TCT – BT

Treasury China beats Q1 forecast

Net property income of $12.45m also 3.5% better than that for Q4, 2010

TREASURY China Trust (TCT) said that it achieved a net property income of $12.45 million for the first quarter ended March 31, exceeding its forecast by 8.6 per cent.

This is a 3.5 per cent improvement over the fourth quarter of 2010. But earnings per share came to 2.7 cents, compared with 8.7 cents for the fourth quarter of last year.

First-quarter gross revenue for the business trust hit $19.45 million, 1.9 per cent above forecast but 4.9 per cent below the fourth-quarter mark.

TCT yesterday reaffirmed its earlier intention to declare a distribution per unit of 10 cents for 2011 with a payment of five cents per unit each to be made on June 30 and on Dec 31.

There are no comparative figures from a year ago as TCT was listed only last June by way of introduction, after taking over China Real Estate Opportunities that was formerly listed on London’s Alternative Investment Market.

TCT said that its portfolio committed occupancy came to 93.3 per cent at the end of the first quarter, outperforming the target of 87.9 per cent for 2011, and beating the 2010 year-end occupancy level of 90.9 per cent.

It has also entered into formal negotiations to dispose of a majority stake in its Central Plaza asset and is in separate discussions to acquire a Shanghai-based retail asset.

TCT’s current portfolio comprises Central Plaza, City Center and Treasury Building in Shanghai and 74,000-square-metre development space in Beijing International Logistics Park.

It just completed an acquisition that provided a 55 per cent interest in Central Avenue Mall in Qingdao. TCT has also obtained regulatory approval to acquire 100 per cent of Shanghai Huai Hai Mall and a US$50 million loan from Citic International Bank to assist with the acquisition.

Richard Barrett, chairman of TCT, said that he expects the completion of the Central Avenue Mall purchase in Qingdao to provide a strong revenue stream from the second quarter onwards.

The group noted that leasing activities in the Shanghai office market remained active in the first quarter, with strong demand from multinational corporations, while demand for retail space is mainly driven by mid-market fast fashion retailers.

Some 33 leases were negotiated in the first quarter ended March 31, comprising new lettings and renewals. They produce an aggregate per square metre rental representing a 12.8 per cent increase over the expiring leases.

Among the new leases were a three-year lease to Eastern Life Insurance in Treasury Building and a 10-year lease pre-commitment from Marks & Spencer at TCT’s City Center Extension development.

TCT said that it is confident that ‘the retail and office sector will continue to perform well for the remainder of 2011’.

TCT units closed trading 1.6 per cent lower at $1.87 yesterday.