Author: tfwee
CRCT – BT
CRCT seeks approval to retain Beijing mall, raise up to $280m
CAPITARETAIL China Trust (CRCT) wants approval from unitholders to keep its main income generator Wangjing Mall for another six months and to raise equity of up to $280 million to help acquire Xizhimen Mall. Both malls are in Beijing.
CRCT does not have legal title to Wangjing Mall – only contractual rights to the property. Legal title is still pending formal approval from the Chinese authorities. If this is not obtained within 12 months of CRCT’s Dec 8, 2006 listing date, the trust needs the nod from unitholders to retain the mall in its portfolio for another six months.
Wangjing Mall, which is almost fully let, is projected to contribute 33.2 per cent of the distribution per unit (DPU) from CRCT’s enlarged portfolio, including Xizhimen Mall, for the year ending Dec 31, 2008.
The forthcoming $336 million acquisition of Xizhimen Mall will boost CRCT’s portfolio to eight malls worth almost $1.2 billion and take the trust closer to its target asset size of $3 billion by 2009. The acquisition will boost projected FY2008 DPU 10.3 per cent to 7.2 cents, assuming the new issue is priced at $2.50 a unit.
The equity fund-raising exercise will involve the issue of 112 million new units for offer and placement to existing unitholders and new institutional and retail investors.
Assuming CapitaLand and CapitaMall Trust, which each own 20 per cent in CRCT, subscribe for the new units to maintain their existing stakes in CRCT, $168 million will need to be raised from other parties, making the equity fund-raising exercise ‘highly palatable’, Hsuan Owyang, chairman of CapitaRetail China Trust Management, said in a statement yesterday.
Besides the equity fund-raising exercise, CRCT will seek additional borrowings of about $88 million. The balance of the proceeds beyond the $344 million total acquisition cost of Xizhimen Mall, including related fees and expenses, will be used for working capital and capital expenditure. CRCT’s aggregate leverage will drop from 31 per cent to 28.7 per cent, giving it flexibility to undertake future acquisitions and asset enhancements.
An extraordinary general meeting to obtain untiholders’ approval will be held on Dec 4, 2007 and the proposed equity fund-raising exercise will be carried out no later than January 2008.
CRCT is buying the seven-storey Xizhimen Mall, which officially opened in September this year, from CapitaRetail China Incubator Fund.
The proposed acquisition includes an agreement to buy a planned extension to the mall’s basement 1 from Beijing Finance Street Construction Development Co, the original developer of the Xihuan Plaza complex where the mall is located.
Office REITs – UOBKH
Office REITs
Cooling off in bidding for office site
Auction for Marina View Land Parcel B located diagonally behind One Shenton has closed with only two bids, reflecting cautiousness for commercial properties due to the sub-prime mortgage crisis in the US. Marina View Land Parcel B has site area of 0.9hectare and can be developed into maximum gross floor area of 1.2m sf with at least 60% utilised for office and at least 25% utilised for hotel.
The top bid from MacQuarie Global Property Advisors came in at S$952.9m or S$779.42psf ppr. This is lower than CB Richard Ellis’ expectation of S$1,200 to S$1,300. Knight Frank has expected bids of between S$1.1b to S$1.3b or S$900 to S$1,060psf ppr. The second bid from CapitaLand came in at S$898m or S$734.52psf ppr. Some industry players are concerned that the latest site may not be awarded because the reserve price may not have been met.
Monthly gross rents of Grade A office space in Raffles Place increased by 18.2% qoq to average at $15.00psf in 3Q07. Capital values of Grade A office space in Raffles Place has also risen 23.8% qoq to an average of $2,416psf (source: Colliers International). K-REIT Asia and Suntec REIT have also recently acquired one-third stakes in One Raffles Quay at S$941.5m or S$2,115psf.
The limited supply of office space coming on stream over the next three years will provide some cushion for office properties. However, the cooling off in bidding for office sites within the Central Business District will have a dampening effect on share price for office REITs such as K-REIT, Suntec REIT and CapitalCommercial.
First Reit – SGX
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LMIR – UOBKH
Issue statistics:
Offer size: 645.469m units (subject to Over-Allotment Option of 58.738m units)
Public Tranche – 20.000m units
Placement Tranche – 625.469m units
Price: S$0.80
NAV per Unit (post-IPO): S$0.91
Forecast Yield: 7.3% (FY08) ; 7.8% (FY09)
Market Cap (post-IPO): S$963.316m
Open: 12 Nov 2007
Close: 15 Nov 2007, 12.00p.m.
Trading: 19 Nov 2007, 2.00p.m. (on “ready” basis)
Lead Manager: UBS, BNP & OCBC
Background
Lippo-Maple Tree Indonesia Retail Trust (LMIR Trust)’r property portfolio comprises seven Retail Malls and seven Retail Spaces, valued at S$1004.7m. As at 30 June 2007, the Retail Malls with a NLA of 219.392 sqm had a weighted average occupancy of approximately 91.6% based on Committed Leases. The Retail Spaces, with total NLA of 94,070 sqm, are master-leased to PT. Matahari Putra Prima Tbk, Indonesia’s largest retailer for an initial term of 10 years with fixed rental growth of 8.0% per annum for the first four years and a revenue sharing formula thereafter.
LMIR Trust’s distribution policy is to distribute 100% of its tax-exempt income and capital receipts from 2007 to 2009, and at least 90% of its tax-exempt income thereafter. Distributions will be paid on a quarterly basis for the three-month periods ending on 31 March, 30 June, 30 September and 31 December each year. The projected DPU for FY08 and FY09 are 5.84 and 6.27 cents respectively.
LMIR – BT
Lippo launches retail Reit IPO, aims to treble size by end-09
Trust comprises 7 Indonesian malls and 7 retail spaces in other malls
THE Lippo Group aims to triple the portfolio size of its latest real estate investment trust (Reit) to $3 billion by end-2009, the Reit’s manager said yesterday.
The Lippo-Mapletree Indonesia Retail Trust (LMIR Trust), which will be the first Singapore-listed Reit to offer exposure to Indonesia’s retail sector, aims to raise $516.4 million from its initial public offering (IPO).
The trust, which has an initial portfolio of seven Indonesian shopping malls and seven retail spaces in other malls, will sell 645.5 million units at 80 cents each.
The trust had earlier gave an indicative range of 78-91 cents a unit for the IPO.
Of the offer, some 625.5 million units have been placed with institutional and other investors – and is 1.6 times subscribed – while the remaining 20 million are being offered to the public.
‘Investors we met during the roadshows welcome this opportunity to participate in Indonesia’s growing retail sector, given Indonesia’s robust economic fundamentals underpinned by a growing and affluent urban middle-class population of about 66 million consumers,’ said Viven Sitiabudi, chief executive of the Reit’s manager.
PT Lippo Karawaci, Indonesia’s biggest listed real estate developer, will hold 27 per cent of the trust after the unit sale, while Singapore’s Mapletree Investments will own 12 per cent, the trust said.
LMIR Trust is projecting a yield of 6.9 per cent for 2007, 7.3 per cent for 2008 and 7.8 per cent for 2009, it said.
The public offer will close at noon on Nov 15 and trading is expected to start on Nov 19 at 2pm.
The trust is listing at a time when market sentiment is poor.
Japanese trust Saizen Reit tumbled 14 per cent on its debut on Friday, while Japan’s Asia Pacific Land delayed its $514.9 million Singapore IPO last week, citing ‘negative market sentiments’.
But Ms Sitiabudi said that she is confident of LMIR Trust’s quality, even as Lippo’s Indonesian hospital trust First Reit, which was listed last December, fell below its IPO price last week.
‘The market goes up and down, but we’re confident of the quality of our product,’ she said.
Lippo president Stephen Riady, who was speaking to reporters at a news conference to launch the trust, said that the group plans to list two to three Reits – worth some US$3-4 billion in all – in Singapore over the next two to three years.
‘These new Reits would most likely be for hotels, offices and for retail malls outside of Indonesia,’ Mr Riady said.