TCT – BT

Treasury China Q4 income falls short of its forecast

TREASURY China Trust (TCT) yesterday posted a net property income of $15.9 million for the three months ended Dec 31, 2011, up 31.9 per cent from $12 million a year earlier.

In renminbi terms, Q4’s net property income of 78.68 million yuan (S$15.9 million) was 4.6 per cent lower than TCT’s own forecast of 82.47 million yuan.

Meanwhile, gross revenue for the quarter rose 27.4 per cent to $26.1 million, underpinned by the continued strengthening of its portfolio occupancy, and the increase in underlying average rent per square metre.

This was in turn driven by an average 8.5 per cent increase in rent for the 32 leases negotiated during the quarter.

Earnings per unit for Q4 2011 slipped to 8.1 cents from 8.7 cents for Q4 2010.

For the full year ended Dec 31, 2011, TCT’s net property income was $58.1 million, 0.8 per cent lower than its forecast. Gross revenue was $93.2 million.

For the period from May 19 to Dec 31, 2010, net property income was $22.6 million on revenue of $39.6 million. TCT, a Singapore-based business trust focusing on commercial real estate in China, was listed in June 2010.

TCT did not declare any distributions for the financial period, citing the ongoing uncertainty in China’s liquidity environment and its current development of The HQ – a retail and office complex in Shanghai.

TCT’s chairman, Richard Barrett, called the decision to delay the declaration of a distribution ‘one of prudence’, in order to ensure liquidity should bank lending be further tightened.

Mr Barrett also issued a note of caution for 2012: ‘Despite the (Chinese) government’s decision on Feb 17, 2012, to reduce the reserve requirement ratio by 0.5 per cent, equivalent to approximately 380 billion yuan in additional liquidity, the prospect of increased certainty from banks as to the availability of funding for the real estate sector remains patchy at best.’

The reserve requirement ratio refers to the amount of funds Chinese banks are required to hold with the central bank.

In a separate filing to the Singapore Exchange yesterday, the group also clarified that TCT, its intermediate holding companies, and its project companies are ‘in compliance with their respective debt covenants.’

TCT units fell 11 cents to close trading at $1.39 per unit yesterday.