Author: tfwee
Cambridge – BT
Cambridge Reit posts Q2 net of $8m
CAMBRIDGE Industrial Trust (CIT) yesterday reported distributable income of $8 million for the second quarter ended June 30, beating its forecast of $6.8 million. Distribution per unit (DPU) is 1.560 cents for the period, said Cambridge Industrial Trust Management (CITM), the manager of the trust. CIT was listed in July last year.
‘We’re pleased that our acquisition efforts are paying off,’ said Ang Poh Seong, CEO of CITM.
CIT’s total net distributable income of $8 million for the quarter represents an annualised yield of 6.62 per cent, based on the closing price of 94.5 cents per unit on June 29, he said.
Annualised DPU of 6.257 cents is 22.2 per cent more than the forecast DPU.
The trust said all its properties are signed with long leases ranging from 5 to 15 years, with fixed rental escalation. The weighted average remaining lease term of CIT’s existing portfolio of 32 properties remained stable at 7.15 years as at the end of June. CIT has a portfolio of 32 properties with 507,800 square metres of lettable area valued at $662.4 million.
About 41.6 per cent of the portfolio is in the logistics and warehousing sector, with the next significant segment in the light industrial space accounting for 32.8 per cent. The remaining properties are represented across a well-diversified spectrum of tenant uses such as car showrooms, self-storage facilities as well as industrial and warehousing.
The overall occupancy of CIT’s portfolio of 32 properties remained at 100 per cent.
CIT said: ‘The demand for quasi-offices will spill into the demand for light industrial space resulting from the current rental pressure on prime office space in the Central Business District.’
Fortune – BT
Fortune Reit H1 profit rises 1.5% to HK$143.3m
FORTUNE Real Estate Investment Trust has reported a net profit – income available for distribution – of HK$143.3 million (S$27.7 million) for the first half of 2007, up 1.5 per cent from a year ago.
Total revenue for the Reit, which holds 11 retail malls in Hong Kong, was down slightly by 0.8 per cent due to vacancies arising from repositioning and asset enhancement initiatives at some of its malls.
The Reit, which is partly owned by Li Ka-Shing’s Hong Kong flagship Cheung Kong Holdings and listed on the Singapore Exchange (SGX) mainboard, has not made any acquisitions since 2005.
Justin Chiu, chairman of ARA Asset Management, which manages the Reit, said, however, that due to the ‘stabilisation of the interest rate environment’, it could now be looking to acquire more properties.
‘We are looking at opportunities in China, but looking at it cautiously,’ he said, adding that ARA was also looking at properties in Hong Kong, and that Cheung Kong has, ‘a lot of properties’.
Fortune Reit has not revealed a target portfolio size. Mr Chiu said: ‘We don’t want to limit ourselves.’
Fortune Reit currently has a gearing ratio of 24.6 per cent. Based on the 35 per cent cap for Reits that are not rated, it estimates that it has a further debt flexibility of about HK$1.5 billion.
Mr Chiu also emphasised that Fortune Reit could raise its gearing to 60 per cent to fund future acquisitions if required. He said the Reit might seek a rating, depending on the size of possible acquisitions. ‘It only takes about a month to get a rating,’ he added.
The portfolio’s base rent also increased by 4.8 per cent to HK$24.54 psf on a year-on-year basis.
Fortune Reit reported yesterday that its annualised tax exempt yield was 5.4 per cent based on the closing unit price of HK$6.60 as at June 29. At the close of trading yesterday, Fortune Reit ended at HK$6.25 per unit, up five cents.
Rental reversion for renewals in H1 was 11 per cent. The better performing malls such as Ma On Shan Plaza, Waldorf Garden Property and City One Shatin Property registered rental reversions of 40 per cent, 18.7 per cent and 11.4 per cent respectively.
CDLHTrust – BT
CDL Hospitality Trusts’ Q2 earnings beat forecasts
Income available for distribution to holders of stapled securities is $14.8m
CDL Hospitality Trusts (CDL HT) has reported better-than-projected earnings for the second quarter. CDL HT – a stapled group comprising CDL Hospitality Real Estate Investment Trust (H-Reit) and CDL Hospitality Business Trust – said yesterday its income available for distribution to holders of stapled securities amounted to $14.8 million, from April to June this year. That’s 52 per cent higher than the $9.8 million which it projected, in its initial public offering (IPO), that it would earn during the three-month period.
Second-quarter gross revenue was $20.7 million, 48 per cent higher than projected. Its net property income totalled $19.5 million, 52 per cent higher than forecast, and its net income amounted to $18.0 million, more than double the $8.7 million expected.
Its income available for distribution per stapled security came to 2.11 cents for the period – and 8.46 cents on an annualised basis. The total number of stapled securities was 702.4 million. Its annualised distribution yield was 10.19 per cent, based on its IPO price of 83 cents, and 3.69 per cent, based on its closing market price of $2.29 on Monday.
For the entire half-year period from January to June this year, CDL HT reported income available for distribution to holders of stapled securities of $27.1 million – some 40 per cent more than projected. Its revenue was $38.7 million, 38.8 per cent more than IPO projections.
CDL HT listed on the Singapore Exchange on July 19. It now owns five hotels and one shopping arcade in Singapore – Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel, Copthorne King’s Hotel, Orchard Hotel Shopping Arcade and Novotel Clarke Quay – as well as one hotel in New Zealand, the Rendezvous Hotel Auckland.
The trust also said it had benefited from the positive growth of the tourism and the hotel sector. Its average occupancy rate in the January-June half was 84.4 per cent, against an indicative 78.6 per cent. Its average daily room rate was $193 for the six months, against an indicative $160.
‘CDL HT has grown and performed very well in the last six months,’ said Vincent Yeo, CEO of M&C Reit Management Limited, manager of H-Reit. ‘As Singapore’s largest hotel operator by number of rooms, we are well-positioned to capitalise on the current growth in the tourism and hotel sectors. In addition to the strong organic growth inherent in our portfolio, we will continue to seek yield-accretive acquisition opportunities to deliver higher returns to our security holders.’
Suntec – OCBC
Upgrade on One Raffles Quay acquisition
Results are in line. Suntec REIT reported 3Q07 revenue of S$46.7m; +6% YoY but flat QoQ. Distributable income was equally strong at S$30.m; +23% YoY and +7% QoQ. At the DPU level, growth was more moderate at +12% YoY and +7% QoQ to 2.1 cents. Growth was mainly due to the increase in office revenue at Suntec City and Park Mall as well as the newly acquired strata space from Suntec City. However, higher property expenses eroded much of the better revenue. This led to cost to income ratio rising from 24.4% (2Q07) to 26.9% (3Q07). The results are broadly in line with our estimates.
Buys One Raffles Quay. Separately, Suntec’s manager ARA Trust Management (ARA) announced that it has acquired a one-third stake in One Raffles Quay (ORQ) for S$941.5m from Cheung Kong. The acquisition includes a rental top up of S$103.48m. In our opinion, the best way to view this rental top up is in the form of a discount. ORQ’s actual value net of the income support is thus S$838m or a reasonable S$1,877 psf. No rental details were provided; however, assuming an average rental of say S$10 psf/mth, this translates to an NPI of S$40.2m or a capitalized rate of 4.8%. Presently Suntec is trading at a yield of 4.4%, so ORQ should be marginally accretive. However, allowing for the rental top-up, an extra S$17.0m NPI could be recognized. This in turn will boost ORQ’s yield to 6.1% making the acquisition very accretive. Even though this scheme is innovative to the office sector, it has been used previously in the industrial REIT sector. In light of this acquisition, we have adjusted our FY08F from 8.70 cents to 8.84 cents.
Upgrade to BUY with revised fair value of S$2.18. Over the last quarter, Suntec has corrected from a peak of about S$2.10 to the current level of S$1.86 or by about 11%, which is close to our fair value of S$1.82 (based on asset size of S$4.5bn). However, in light of the ORQ acquisition, Suntec has reached our target asset size. We thus revised up our target size to S$5.5bn and hence our fair value to S$2.18. With over 17% potential upside to our fair value and a FY08F trading yield of 4.75%, the investment case for Suntec is looking compelling. We thus upgrade our rating from HOLD to BUY.