Author: tfwee
First Reit – BT
SINGAPORE – First Real Estate Investment Trust (First Reit) on Monday said that it has secured a three-year $70 million (US$47 million) multi-currency transferable loan facility from OCBC Bank.
The primary purpose of the loan is to refinance the Reit’s outstanding bank loans of $50.8 million, the healthcare Reit said. The balance will be used for funding the redevelopment of its Adam Road Hospital and for possible acquisitions in the future.
a-iTrust – BT
Ascendas India Trust, Chip Eng Seng secure loans
Trust gets $50m for refinancing, CES unit gets $60m for repayment
REAL estate business trust Ascendas India Trust (a-iTrust) and construction and property group Chip Eng Seng Corporation have secured loan facilities of $50 million and $60 million respectively – the former for refinancing and the latter for repayment of notes issued by a subsidiary.
For a-iTrust, its $50 million short-term loan, which matured on March 31, has been refinanced by the lenders, Citibank and DBS Bank, from April 1 under a new loan expiring on Sept 30, 2010, but at a higher interest rate.
The rate is 600 basis points above the Singapore dollar swap offer rate – which has been fixed at 1.046 per cent till May 29 – and works out to 7.046 per cent.
a-iTrust said that the impact of the higher interest rate on distribution to unitholders is less than 0.3 cent per unit for the financial year 2009/10.
This is due to the low gearing level, which was forecast to be below 10 per cent as at March 31.
Also, 40 per cent of the loan proceeds will be used for construction of new buildings, and the related interest expense will be capitalised.
a-iTrust,which owns real-estate for business use in India, added that its portfolio remains stable with a 98 per cent occupancy rate.
It has also renewed 90 per cent of the leases which expired in the fourth quarter ended March 31, resulting in a full-year tenant retention rate of 87 per cent.
More information on its performance is due on April 28 when it announces its full-year results.
For Chip Eng Seng Corporation, the $60 million loan was granted by Standard Chartered Bank to subsidiary CEL Development to finance the repayment of certain notes issued by the unit under a multi-currency medium term note programme.
FCOT – BT
Frasers Centrepoint Asset Management (Commercial) Ltd, as manager of Frasers Commercial Trust, said on Friday it is negotiating the terms and conditions with financial institutions to refinance $550 million of loan notes.
Previously, KPMG LLP has, in their Independent Auditors’ Report on the financial statements of FrasersComm for the financial year ended 31 December 2008, highlighted the ability of FrasersComm to continue as a going concern.
KPMG said the ability of FrasersComm to continue was dependent on the successful outcome of its negotiations with financial institutions to refinance its loan notes totalling $550 million, of which $400 million would mature on 31 July 2009, while the remaining $150 million would mature on 31 December 2009.
REITs – OCBC
Class gap implies different valuation catalysts
Class gap between S-REITs. Consensus forward yields, ranging from 7- 38%, are showing a wide divergence in valuations across the S-REIT sector. Our thesis is that the S-REIT sector is now broadly segregated into two camps – the “haves” (large, blue-chip sponsored REITs with strong balance sheets) and the “have-nots” (smaller, non-sponsored REITs with high gearing). Valuation catalysts also vary accordingly – we believe the market focus for the weaker “have-nots” is still on their ability to secure refinancing but the focus for the “haves” is on 1) how the macroeconomic picture affects earnings and 2) the need for equity issues to recapitalize balance sheets. Investors can expect some key data points on both the refinancing and the earnings fronts in the coming months.
Refi news impacts “have-nots” more. MacarthurCook Industrial REIT [NOT RATED] announced yesterday that it has received a 60 day extension for its loan facility worth S$220.8m maturing on 18 April. MI-REIT is geared at almost 40% and this facility constitutes the bulk of its borrowings. The extension buys MI-REIT some time to continue negotiations with its lenders, National Australia Bank and Commonwealth Bank of Australia. Its inability to secure a resolution by April is a disappointment, in our view. MI-REIT’s refinancing efforts will likely be benchmarked against the Dec 2008 refinancing completed by peer Cambridge Industrial Trust [NOT RATED] as both S-REITs are relatively smaller, non-sponsored and industrial focused. We expect negative refinancing news to further widen the valuation gap between the two S-REIT classes. For the broader sector, such refinancing news may be indicative of lender risk appetite. Tighter loan-tovalue demands may trigger a sector-wide overhaul of capital structures, potentially via equity issues.
Watch rents & vacancy data points for the “haves”. Most S-REITs should report 1Q CY09 earnings over the last two weeks in April. We believe that 1H09 earnings are worth watching as the impact of macroeconomic events slowly filters through to the S-REIT bottom-line. For the office sector, we will be watching the pace of the decline in achieved rents as well as any change in occupancy levels. Given the economic slowdown, occupancy levels will be the key metric to watch in the industrial space. We are also looking out for an update on the post-CNY retail landscape and validation of the consensus ‘suburban means defensive’ view. We maintain our NEUTRAL call on the sector and leave our estimates and ratings for individual S-REITs unchanged in anticipation of 1Q results.
Link – Table
Rickmers – BT
Bank raises rate on Rickmers Maritime loan
It invokes market disruption clause in loan terms
JITTERY financial markets continue to be the thorn in the side of corporates as shipping trust Rickmers Maritime yesterday announced that one of its banks has invoked the market disruption clause in the loan terms and will consequently levy a higher interest rate on its loan.
First Ship Lease Trust (FSLT) got hit with this same problem in October and this time it is Rickmers’ turn and it will result in an about US$47,000 rise in interest cost for this fixing period. However, it will not have a significant impact on its earnings per unit for the financial year ending Dec 31, trustee-manager Rickmers Trust Management said.
The market disruption clause is invoked when the US$ Libor, which is the reference rate on the loans, does not accurately reflect the lenders’ actual cost of funds.
In response to queries in the wake of FSLT’s problems in October, Rickmers said then that though it had the clause in its loan documents it had not been invoked yet. The increased interest costs then caused FSLT to reduce its Q408 distribution per unit guidance by 1 per cent.
Three-month US dollar Libor rates hit their lowest in two months in London falling one basis point to 1.1768 per cent yesterday, Reuters reported.
‘The increase in interest rate pursuant to the invocation of the market disruption clause by the bank by no means reflects the credit-worthiness of Rickmers Maritime. Where Rickmers Maritime is concerned, we continue to enjoy strong cash flows and have met all our loan obligations promptly,’ reiterated CFO Quah Ban Huat.
Rickmers Maritime has credit lines with nine other banks, none of which has invoked the market disruption clause, Mr Quah added.
Separately, Rickmers said yesterday that is has taken delivery of its 16th containership, Hanjin Newport, the first of four ships chartered to Hanjin Shipping, South Korea’s largest container liner company.
The 4,250 twenty-foot equivalent unit (TEU) newbuild vessel from Jiangsu New Yangzijiang Ship Building commences a seven-year fixed-rate time charter to Hanjin Shipping.
Rickmers units closed unchanged at 34.5 cents yesterday.