Author: tfwee
Cambridge – BT
New CEO at Reit manager CITM
SINGAPORE’S first independent real estate investment trust (Reit), Cambridge Industrial Trust (CIT), will see Wilson Ang Poh Seong step down as chief executive of the Reit manager Cambridge Industrial Trust Management (CITM). He makes way for Christopher Calvert, formerly the CEO of MacarthurCook Ltd (Asia).
Mr Ang was part of the team that initiated and launched the initial public offering (IPO) of CIT in July 2006.
In February, Oxley Group, led by executive chairman Michael Dwyer (formerly chief executive and managing director of Allco), acquired an effective 20 per cent interest in CITM by procuring 33 per cent of the equity in Cambridge Real Estate Investment Management (CREIM)). Oxley’s stake was acquired from Chan Wang Kin – until then a director of CREIM and CITM – who was also part of the team that initiated the Reit. CREIM held a majority stake of 60 per cent of CITM at the time.
In August, National Australia Bank and Oxley Group formed a joint venture to take an 80 per cent stake in CITM.
Since then, Finian Tan, who was also part of the IPO team of CIT, has resigned from the board of CITM.
When contacted, Mr Ang said that he had not intended to leave CITM when Oxley first took a stake in February. However, he added that the new board will take CIT ‘to the next level’. Mr Ang, who still holds 420,000 units in the Reit, said that he has not decided on his future plans yet.
Separately, CITM said yesterday that it has reached an agreement with three banks for a $390.1 million syndicated term loan to CIT. The funds will be fully utilised to refinance all of CIT’s existing debt facilities. The three banks are HSBC, nabCapital (a division of National Australia Bank) and RBS. The effective interest rate will be about 6.6 per cent per annum including amortisation of upfront costs.
CITM said that CIT’s distribution per unit in 2009 will be reduced by about 0.9 cents per unit per annum.
In terms of forward commitments that may have required debt funding, CITM said that it has reached an agreement with the seller of 29 Tai Seng Avenue to extend the option agreement to June 30, 2009, and the completion is subject to market conditions having supported an equity fund raising by CIT. It has also reached an agreement with the seller of 75 Tuas Avenue to terminate an earlier option agreement.
Cambridge – SGX
PRESS RELEASE
CAMBRIDGE INDUSTRIAL TRUST TO REFINANCE WITH S$390.1 MILLION TERM LOAN
Coordinating Lead Arrangers : The Hongkong and Shanghai Banking Corporation Limited; nabCapital, a division of National Australia Bank; and The Royal Bank of Scotland plc
Tenor : 3 years from drawdown
Loan: S$390.1m syndicated term loan, fully funded by the Coordinating Lead Arrangers. Completion of the Loan is subject to standard documentation. A portion of the Loan is subject to syndication on normal market conditions.
Effective Interest Rate: 6.6% per annum (approximately), including amortisation of upfront costs.
DPU Impact: CITM anticipates that CIT’s distribution in 2009 will be reduced by approximately 0.9 cents per unit per annum(1). (1) Note that amortisation of upfront costs does not affect the level of distributions to unitholders.
Properties mortgaged: CIT’s existing property portfolio excluding 16 Tuas Avenue 18A
Mr Chris Calvert, CEO of CITM said, “We are addressing the short-term refinancing risk that has been affecting CIT.
“Investors in CIT now have a highly stable income stream, driven by CIT’s long average lease term and high level of tenant security deposits, and following successful completion of the new loan facility, will be coupled with three years of debt financing. Given the current economic climate, this will be a welcomed position.”
Commenting upon the refinancing, Dr Chua Yong Hai, the Chairman of CITM said, “In the current economic circumstances it is pleasing to note that CIT has been able to retain the support of its existing lenders, HSBC and RBS. It is also pleasing that the National Australia Bank – through nabCapital, its institutional banking and capital markets business – has become a lender, adding to the role its nabInvest business has taken as a shareholder in the REIT’s manager. This is an excellent demonstration to REIT investors of the importance of strong sponsorship,” says Dr Chua.
Standard and Poor’s Ratings Services affirmed CIT’s ‘BBB-‘ credit rating on 6 October 2008.
CITM has decided to refinance using conventional debt, in lieu of a Shariah compliant facility. The Board recognises the strategic importance and potential benefits to CIT of becoming Shariah compliant and will continue to investigate whether this direction is in the best interest of unitholders in the medium term.
In terms of forward commitments that may have required debt funding, CIT has reached agreement with the seller of 29 Tai Seng Avenue to extend the option agreement to 30 June 2009 (or such other mutually agreeable date) and the completion is subject to market conditions having supported an equity fund raising by CIT. CIT has reached agreement with the seller of 75 Tuas Avenue to terminate the option agreement relating to that property.
Cambridge – BT
SINGAPORE – Cambridge Industrial Trust, which owns 43 warehouses and factories in Singapore, said on Thursday that chief executive Ang Poh Seong had quit with immediate effect and that he will be replaced by Chris Calvert.
Mr Ang’s departure was not related to any differences of opinion with its board of directors, the firm said in a statement to the stock exchange, but it did not say why he was leaving.
Mr Calvert, 38, is an Australian citizen who was previously CEO of a firm called Blaxland Funds (Asia).
Cambridge Reit shares fell 2.4 per cent on Thursday and have lost more than 60 per cent of their value in the last three months as the Singapore economy slipped into recession. — REUTERS
CMT – OCBC
Uncertainties over refinancing and rental rate outlook
Refinancing is still our focus for 2009. Going into 2009, refinancing of borrowings will remain the overhanging concern for CMT. CMT had not done any refinancing in 3Q08 but management assured that there is sufficient cash and bank facilities to refinance its borrowings due in December 08 (S$187.5m) and May 09 (S$80m). While previously we had assumed that part of the borrowings be refinanced by the medium term notes (MTN) programme, there is now little investor appetite for MTN, meaning that CMT would not be able to draw down its untapped MTN facility for refinancing.
Credit rating could be at risk. Recent spate of downgrading of S-REITs’ credit ratings reflects the cautious stance that rating agencies had taken on S-REITs and has also raised further concerns on their credit health. In May, rating agency Moody’s confirmed CMT’s A2 rating but revised its outlook to negative due to its weakened financial profile following the acquisition of Atrium@Orchard. We believe that the risk of credit rating downgrade is higher now given the current tight credit market and slowing retail rental rates. A downgrade could potentially raise CMT’s cost of refinancing and affect its future distributions.
Cutting back our retail rental expectations. In light of the worsening economic and job outlook, consumer spending could continue to slow down in 2009. As such, we are now taking a more conservative stance in our retail rental rate expectations and adjust our rental forecast from 0% to -5% per annum for FY09 and FY10.
Fair value lowered to S$1.94. We remain optimistic that CMT should be able to refinance its near term borrowings, given its portfolio of quality assets, track record of good access to the debt market and backing of a strong sponsor, CapitaLand. However, to reflect the tight credit market conditions, we are now factoring a higher increase in borrowing costs for FY09, from our previous forecast of +60bp to +100bp now. Also factoring in our new retail rental rate expectations, our FY09 DPU forecast has been cut by 6.8%, from 16.2 S-cents to 15.1 S-cents. We are also ascribing a 15% discount (no discount ascribed previously) to our RNAV forecast in light of the challenging condition in the retail market. As such, our fair value of CMT has now been lowered from S$2.57 to S$1.94. As upside to share price is still 35.7%, we maintain our BUY rating on CMT.