Author: tfwee
CMT – BT
Capitamall Trust buys Iluma for S$295 mln
SINGAPORE – Singapore's CapitaMall Trust Management said on Monday it has entered an agreement to buy a shopping mall in the city-state, Iluma, for S$295 million ($231 million).
'Iluma is a new shopping mall in Singapore located at Victoria Street opposite the popular Bugis Junction, one of CMT's existing properties. The mall has a net lettable area of 185,190 square feet,' CapitaMall Trust said in a statement.
CapitaMall is part of Singapore's CapitaLand, Southeast Asia's largest property firm.
FCOT – SGX
Trust Deed Amendment to Remove Trustee’s Acquisition Fee and Divestment Fee
Singapore, 20 January 2011 – Frasers Centrepoint Asset Management (Commercial) Ltd. (the “Manager”), as the manager of Frasers Commercial Trust (“FCOT”), wishes to announce the amendment of the trust deed dated 12 September 2005 constituting FCOT (as amended and restated) (the “Trust Deed”) by way of a seventh supplemental deed.
The seventh supplemental deed has been entered into today between the Manager and British and Malayan Trustees Limited, as trustee of FCOT (the “Trustee”), to amend the Trust Deed to remove the Trustee’s acquisition fee and divestment fee from the remuneration of the Trustee such that the Trustee will no longer be entitled to receive such fees, to be in line with market practice.
The Trust Deed will be available for inspection at the registered office of the Manager and the registered office of the Trustee.
CCT – UOB Kay Hian
BACKGROUND
CapitaCommercial Trust (CCT) has the largest portfolio of prime office properties in Singapore, deriving about 72% of its value from this segment. Its portfolio also includes office and business park properties in Malaysia through a 30% stake in Quill Capital Trust (QCT) and a 7.4% stake in Malaysian Commercial Development Fund.
OUTLOOK/RECOMMENDATION
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Watch out for acquisitions.
- Portfolio reconstitution saw the sale of two office buildings, Robinson Point and StarHub Centre, in quick successions this year for a total of S$572.5m. Current gearing of 31.5% gives debt headroom of S$1b, assuming target gearing of 45%, for acquisitions. Management indicated it is on an active lookout for prime/Grade A office property in the CBD.
- Portfolio reconstitution saw the sale of two office buildings, Robinson Point and StarHub Centre, in quick successions this year for a total of S$572.5m. Current gearing of 31.5% gives debt headroom of S$1b, assuming target gearing of 45%, for acquisitions. Management indicated it is on an active lookout for prime/Grade A office property in the CBD.
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Strong pick-up in office rentals mitigates risk of negative reversion.
- The market rents for office space continued to improve in 3Q10 with prime office rents increasing 7.2% qoq to S$7.40psf pm and Grade A office rent increasing 6.5% qoq to S$9.00psf pm. The risk of negative rental reversions is mitigated with Grade A office rents exceeding the average portfolio rent of S$8.73psf pm and the prime office rentals bridging the gap to average portfolio rents. Average portfolio rent for CCT is S$8.79psf pm.
- The market rents for office space continued to improve in 3Q10 with prime office rents increasing 7.2% qoq to S$7.40psf pm and Grade A office rent increasing 6.5% qoq to S$9.00psf pm. The risk of negative rental reversions is mitigated with Grade A office rents exceeding the average portfolio rent of S$8.73psf pm and the prime office rentals bridging the gap to average portfolio rents. Average portfolio rent for CCT is S$8.79psf pm.
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Market Street carpark redevelopment.
- With prime office capital values increasing 29% ytd to S$2,000psf in 3Q10, outpacing a corresponding 9.6% rise in prime office rents to S$7.40, yield compression is starting to set in. With yield-accretive acquisition opportunities becoming increasingly difficult in the near term, management may relook the option to redevelop the Market Street carpark into an office building.
- With prime office capital values increasing 29% ytd to S$2,000psf in 3Q10, outpacing a corresponding 9.6% rise in prime office rents to S$7.40, yield compression is starting to set in. With yield-accretive acquisition opportunities becoming increasingly difficult in the near term, management may relook the option to redevelop the Market Street carpark into an office building.
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Maintain BUY and target price of S$1.70.
- We use the dividend discount model (required rate of return: 7.7%, terminal growth: 2.5%) to value CCT.
Ascendas REIT – UOB Kay Hian
BACKGROUND
Ascendas REIT (A-REIT) is a business and industrial REIT which invests in a diversified property portfolio in Singapore, comprising business and science parks, hi-tech industrial properties, light industrial properties, logistics and distribution centres as well as warehouse retail facilities.
OUTLOOK/RECOMMENDATION
Positive rental reversions in FY11. A-REIT will benefit from positive rental reversions for lease renewals across all sub-segments in FY11, as current market rentals are at 4-21% premium to expiring rents, with existing business park rentals commanding a 19% premium to space due for renewal. A-REIT will also benefit from the bottoming out in industrial rentals and the improvement in the manufacturing sector outlook.
- Industrial rentals picking up. The Urban Redevelopment Authority (URA) industrial rental index bottomed out in Sep 09 and is up 8.0% ytd. Average market rents for business parks, factory and warehouse space are up 6.9%, 8.0% and 8.1% ytd respectively. Hi-tech industrial space is expected to recover in 2011 after bottoming out this year due to supply overhang in the segment.
- Downside protection in earnings. A-REIT has a well-diversified and stable portfolio with average lease to expiry of five years. About 45% of the leases are long-term, typically with annual rental escalation, of which 32% have adjustments pegged to the Consumer Price Index.
- Continued acquisitions and developments to drive growth. A-REIT acquired DBS Asia Hub at Changi Business Park and another industrial property in Joo Koon in 1Q10. Development projects, such as the recently completed Plaza 8 @ Changi Business Park (CBP) and Phase II of CBP due to be completed in 1Q11, will contribute to FY11 and FY12 earnings.
- Debt headroom of S$953m. A-REIT has a debt headroom of S$953m from its current gearing level of 34.3% before reaching the 45% aggregate
- leverage. This presents ample opportunity to fund build-to-suit (BTS) development projects and acquisitions.
- Maintain BUY and target price of S$2.50. We value A-REIT based on the dividend discount model (required rate of return: 7.7%, terminal growth: 2.0%).
MIT – SGX
COMPLETION OF ACQUISITION OF 44 & 46 CHANGI SOUTH STREET 1, SINGAPORE
Further to its press release dated 2 December 2010 regarding the acquisition of the property at 44 & 46 Changi South Street 1, Singapore for a purchase price of S$16.8 million, Mapletree Logistics Trust Management Ltd., as manager of Mapletree Logistics Trust is pleased to announce that the acquisition was completed today.
The acquisition was fully funded by proceeds raised in the recent equity fund raising exercise announced on 21 September 2010 (“EFR announcement”). This was one of the Potential Acquisitions as identified in the EFR announcement.