Author: tfwee
Cambridge
OXLEY GROUP ACQUIRES STRATEGIC STAKE IN CAMBRIDGE INDUSTRIAL TRUST MANAGEMENT
Singapore, 20 February 2008 – Cambridge Industrial Trust Management Pte Ltd (“CITM”) wishes to announce that Oxley Group (“Oxley”) has acquired an effective 20 percent interest in CITM by acquiring 33 percent of the equity in Cambridge Real EstateInvestment Management (“CREIM”). CREIM holds a majority stake of 60 per cent ofCITM.
CITM is the manager of Cambridge Industrial Trust (“CIT”), which is the first independent industrial REIT to be listed on the Stock Exchange of Singapore with a market capitalization of approximately S$ 552 million and total assets of S$ 949.8 million.
Oxley’s interest was acquired from Mr Chan Wang Kin, who has sold his entire 28 percent stake in CREIM to Oxley. Oxley has acquired an additional 5 percent from Mr Ang Poh Seong, CEO of CITM. Mr Ang retains a 20 percent stake in CREIM.
With the sale of his interest in CREIM, Mr Chan Wang Kin will cease to be a director of CREIM and CITM Mr Ang welcomed Oxley as a strategic shareholder of CREIM adding, “We are excited
with this new development particularly in light of the regional networking and depth of experience that Oxley will bring to this partnership.”
“We are delighted with this transaction and look forward to working with the management of CITM to further develop CIT as a leading player in the Asian Industrial Property space.” said Michael Dwyer, Executive Chairman of Oxley.
PLife – BT
Parkway Life’s maiden results beat forecasts
It reports $13.6m distributable income for Aug23-Dec31, 2007 period
PARKWAY Life Reit has beaten forecasts in its maiden results.
It reported a distributable income of $13.64 million for the period between Aug 23, when it was listed, and Dec 31, 2007. This was 5.81 per cent better than its projection of $12.89 million. This led to a distribution per unit (DPU) of 2.27 cents, higher than the forecast 2.14 cents.
Riding on the momentum, the Reit’s manager expects to do better than its forecast for FY2008.
‘We’ve got a (yield) forecast in the IPO, which is 4.9 per cent,’ said Justine Wingrove, CEO of the Reit’s manager, Parkway Trust Management. ‘I think it’s fair to say we’re likely to go in excess of that, but I obviously can’t say too much.’
Parkway Life Reit holds the Mount Elizabeth, Gleneagles and East Shore hospitals under its asset portfolio. Independent valuer DTZ Debenham Tie Leung recently valued the portfolio, which includes 68 medical offices and retail units and 559 parking lots, at $831.5 million. This is 7.3 per cent higher than the appraised value of some $775 million in July last year.
Gross revenue was $16.9 million, 5 per cent higher than the forecast of $16.09 million. This was because the actual adjusted hospital revenue for the period was higher than the minimum rent assumed in the forecast. The increase in adjusted hospital revenue was largely driven by a rise in foreign patient revenue, higher consumption of diagnostic outpatient services and contribution from Parkway Cancer Centre.
The biggest rental contribution came from Mount Elizabeth Hospital, which accounted for $10.6 million. Gleneagles Hospital raked in $5.5 million, while the balance came from East Shore Hospital.
The Reit manager is targeting acquisitions in Singapore, China, India, Japan, Malaysia and Thailand to grow its portfolio. Some of the property types it is pursuing include warehousing facilities for pharmaceutical companies, nursing homes, hospitals and medical offices. It does not rule out development projects as well, but will cap them at 10 per cent of its asset base. Immediate acquisition targets are unlikely to come from Parkway Holdings, said Ms Wingrove.
‘I think with Parkway, it’s just there for us,’ she said. ‘And so, yes we are looking at it . . . but we need to take advantage of third-party acquisitions if there’s an opportunity, because we don’t have an automatic right for those.’
When asked by the media on what she thought of Parkway Holdings’ recent record bid for a hospital site at Novena, Ms Wingrove said she believes that Parkway Holdings did a lot of analysis before submitting the bid for $1,600 per square foot per plot ratio.
As a Reit manager, Parkway Trust would look at the Novena property at a later date before deciding on the appropriate course of action.
Net asset value per unit came to $1.36. Parkway Life Reit has also attained a ‘BBB+’ credit rating by Fitch Ratings. The counter last traded at $1.20.
MMP – BT
Macquarie may exit MMP Reit under strategic review
MACQUARIE MEAG Prime (MMP) Reit will undergo a strategic review that may see the Macquarie Group sell its stake in the fund.
In a statement, the Reit’s manager – Macquarie Pacific Star Prime Reit Management – said that the exercise aims to enhance the value for all unitholders. It may consider options like merger & acquisitions, full-privatisation or sale of assets, chief executive officer Franklin Heng told BT.
The announcement confirms an earlier BT report that the Macquarie Group, which owns 26 per cent of the Reit, is prepared to exit from the fund under a proposed strategic review.
Indeed, Macquarie Pacific Star said that the move came after the ‘receipt of a number of unsolicited approaches’ made to Macquarie Real Estate, part of the Macquarie Group.
Macquarie Real Estate also has an associated entity that owns a 50 per cent stake in the Reit’s manager.
The key shareholder said it will cooperate with the directors of Macquarie Pacific Star in order to maximise value for all unitholders. The strategic review will be undertaken in the context of strong underlying property fundamentals in the Singapore market.
‘The quality of MMP Reit’s portfolio of real estate assets is supported by MMP Reit’s recent announcement of an increase in its net asset value to $1.61 per unit as at December 31, 2007.’
MMP Reit last traded at $1.08 – a 32.9 per cent discount to its NTA (net tangible asset) and the strategic review will explore options to ‘close this value gap’.
Macquarie Pacific Star intends to appoint Macquarie Securities (Asia) Pte Limited of Singapore to advise it on the strategic review. The entire exercise is expected to be completed by June this year.
Yesterday, the Reit’s manager also cautioned that there is no assurance that the strategic review will result in any specific transaction.
MMP Reit reported a 15.7 per cent year-on-year rise in distributable income to $16.2 million for the fourth quarter ended Dec 31, 2007. The Q4 distribution brought 2007 full year’s distributable income to $59 million, up 7.5 per cent.
PLife – DBS
Even more headroom now
Comment on Results
ParkwayLife REIT’s (PREIT) FY07 results were in line with our expectations. Gross revenues ended at S$16.9m as a result of higher variable rent component that is linked to the Adjusted Hospital’s Revenue. This was partially offset by higher property expenses as a result of more contributions to the management and sinking fund for Mount Elizabeth Hospital (MEH). DPU for FY07 was 2.27 Scts, annualized at 6.32 Scts.
There was a revaluation gain of S$56.3m on its investment properties, mainly contributed by MEH (+S$47.3m). This increased its NAV per unit to S$1.36, from S$1.25 as of listing.
Recommendation
PREIT also announced that it has received an investment grade rating of “BBB+” by Fitch Ratings. With the rating, it will allow PREIT to increase its aggregate leverage limit to a maximum of 60% of the value of its deposited property, from its previous capped gearing of 35%. While management indicated that a comfortable long-term gearing target is probably around 45%, the rating and revaluation gain allows PREIT to take up a maximum of about S$1.1bn of debt (at 60% gearing). Its current low gearing of 4% provides substantial flexibility to pursue its growth and acquisition strategy.
Management also indicated that any asset injection from its Sponsor would be done as a business case and evaluated on its investment and financial merits to the REIT.
Maintain BUY, TP: S$1.50. The prospects of the Group should remain firm on an aging population, increasing life expectancy, growing affluence, and Singapore’s drive to promote medical tourism. In addition, downsides are protected from gross revenues pegged to the higher of Adjusted Hospital’s revenue or [1+(1%+CPI)] on the total rent payable on the immediate preceding year. Maintain BUY, TP unchanged at S$1.50 based on DCF (WACC 5.6%, terminal growth 1%). Counter is currently trading at 11% discount to NAV and offers a forward yield of 5.4% (FY08F).
PLife – UOBKH
FY07: Maiden results exceeded forecast
Parkway Life REIT reported its maiden set of results for the period from 23 Aug to 31 Dec 08.
Parkway Life REIT achieved rental revenue of S$16.9m, 5% higher than forecast provided in the IPO prospectus. This comprises base rent of S$10.7m and variable rent of S$6.2m. Higher variable rent was driven by increased revenue from foreign patients, higher consumption of diagnostic outpatient services and contribution from Parkway Cancer Centre.
Distributable income was 5.8% higher than forecast at S$13.6m. Parkway Life REIT declared DPU of 2.27 cents, representing annualised distribution yield of 5.3%. The distribution will be paid on 28 Mar 08.
Revaluation boosted NAV/share. Parkway Life REIT has revalued its portfolio from S$775.3m at 17 Jul 07 to S$831.6m at S$831.6m at 31 Dec 07. This is an increase of S$56.3m or 7.3%. The appraised value for hospitals are based on discounted cash flow while the appraised value for medical centre units at Mount Elizabeth Medical Centre (S$5.7m per medical centre unit) and Gleneagles Medical Centre (S$2.5m per medical centre unit) are based caveats lodged. NAV/share for Parkway Life REIT has therefore increase by 8.8% to S$1.36.
Investment grade rating from Fitch boost debt capacity. Parkway Life REIT will pursue yield accretive acquisitions focusing on Singapore, Malaysia, Thailand, India and China. The company has received investment grade rating of BBB+ from Fitch Rating on 19 Feb 08. Its maximum permissible gearing has increased from 35% to 60%. Additional debt capacity to fund acquisition has increased from S$410m to S$1,200m.
Parkway Life REIT will diversify in terms of asset type. It will seek investments in ambulatory surgery centres, primary clinics, medical office building, step-down care facilities such as nursing homes, research & development (R&D) facilities and pharmaceutical storage and distribution facilities. Parkway Life REIT targets to targets to double size of portfolio to S$1.6b by end-09.
Reiterate BUY. Parkway Life REIT provides strong defensive qualities. It benefits from revenue growth at Mount Elizabeth Hospital, Gleneagles Hospital and East Shore Hospital as variable rent is 3.8% of adjusted hospital revenue. Our target price is S$1.72 based on the discounted dividend model (discount rate: 7.1%, terminal growth: 3%).