Month: April 2012
Suntec – CIMB
Due for a bounce
Positives were better rental reversions and stronger occupancy from Suntec City offices. An ROI of 10.1% from Suntec City Mall's AEI is within sight, based on >45%secured pre-commitments. Its risk-reward trade-off remains favourable at 0.65x P/BV.
1Q12 DPU matches consensus and our estimates at 28% of FY12. We expect a frontend-loaded year with Suntec City Mall's AEI contributing in 2H12. We factor in GST rebates for ORQ, adjusting our DPU by 1-2%. Maintain Outperform with a higher DDM target (discount rate: 8.1%).
Stronger offices
1Q12 DPU was up 4% yoy on higher contributions from ORQ, MBFC and Park Mall. Positives were slightly better rental reversions at Suntec City offices, aided by low expiring rents for certain leases like IDA's and UBS's. Renewal rents inched up to S$8.79psf (4Q11: S$8.72psf) while occupancy tightened to 99.5% (4Q11: 99.2%). 2012 lease expiries are down to 7.5% by NLA and management is working on those leases due in late 2012 and early 2013. ORQ and MBFC also contributed more yoy. Management is expecting GST returns from ORQ income support in the coming quarters.
AEI on track
Management appears increasingly confident of returns from Suntec City Mall's AEI, guiding that it is on track to hit its ROI target of 10.1%, judging from its >45% of secured pre-commitments. Chijmes' divestment proceeds will be used to mitigate a temporary DPU dip 'if necessary'. Phase 1 of the AEI will involve the closure of 193k sf (23% of Suntec City's retail NLA) in the Galleria zone and Fountain Terrace, with a most intensive phase expected between Oct and Dec 12, before completion in 2Q13. Mall rents and occupancy were stable before the AEI.
Valuations compelling
With limited DPU downside and at 0.65x P/BV, we reckon its risk-reward remains in favour of a positioning for a bottom and successful remake of Suntec City Mall.
FCOT – DBSV
Another good set of results
• In line with expectations, 1H DPU forms 53% of our FY12 forecast.
• Drop in occupancy likely transient; expect healthy, positive rental reversions to continue.
• Maintain BUY at an unchanged TP of S$1.76
Highlights
In line with expectations. On a y-o-y basis, 2Q12 revenue and NPI rose 27.4% and 30.4% respectively, on the back of a strong portfolio performance, partial completion of the AEI works at Causeway Point and contributions from Bedok Point. However, revenue rose by a more sustainable 5% on a q-o-q basis. Consequently, 2Q DPU came in at 2.5ct representing a 20.8% y-oy and 13.6% q-o-q increase, even though the trust retained S$659,000 for future distribution. 1H DPU forms 53% of our FY12 forecast. The group renewed 77177sf of retail space at 11% higher than the preceding rental rate.
Our View
Healthy operational metrics. While occupancy fell 4 ppt to 93.5%, we believe it is transient, and attributable to the tenant changeover for Northpoint’s foodcourt, as well as thecommencement of the AEI work at levels 5 and 7 at Causeway
Point. Upon the opening of the food court, portfolio occupancy should move closer to c95%. Meanwhile, our recent site visit to Causeway Point reaffirmed our positive view of the AEI works. On levels 1 and 2, the freed up space from the downsizing of the anchor tenant space has been rented out to new tenants, thus enhancing the mall tenant mix and increasing its attractiveness. Meanwhile footfall was also healthy, therefore, we think the trust should be able to drive rental reversions for the remaining c48,000sf of leases expiring this year.
Balance sheet remains robust. Gearing is at a healthy 30.9% with no major refinancing (only S$75m in FY12). Average cost of borrowings dropped marginally by 3.06% to 3.04%
Recommendation
Maintain BUY. We continue to like FCT for its pure suburban exposure and strong balance sheet. FCT is currently offering a FY12/13 prospective yield of 5.7% – 6.1% and our unchanged DCF-backed TP of $1.76 offers a total return of close to 20%.
MIT – CIMB
Decent quarter
4Q12 results were decent in terms of DPU growth and rental reversions. While there was a qoq dip in portfolio occupancy, DPUs should remain stable, underpinned by occupancy and positive rental reversions.
4Q12/FY12 DPU slightly beat our estimates from higher-than-expected rental and margins (28%/106% of FY12) but met consensus expectations. We fine-tune our DPU estimates but keep our DDM target price (discount rate: 8.6%) and Outperform rating pending an analysts’ briefing.
Positive rental reversions
4Q12 NPI was up 23% yoy on increased contributions from acquisitions, higher occupancy and positive rental reversions. DPU was up a lower 14% yoy due to an enlarged equity base following an equity issuance to part-fund its previous acquisition from JTC. Qoq, DPU was up 3%, thanks to positive rental reversions. Rental reversions remained strong: Flatted Factories (+27%), Stack-Up/ Ramp-Up Buildings (+29%) and Warehouses (+15%) over preceding leases. We are slightly concerned about a 9% qoq dip in rentals for new flatted factory leases to S$1.75psf, which could suggest pressures in pushing rents and we would be seeking more clarification from management. Overall occupancy was flat at 94.9%, albeit with some dips from business parks and warehouses.
Strengthened balance sheet
Asset leverage inched down to 38% from 3Q12’s 39% on revaluation gains. During the quarter, management refinanced part of its 2012 loans by issuing a S$125m 7-year 3.75% fixed-rate MTN. Following this, average term to debt maturity has lengthened to three years from 2.5. Weighted average all-in funding costs were up only marginally to 2.3% from 2.2%.
Revaluation gains
A revaluation gain of S$94.1m was recognised from investment properties from higher rental revenue and occupancy, leading to NAV/unit growth of 6.3% qoq.
Suntec – BT
Suntec Reit posts Q1 DPU of 2.453¢
SUNTEC real estate investment trust (Reit) yesterday posted a distribution per unit (DPU) of 2.453 cents for the first quarter of 2012, a 2.7 per cent year- on-year increase.
Based on the unit price of $1.27 on 23 April, this translates to an annualised distribution yield of 7.8 per cent.
For the quarter ended March, distributable income increased 3.8 per cent year-on-year to $54.9 million, on the back of stronger performance from its office portfolio and higher income contribution from its jointly controlled entities, One Raffles Quay and Marina Bay Financial Centre (MBFC) Towers 1 and 2, and the Marina Bay Link Mall.
For the quarter, gross revenue jumped 20.1 per cent year-on-year to $73.3 million, mainly due to the consolidation of $14.6 million in revenue from Suntec Singapore. For the same period, net property income of $49 million was 5 per cent higher year-on-year.
MIT – BT
MIT Q4 DPU up 15%; revenue jumps 24.3%
Reit manager expects MIT to continue doing well in the financial year ahead
MAPLETREE Industrial Trust (MIT) closes its financial year on a sweet note following a 26.4 per cent year-on-year jump in distributable income to $35.8 million during the fourth quarter ended March 31, 2012.
This led to the industrial real estate investment trust (Reit) offering a distribution per unit (DPU) of 2.22 cents for the period – 16.2 per cent higher than the forecast of 1.91 cents and 15 per cent more than the year before.
Gross revenue for the quarter was up 24.3 per cent at $66.3 million from $53.4 million the year before, driven by higher rental rates, stronger occupancy take-up and new contributions. Notably average passing rents rose to $1.55 per square foot (psf) per month from $1.53 psf per month in the quarter before. In addition, positive rental revisions were also achieved for properties such as flatted factories, stack-up/ramp-up buildings and warehouses.
Consequently, net property income was lifted by 23.4 per cent to $46 million over the same period.