Author: tfwee
AscottREIT – UOBKH
2Q07: Results Boosted By Contributions From New Acquisitions
Strong topline growth from contributions of new acquisitions. Ascott Residence Trust’s (ART) reported strong revenue growth of 55% qoq at S$40.6m, on the back of contributions from six additional properties acquired in 2Q06. The strong revenue growth filters down to an impressive 58% qoq increase in distributable income of S$12.1m, implying a DPU of 2.01Scts (18% qoq increase). Amongst the markets, Vietnam and Singapore achieved the strongest performance, with double-digit growth in revenue and gross profit.
Strength in making strategic acquisitions. ART is the world’s only pan Asian serviced residence REIT. It was listed with an initial portfolio of 12 strategically located assets of about S$856m in total asset size in seven pan-Asian cities (Singapore, Australia, China, Indonesia, Japan, Philippines and Vietnam), and had grown to the current S$1.2b portfolio size, comprising of 18 properties. Going forward, we believe that ART will continue to make strategic acquisitions and benefit from the benign hospitality segment globally.
FrasersCT – OCBC
3Q beats forecasts
3Q was better than expected. Frasers Centrepoint Trust’s (FCT) delivered 3Q07 revenue of S$18.9m, up 4.0% YoY, with distributable income of S$10.3m and DPU of 1.67 cents. Distributable income was higher than FCT’s own forecast by about S$1.2m and this was attributed to higher Other Revenue and Income support from its sponsors due to the renovation works at Anchorpoint. The results beat our estimates by about 5%.
Completed acquisition of H-REIT. In the last quarter, FCT announced the completion of the acquisition of a 27% stake in Hektar REIT (H-REIT), a Malaysian retail REIT for S$46.6m as well as a 40% stake in the manager, Hektar Asset Management Sdn Bhd. FCT will fully fund these investments by debt. Even though the current investment into H-REIT is small (H-REIT’s two assets are worth RM523m), and the accretion to DPU is minimal at 0.21 cents, we nevertheless view these investments positively. This is because H-REIT has good growth potential. It has a pipeline of acquisitions that could potentially grow its NLA by 2.3x over the next 3 years. More importantly, these investments provide FCT with an additional avenue of
growth as well as a platform for it to get into the retail market scene in Malaysia.
Asset enhancement on Anchorpoint to complete in 1Q08. FCT is presently revamping Anchorpoint Shopping Centre (ASC). It is repositioning ASC as a village mall concept, offering a wider range of F&B outlets. The project is slated for completion in Nov 2007 and thus will only impact earnings from 1Q08. In terms of lease commitments, FCT has already or is near to securing about 80% occupancy and we do not see an issue in getting 100% commitments by November with the current boom in the retail market space. Beyond ASC, asset enhancement works (AEW) are likely to be carried out at Northpoint and Causeway Point. These projects
are likely to have greater impact on FCT’s earnings due to their significantly larger spaces. However, we do not expect the completion of AEW at Causeway Point until 2008.
Maintain HOLD. While we are positive on FCT’s new growth initiative coming from H-REIT, presently there is not much clarity on the DPU accretion from this acquisition. Hence, we have not factored in this in our valuation. We would prefer to wait for more news before revising our rating and fair value of S$1.67. We thus maintain our HOLD rating for now.
FirstREIT – BT
First Reit goes on acquisition trail
It aims to boost its asset portfolio to $500m by 2009
FOLLOWING the recent announcement by First Real Estate Investment Trust that its distributable income of $4.5 million for the second quarter exceeded forecasts by 3.8 per cent, the Reit is embarking on an acquisition trail to raise asset portfolio to $500 million by 2009.
Singapore’s first healthcare real estate investment trust recently completed its acquisition of Adam Road Hospital for $14.9 million.
With its first hospital acquisition in Singapore, earnings from hospitals will contribute further to First Reit’s revenues.
In the second quarter ended June 30, First Reit reported that net property income rose 8.6 per cent to $6.5 million on the back of maiden contributions from its three recently acquired nursing homes in Singapore.
‘We believe that our yield of 8.19 per cent continues to be one of the highest among Singapore Reits. With a clear focus in Asia’s booming healthcare sector, First Reit offers investors a unique and growing asset class which holds immense potential for yield and capital growth,’ said Bowsprit Capital Corporation chief executive Ronnie Tan, who manages the Reit.
Since its listing in December, First Reit has expanded its asset base by about 20 per cent and now holds eight healthcare assets totalling $308 million. It has four assets in Indonesia, three of which are hospitals. In Singapore it has three nursing homes and a hospital.
Dr Tan said: ‘We will continue to be fairly aggressive in looking for assets, not only in Indonesia and Singapore but we are very keen to look at Chinese assets. In the near term, China will present us with very good opportunities and we hope that in three to six months we will be able to firm up positions in China.’
In Singapore, First Reit will continue to look for further nursing homes. Dr Tan said they provide a stable business in the long term, due to Singapore’s ageing population.
The Singapore Reit is also exploring potential acquisitions with its Indonesian sponsor Lippo Karawaci. Possible projects include Siloam Hospitals Lippo Cikarang and Siloam Hospital Semanggi, which will house Indonesia’s first private cancer treatment centre.
To finance its acquisitions, First Reit has a $90 million term loan facility with OCBC. Including the latest acquisition of Adam Road Hospital, First Reit’s gearing stands at 16.5 per cent.
First Reit’s distribution per unit for the second quarter was 1.65 cents – 3.8 per cent above forecast. The Reit’s shares closed at 82 cents yesterday, up 1.2 per cent.
AscottREIT – SGX
ART’S UNITHOLDERS’ DISTRIBUTION 58% ABOVE 2Q 2006
Achieved DPU growth of 18% in 2Q 2007 vs 2Q 2006
Singapore, 25 July 2007 – Ascott Residence Trust (ART) achieved a unitholders’ distribution of S$12.1 million for the period 1 April 2007 to 30 June 2007, a 58% increase over the same period last year. Distribution per unit (DPU) for the same period is 2.01 cents, 18% increase over 2Q 2006. This is also 10% higher than the forecast DPU of 1.821 cents as stated in the Offer Information Statement dated 12 March 2007.
Based on the 2007 forecast annualised DPU of 7.272 cents and closing price of S$2.00 per unit on 24 July 2007, ART’s trading yield is 3.6%.
Mr Chong Kee Hiong, Ascott Residence Trust Management Limited’s (ARTML) CEO said: “Comparing 2Q 2007 against 2Q 2006, ART has clearly demonstrated its ability to acquire yield-accretive assets post-listing that have boosted unitholders’ distribution to S$12.1 million, and DPU to 2.01 cents, representing a 58% and 18% increase respectively.”
“ART’s properties have done well to report a performance better than forecast. This is attributed to higher revenue and gross profit achieved by the portfolio. In particular, our Vietnam and Singapore properties achieved the strongest performance, with double-digit growth in revenue and gross profit. ART is on track to deliver the forecast annualised DPU of 7.27 cents for the full year,” he added.
Mr Lim Jit Poh, ARTML’s Chairman said: “Since its listing in March 2006, ART has achieved a geographically-diversified asset portfolio, with properties located in both stable and emerging markets. Going forward, ART will further grow its portfolio by acquiring quality, yield-accretive serviced residences and rental housing from The Ascott Group as well as from third parties.”
ART’s portfolio currently comprises 2,942 serviced residence units in 18 properties in 10 cities across seven countries.
An advanced distribution of 1.50 cents per unit for the period 1 January to 25 March 2007 was paid on 28 April 2007. The next distribution of 2.10 cents per unit to be paid on 28 August 2007 will comprise ART’s distributable income for the period from 26 March 2007 to 30 June 2007.
1 The forecast is extracted from the Offer Information Statement dated 12 March 2007, prorated for 1 April 2007 to 30 June 2007.
2 This forecast is extracted from the Offer Information Statement dated 12 March 2007.
Source : SGX
FrasersCT – UOBKH
3Q07: Topline In Line With Forecast
Gross revenue of S$18.9m and NPI of S$12.6m in line with forecast. FCT reported a gross revenue of S$18.9m and NPI of S$12.6m, in line with forecast. DPU, however, was 14.4% above forecast at 1.67 Scts. Revenue growth was mainly a result of more than 90% of new and renewed leases from Causeway Point, which secured rental renewal rates of more than 10% above preceding rates. Northpoint also extended five expiring leases for a period of one year in anticipation of its pending asset enhancement in FY08.
Key driver from acquisitions and asset enhancements. FCT completed its acquisition of 27% stake in Hektar REIT in Jun 07, Malaysia’s only pure retail REIT listed consisting of suburban regional malls, Subang Parade in Selangor and Mahkota Parade in Malacca. Going forward for the next three years, we believe that the growth driver will come from acquisitions of Northpoint 2, Yew Tee Mall, Bedok Mall and Centrepoint, and also continued asset enhancements to Causeway Point, Northpoint and Anchorpoint.