Author: tfwee
CMT – DBS
Office extension, the sequel
Comment on Results
• Revenue and NPI grew by 40% and 45% y-o-y to S$114.5m and S$76.8m respectively. DPU for 3Q07 grew by 19% to 3.4 cts and 9.52 cts.
• For 3Q07, distribution income was retained as CMT continues to dish out Asset Enhancement Initiatives (AEIs). CMT is expected to dish out S$168.6m and S$127.2m for capex in FY07 and FY08 respectively for the whole portfolio. For 3Q07, approx.
S$1.6m was retained by CRCT, which together with the S$4.6m retained in 1Q07, we estimate a DPU kicker of approx. 0.4 cents for 4Q07.
• CMT’s gearing has reached 40%, which suggests an equity raising is imminent for a sizable acquisition. Interest cover remains healthy at 4.9x, and average cost of debt remains stable at 3.5%.
Recommendation
• Apart from decantation of space to create a four-storey retail extension block with 16,500 sf NLA at Lot One Shopping Mall (CRS portfolio), CMT has also announced that URA has granted Tampines Mall a plot ratio increase from 3.5 to 4.2. This creates an additional 95,000 sf of office space, approved for a new office development.
• We are positive on CMT with its consistency in dishing out AEIs, which are integral for the growth of the REIT management business (34% of total DPU growth since listing). With a strong developer sponsorship from CapitaLand, we are also positive about CMT reaching its asset size of S$7bn by FY09. Maintain Buy, target price slightly raised to S$4.34 based on DCF valuation to factor in the announced asset enhancements.
AREIT – DBS
Turning to development projects?
Comment on Results
• Gross revenue and net income available for distribution grew 15% yo-y to S$80.2m and $46.5m respectively, due to additional rental income from completed acquisitions. DPU increased 11% to 3.51 cents.
• As at 30 Sep 07, A-REIT has an aggregate leverage of 38.4%, with an average 91% of interest exposure fixed at a weighted average cost of 3.43% for a term of 4.2 years.
• A-REIT announced that it has committed to develop projects (i.e. Plot 8 Changi Business Park and an industrial facility at Pioneer Walk) at a total cost of S$277m.
Recommendation
• As the environment for third-party acquisitions gets increasingly more difficult in Singapore, we are positive on the move by A-REIT to undertake more development projects, which provide better yields.
• We have reduced our DPU forecast for FY08 and FY09 by 4% and 6% respectively, given that A-REIT has not made any announcements on income-yielding acquisitions in 1HFY08. As we have already assumed an acquisition pipeline of S$400m pa till 2010 in our valuation, the net impact of the inclusion of the development projects (phased over FY09 to FY11) and lower DPU is a slight increase of target price to S$3.18 (based on DCF valuation).
FrasersCT – SGX
Frasers Centrepoint Trust closes first full year with DPU 12% above forecast
- Full year 2007 DPU of 6.55 cents
- FCT to acquire Northpoint 2. Four malls for injection over the next three years
- FCT will start on its second mall enhancement initiative at Northpoint in first quarter 2008
- “We are firing well on all cylinders,” says CEO Christopher Tang
FCT’s distributable income for fourth quarter 2007 (period 1 July to 30 September 2007), was S$10.3 million, 13.5% higher than the forecast of S$9.1 million. This translates to a distribution per unit (“DPU”) of 1.67 cents. Full year DPU was 6.55 cents, an increase of 12.0% above the forecast of 5.85 cents.
In fourth quarter 2007, gross revenue was S$19.8 million with net property income at S$12.8 million. In spite of the Anchorpoint asset enhancement programme which began in May 2007, the weighted average occupancy rate of FCT’s portfolio was 94.5% as at 30 September 2007. Causeway Point and Northpoint achieved occupancy rates of 99.9% and 100.0% respectively. Anchorpoint’s occupancy rate was 52.0% as sections of the mall had been vacated for asset enhancement and repositioning works. There was strong rental reversion, with new and renewed leases recording an increase of over 12% above preceding rates. “This demonstrates the trend for strong and sustainable rents for FCT’s malls, and our asset enhancement initiatives will benefit tenants and pave the way for further rental growth,” said Mr Christoper Tang, CEO, Frasers Centrepoint Asset Management Ltd, the Manager of Frasers Centrepoint Trust.
“We are firing well on all cylinders. FCT’s primary focus is to be a leading retail mall owner and manager delivering sustainable DPU growth through four strategic growth thrusts. And on all four we have a healthy state of report,” he says. The four thrusts are building up a pipeline of quality malls for future injection into FCT; growth through increasing rental reversions; growth through asset enhancement initiatives; and growth through overseas expansion.
Source : SGX