Author: tfwee
KREIT – UOBKH
Proposed Maiden Acquisition of One Raffles Quay
Proposed maiden acquisition of One Raffles Quay. K-REIT has announced the proposed maiden acquisition of one-third interest in One Raffles Quay for S$941.5m from the its sponsor, Keppel Land’s divestment of the property. It has also entered into a conditional share purchase agreement with Boulevard for the acquisition, who will provide K-REIT with an income support of S$103.4m through 2011 should the financial performance of the property does not meet certain requirements. The acquisition will be funded through equity fund raising whereby Keppel Land will subscribe to the issued new units to maintain its proportionate stake of 40.7% in K-REIT.
One Raffles Quay – Prime office property. One Raffles Quay is one of the largest prime office building with an NLA of 1.3m sf located in the heart of CBD. It comprises of a 50-storey North Tower and a 29-storey South Tower, with an underground link to the Raffles MRT station, a plaza featuring a water fountain, and a sheltered drop-off point and carpark hub with 713 carparking lots. The property also boasts of large banks and financial institutions such as ABN AMRO, Deutsche Bank AG, Ernst & Young and UBS AG as its tenants.
Potential trigger to a series of injections. With the first seen divestment of interest in One Raffles Quay from Keppel Land to K-REIT, we believe this is only the start to a series of potential injections of properties into K-REIT from its parent. The proposed acquisition will also bring K-REIT’s portfolio to S$1.6b from S$677m, a step nearer to meeting its target portfolio of S$2.0b over the next few years.
Maintain BUY, target price at S$3.39. We have previously assumed S$100m-150m of acquisitions p.a in our model, and will be revising our acquisition assumptions to accommodate a more aggressive scenario. Currently, it has a gearing of 28.0%. We re-iterate BUY on K-REIT with a target price of S$3.39. The stock is currently trading at a yield of 2.57%.
Cambridge – SGX
Cambridge Industrial Trust’s (“CIT”) DPU outperform forecast by 22.2%
Highlights:
• Annualised distribution per unit (“DPU”) of 6.257 cents is 22.2% higher than the forecast DPU of 5.120 cents for the second quarter ended 30 June 2007.
• Net Property Income of S$11.0 million exceeds IPO forecast by 22.8%, total Distributable Income to Unitholders exceeds forecast by 18.5%, giving DPU of 1.560 cents for the second quarter ended 30 June 2007.
• In 2Q2007, three investment properties valued at S$40.4 million were acquired bringing total investment properties under management to S$662.4 million as at 30 June 2007.
• Option Agreements with a total asset value of approximately S$196.38 million were signed and announced to date. MOUs for approximately S$82.47 million worth of properties were entered into as at 31 July 2007.
Source : SGX
CMT – OCBC
Guiding for larger size
Slightly worst off than 1Q. CapitaMall Trust (CMT) reported a modest set of 2Q07 results with revenue rising 35.8% YoY and 6.7% QoQ to S$103.9m. Income available for distribution (IAD) grew 27.6% YoY, but down 5.2% QoQ to S$48.8m. CMT declared 2Q DPU of 3.12 cents or +13% YoY and +4.0% QoQ. This is slightly below our forecast of 3.16 cents. The anomaly between sequential decline in the IAD and a sequential growth in DPU was due to a low DPU base. In 1Q07, CMT distributed only 90% of its IAD. If 100% of its 1Q07 DPU were distributed, its 1Q07 DPU would have been 3.3 cents (instead of 3.0 cents) resulting in 2Q07 seeing a 5.5% sequential decline, which is comparable to its IAD negative growth.
Higher operating costs and management fees to blame. CMT’s better sequential top-line performance was mainly attributed to the acquisition of 72.8% of CapitaRetail Singapore (CRS) bonds. However, the better revenue could not offset its higher operating costs which rose 19.3% QoQ. This was compounded by higher manager/trust fees which rose 22.7% QoQ. The net effect is that CMT suffered NPI margin decline of 4% QoQ to 65%. CMT attributed the higher operating costs to higher property tax and higher marketing and maintenance expenses. As for the higher managers’ fees, this was probably due to higher fees from the revaluation of its portfolio. An extra S$290m in revaluation surplus was added in 2H07.
Completed acquisition of CapitaRetail Singapore bonds. Over the last quarter, CMT completed the acquisition of 72.8% of CRS class E bonds for an aggregate value of S$516.9m. As CMT previously already owned 27.2% of CRS, it now owns 100% of CRS bonds and hence all the 3 malls within CRS.
Maintain HOLD. With the CRS acquisition, CMT’s asset size has been boosted from S$4.6bn (end 2006) to S$5.6bn (including revaluation surplus of S$290m from recent revaluation). Furthermore, with the likelihood of CMT acquiring a development project soon, it is on target to achieve an asset size of S$7.0bn by 2009. In light of this, CMT has revised up its target asset size to S$8.0bn by 2010. Even with the revalued portfolio, CMT is not cheap, trading at a very high price-to-book of over 1.75x and with yield at about 3.5%. We thus maintain our HOLD rating and fair value of S$3.44.
Suntec – SGX
SUNTEC REIT ACQUIRES STATE LAND ALONG PENANG ROAD
Singapore, 30 July 2007 – ARA Trust Management (Suntec) Limited (“ARA Suntec”), the
Manager of Suntec Real Estate Investment Trust (“Suntec REIT”), is pleased to announce the acquisition from the State today, a strip of land of about 1,261 square metres (13,572 square feet) along Penang Road, at a land premium of S$14.5 million for amalgamation with Park Mall to create an additional floor area of 5,825 square metres (62,704 square feet) for the property.
The total acquisition cost of the land amounted to S$15.9 million. With the additional floor area, the total permissible gross floor area for Park Mall will increase to 41,492 square metres (446,622 square feet).
Mr Yeo See Kiat, Chief Executive Officer of ARA Suntec, said, “The acquisition of the
subject land and the creation of the additional floor area would enable us to implement a more comprehensive asset enhancement program for Park Mall, which would significantly add value to the REIT and our unitholders. Details of the asset enhancement program will be unveiled in due course.”
Source : SGX
Suntec – SGX
SUNTEC REIT TO ACQUIRE ONE-THIRD STAKE IN ONE RAFFLES QUAY
ASSETS UNDER MANAGEMENT INCREASES TO S$4.81 BILLION, OFFICE PORTFOLIO TO 1.82 MILLION SQUARE FEET
Singapore, 30 July 2007 – ARA Trust Management (Suntec) Limited (“ARA Suntec”), Manager of Suntec Real Estate Investment Trust (“Suntec REIT”), is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited, as trustee of Suntec REIT, has entered into a conditional share purchase agreement with Cavell Limited (the “Vendor”) for the acquisition by Suntec REIT of a onethird interest in One Raffles Quay through the acquisition of the entire issued share capital of Comina Investment Limited (“Comina”). Comina is a special purpose holding company holding one-third of the issued share capital of One Raffles Quay Pte Ltd (“ORQPL”), the developer and owner of the Property.
The proposed one-third stake in One Raffles Quay is at a purchase value of S$941.5 million. The acquisition is expected to be yield accretive for Unitholders, taking into account the rental top up payments of S$103.48 million (inclusive of GST) over 54 months to be provided by the Vendor. It will also provide further geographical and income diversification for Suntec REIT. The Manager is currently reviewing various financing options for the Acquisition, including without limitation the issuance of units, loans, convertible bonds or other debt securities, or any combination of the aforesaid.
The acquisition is targeted for completion by the first quarter of FY2008. Upon completion, Suntec REIT’s total assets under management would increase to S$4.81 billion.
Mr. Yeo See Kiat, Chief Executive Officer of ARA Suntec, said, “This is a rare opportunity to own a key development such as One Raffles Quay, which offers excellent growth potential. This is in line with our strategy to focus on the exciting Marina Bay growth corridor in acquiring quality assets that would provide stable income streams and significantly enhance the income diversification of the REIT.”
“Given the increased portfolio exposure to the rising office market, we are pleased that this acquisition would allow us to deliver more value to our unitholders.”
Iconic development in the heart of Singapore’s upcoming financial hub
One Raffles Quay is a prime landmark office development situated within the new Business Financial Centre in the Marina Bay precinct with direct accessibility to Raffles Place MRT, a key interchange station in the heart of Singapore’s Central Business District.
Well-positioned to capitalise on the future growth of the area, the property offers a strategic fit in Suntec REIT’s existing portfolio of assets and allows greater exposure to Singapore’s rising office market, underpinned by strong demand for quality office space. Upon completion, the enlarged portfolio of 1.82 million square feet of office space will include reputable tenants such as ABN Amro Asia Pacific Pte Ltd, Barclays PLC, Credit Suisse (Singapore) Limited, Deutsche Bank AG, Ernst & Young Services Pte Ltd and other major financial institutions in addition to Suntec REIT’s existing strong tenant base.
Source : SGX