Author: tfwee
Singapore Reits – DBS
The quest for growth
• S-REITs offer FY11 yields of 6.1%, an attractive 340 bps spread against long bonds
• As inflation inches higher, we prefer SREITs with ability to continue delivering strong organic growth
• Strong balance sheets to leverage on in the chase for further acquisitions
• BUY FCT, P-Life, Cache, MLT, CDL HT, ART, CMT
Normalized FY11F yield of 6.1%. The S-REIT sector now trades at a normalized FY11F distribution yield of c6.1%, slightly below its historical mean of c6.5%. Spreads have narrowed but still remain attractive at c340bps above the long-term government bond yield, currently at c2.7%.
The quest for DPU growth. S-REITs offer a good hedge against inflation given that earnings growth can potentially outpace inflation, which is expected to inch higher to 3.2% in 2011. We prefer S-REITs with the ability to deliver growing distributions organically while having the opportunity to acquire accretively. We continue to hold the view that hospitality and retail sectors offer a more robust outlook on the back of expected strong visitor arrivals in 2011. Office REITs are expected to see topline pressure from negative reversions in 2011 though the sector is on an uptrend.
Interest rate hikes to have minimal impact on distributable income. Given the current low interest rate environment, S-REITs have taken the opportunity to refinance, lengthen the debt maturity profile as well as widen their sources of debt, hence enjoying savings in interest. DBS economist expects interest rate hikes only towards the end of 2011. Even then, our scenario analysis reveals that the impact on S-REITs FY11 distributable income is limited to -0.2 to -3.0% as majority of the S-REITs have hedged/fixed their interest rate positions.
Industrial & Sponsored REITs have potential for further accretive acquisitions. Even after acquiring cS$6bn of assets YTD, S-REIT sector gearing remains low at 34.4%. Further growth from acquisitions is possible and we look towards the industrial REITs for their ability to acquire earnings accretive assets given the relative higher yields of industrial assets while sponsored REITs continue to offer long-term portfolio growth visibility to investors from potential asset injections in the medium term.
Stock picks. CMT, FCT, CDL HT and Ascott REIT are expected to deliver strong organic growth potential coupled with sponsor injection possibilities. P-Life offers downside protection as revenue is pegged to inflation. MLT and Cache offer potential earnings surprise given their visible sponsor pipeline.
First REIT – SGX
ANNOUNCEMENT
EXTENSION OF HGB TITLE FOR MOCHTAR RIADY COMPREHENSIVE CANCER CENTRE
Further to:
(1) the announcement dated 9 November 2010 in which Bowsprit Capital Corporation Limited, in its capacity as manager of First Real Estate Investment Trust (“First REIT” and as manager of First REIT, the “Manager“), proposed the acquisition by First REIT of Mochtar Riady Comprehensive Cancer Centre (“MRCCC” and the proposed acquisition of MRCCC, the “MRCCC Acquisition“) subject to, among others, the condition precedent that the in-principle approval for the renewal of the “Right to Build” (Hak Guna Bangunan or “HGB“1) title in relation to MRCCC be obtained from Badan Pertanahan Nasional (or the National Land Office of Indonesia);
(2) the circular dated 10 November 2010 issued to unitholders of First REIT (“Unitholders“) to seek Unitholders’ approval for, among others, the MRCCC Acquisition; and
(3) the approval by Unitholders of the MRCCC Acquisition at First REIT’s Extraordinary General Meeting on 29 November 2010,
the Manager is pleased to announce that the National Land Office of Indonesia has extended the HGB title in relation to MRCCC (which was scheduled to expire on 27 August 2015) for a period of 20 years subject to, among others, the payment of a nominal premium and certain other standard conditions, and therefore the condition precedent described above has been satisfied. The amount of premium payable is approximately 193.2 million Indonesian Rupiah (approximately S$28,006.252) and is payable by the vendor of MRCCC.
Suntec – BT
SINGAPORE – Suntec Real Estate Investment Trust , which owns most of Singapore's Suntec City complex, said on Monday it planned to raise around $429 million (US$325 million) via a private placement of new units.
Suntec will issue 310.7 million to 320 million new units at between $1.34 and $1.38 per unit, Suntec's manager said in a disclosure to the Singapore Exchange.
Suntec obtained shareholder approval on Nov 26 to buy a one-third stake in Marina Bay Financial Centre Towers 1 and 2 along with the mall and 695 car park lots from a firm linked to Hong Kong's Cheung Kong and Hutchison Whampoa.
In October, Suntec announced that it would buy the stake for $1.5 billion.
The company has hired Citigroup, DBS Bank and Standard Chartered to act as joint financial advisers, underwriters and bookrunners for the placement.
ARA, the manager of Suntec Reit, is 15.6 per cent owned by Cheung Kong Investment Company Ltd, an entity controlled by Hong Kong billionaire Li Ka-Shing. — REUTERS
Sabana – DJ
SINGAPORE (Dow Jones)–Sabana Shari''ah Compliant Industrial Real Estate Investment Trust (M1GU.SG), or Sabana REIT, Friday opened 5.7% lower on its debut on the Singapore Exchange.
Sabana REIT, the world''s largest listed Shariah-compliant REIT by total assets, opened at S$0.99 compared with an initial public offering price of S$1.05. It was trading at S$1.00, or 4.8% lower than the IPO price, at 0610 GMT.
The Singapore-based company, which priced its offer at S$1.05 per unit, saw its IPO subscribed 2.5 times, allowing it to raise a total of S$666.40 million in gross proceeds.
Sabana, which is also the first Shariah-compliant listing in Singapore, had offered a total of 632.8 million units, of which 101.8 million were placed with cornerstone investors.
Of the remaining 507.99 million units, a total of 432.49 million were placed with institutional investors, 25.5 million with the public and the remaining 50 million reserved for company officials.
Sabana intends to use the proceeds of the IPO to purchase properties and to pay off debt-related costs.
The REIT''s assets are estimated at S$850 million.
Sabana REIT Prices IPO At S$1.05 Per Unit – DJ
Sabana Shari''ah Compliant Industrial Real Estate Investment Trust, or Sabana REIT, has priced its initial public offering at S$1.05 per unit, allowing the company to raise as much as S$664.4 million in gross proceeds, people familiar with the situation said Friday.
The first Shariah-compliant listing in Singapore is planning to sell a total of 632.8 million units in the IPO, with the units listing on the Singapore Exchange likely on Nov. 26, one of the people said.
Of the total offering, 101.8 million were placed to cornerstone investors.
The offering would also be the world''s largest listed Shariah-compliant REIT by total assets. The Singapore-based REIT''s assets are estimated at S$850 million.
The pricing of the units is at the middle of the price range of between S$1 and S$1.10.
The company intends to use the proceeds of the IPO to purchase properties and to pay off debt-related costs.
Daiwa Capital Markets, HSBC and United Overseas Bank are advising Sabana on the deal, while HSBC is also the sole financial adviser.