Author: tfwee
First REIT – UOBKH
2Q07: Results Slightly Ahead of Forecast, More Plans Revealed
Results slightly ahead of forecast. First REIT’s Q2 results came in slightly better than its earlier forecasts. A S$6.50m net property income was achieved (8.6% ahead of its forecast), translating into a DPU of 1.65 Scts (6.59 Scts on an annualised basis), or 3.8% higher than its forecast. The increase in revenue and distributable income was attributed to maiden contributions from its three recent acquisitions (Lengkok Nursing Home, Senja Nursing Home and Lentor Nursing Home).
Asset enhancements to Adam Road Hospital. Besides the recent three nursing homes acquisitions, First REIT has also just completed its fourth acquisition of Adam Road Hospital. It intends to undergo major asset enhancements to Adam Road Hospital and will convert it from a primarily psychiatric hospital to one which provides mainly general hospital services such as day-care surgery and dental services for higher profitability. Post enhancements, psychiatric services will only contribute a small portion to its revenue.
Pipeline of hospitals identified for steady acquisition trail. With the addition of four new properties, total portfolio asset size of First REIT currently stands at about S$308m. We believe it is on track to meet management’s target portfolio of S$500m by 2009. It is already in negotiations to acquire an asset in China, and also seriously looking for opportunities in key cities (Beijing, Shanghai and Shenzhen) of China, Malaysia, Vietnam, Philippines, and Thailand. Besides acquiring assets from other vendors in the region, First REIT is also exploring potential asset injections from its sponsor, Lippo Karawaci. Potential pipeline includes Siloam Hospital Lippo Cikarang, Siloam Hospital Semanggi, which will house Indonesia’s first private cancer treatment centre (due completion in Dec 08), and also any potentially upcoming hospitals from expansion plans by Lippo Karawaci at Siloam Hospitals West Jakarta and Siloam Hospitals Surabaya.
Higher investors’ interests as more plans unravel. First REIT has been trading with low liquidity since launch, with a yield of 8.19% (based on 20th July 07’s closing price). We expect liquidity to improve as it unravels more plans which will generate investors’ interest.
Cambridge – SGX
CIT ACQUIRES THREE PROPERTIES FOR A TOTAL OF S$108.5 MILLION
The Proposed Acquisition
Cambridge Industrial Trust Management Limited (the “Manager”), the Manager of
Cambridge Industrial Trust (“CIT”), has identified the following Properties to be acquired by CIT (collectively known as the “Acquisitions”).
– 1 Tuas Avenue for a purchase price of S$32,500,000. DPU Impact : +0.0597 cents(2);
– 120 strata units of Enterprise Hub located at 48 Toh Guan Road East for a purchase
price of S$71,000,000. DPU Impact : +0.0937 cents(2); and
– Natural Cool Building located at 81 Defu Lane 10 for a purchase price of S$5,000,000. DPU Impact : +0.0077 cents(2)
(2) Based on simple annualisation on the audited results for the financial period ended 31 December 2006 and the assumption that CIT had purchased, held and operated the respective property for the same annualised period based on long term gearing ratio of 40%.
Note : The above is a modified short extract. For a full version, go to SGX Announcements (Click on link below)
Source : SGX
First REIT – SGX
First REIT’s 2Q07 distributable income up 3.8% to $4.5M as healthcare portfolio grows
Maiden contribution from three recently acquired nursing homes
2Q07 DPU of 1.65 Singapore cents represents an annualised distribution yield of 8.19%
Successfully completes fourth acquisition this year – Adam Road Hospital
SINGAPORE – 23 July 2007 – Bowsprit Capital Corporation (the “Manager”), the manager of First Real Estate Investment Trust (“First REIT”), Singapore’s first healthcare real estate investment trust, today announced that First REIT’s distributable income of S$4.5 million for the second quarter of FY2007 ended 30 June 2007 exceeded forecast by 3.8%.
At the same time, First REIT is also pleased to announce that it has successfully completed the acquisition of Adam Road Hospital for a purchase consideration of S$14.9 million. This represents First REIT’s fourth completed acquisition since its listing in December 2006 and clearly demonstrates its commitment to expand its asset portfolio and strengthen property income.
In the second quarter of FY2007, First REIT’s net property income rose 8.6% to S$6.5 million as maiden contributions from its three recently-acquired nursing homes in Lengkok, Senja and Lentor kicked in. Both the Lengkok and Senja nursing homes were acquired on 11 April 2007, while the acquisition of Lentor nursing home was completed on 8 June 2007.
First REIT’s distribution per Unit (“DPU”) for the second quarter was 3.8% higher than forecast, amounting to 1.65 Singapore cents, representing an annualised yield of 8.19% based on the closing price of S$0.805 per Unit on 20 July 2007.
The Books Closure and Distribution Payment dates are 1 August 2007 and 29 August 2007 respectively.
Commenting on First REIT’s results, Dr Ronnie Tan, Bowsprit’s CEO said, “We believe that our yield of 8.19% 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. We are well on an aggressive acquisition trail and the Management is confident of raising our asset portfolio to S$500 million before 2009.”
Indeed, since its listing in December 2006, First REIT has expanded its asset base by about 20%. It currently has eight healthcare assets totalling S$308.0 million, compared with four assets at S$257.0 million at IPO last year.
Capital Management
To fund its acquisitions, First REIT has in place a clear financing structure with a S$90 million term loan facility with the Oversea-Chinese Banking Corporation. S$51 million of the proceeds have been utilised to date for First REIT’s acquisitions. Including the latest acquisition of Adam Road Hospital, First REIT’s gearing stands at 16.5%.
“Compared with other REITs, our gearing is still relatively low and this gives us headroom to undertake more accretive acquisitions. We are currently in active negotiation with a number of vendors in the region, which we hope will lead to a few additional acquisitions soon,” added Dr Tan
Potential Acquisitions
Besides acquiring assets from other vendors in the region, First REIT is also exploring potential acquisitions with its Sponsor, Lippo Karawaci.
Potential pipeline includes Siloam Hospitals Lippo Cikarang, and a 29-storey, 210-bed specialist hospital, called Siloam Hospital Semanggi, which will house Indonesia’s first private cancer treatment centre with state-of-the-art equipment – the Mochtar Riady Comprehensive Cancer Centre (“MRCCC”). Collectively known as the “Building of Hope”, Siloam Hospital Semanggi and MRCCC is expected to be completed and operational by December 2008.
In addition, according to Lippo Karawaci, expansion plans are underway at Siloam Hospitals West Jakarta and Siloam Hospitals Surabaya. When completed, First REIT has the option of acquiring the expanded real estate under terms of the Master Lease agreement.
“First REIT has the benefit of a regional reputable sponsor that is committed to expanding its healthcare business. With the first right of refusal under terms of the Master Lease agreement, Lippo Karawaci’s growing healthcare facilities form a solid pipeline of potential acquisitions for us, while we continue to explore other acquisition targets in the region,” added Dr Tan.
Barring unforeseen circumstances, First REIT is confident of delivering on its 2007 forecast distribution of 6.51 cents.
AllCo – SGX
Asset Valuation of Allco REIT Properties
The Board of Directors of Allco (Singapore) Limited (the “Manager” or “Allco Singapore”), the manager of Allco Commercial Real Estate Investment Trust (“Allco REIT”) (SGX:ALLC) announces that independent valuations1 of the China Square Central, 55 Market Street, Central Park (Perth) and Centrelink (Canberra)2 properties (collectively, the “Properties”) have been completed.
The revaluations have resulted in an increase of S$182.0 million (22.1%) over the valuations of the Properties3 as disclosed in the 2006 Audited Consolidated Financial Statements of Allco REIT as at 31 December 2006. The revaluations have been completed in accordance with the relevant accounting standard, Financial Reporting Standard 40 Investment Property, and the Property Funds Guidelines.
The valuation of each Singapore property was conducted by Savills (Singapore) Pte Ltd and the valuation of Central Park (Perth) was conducted by CB Richard Ellis Pty Ltd. The valuations of Centrelink (Canberra) were conducted by both CB Richard Ellis Pty Ltd and Colliers International Consultancy and Valuation Pty Limited.
The valuation details are as follows:
Source : SGX
CCT – OCBC
Buys Wilkie Edge
Flat sequentially. CapitaCommercial Trust (CCT) released its 2Q07 on Friday. Revenue came in at S$S$59.4m (+91.1% YoY and +2.5% QoQ) with distributable income at S$29.28m (+84.7% YoY and +0.1% QoQ). Distributable income per unit (DPU) came in at 2.12 cents (+19.8% YoY and 0.5% QoQ), slightly below OIR’s estimate of 2.17 cents. The strong annual numbers were attributed to the inclusion of Raffles City (RC), higher rental and car-park rates as well as investment income.
Buys Wilkie Edge from CapitaLand. CCT also announced the proposed acquisition of Wilkie Edge, a 12-storey mixed development from CapitaLand (CapLand) for S$262.0m. Completion is expected by end 2008. With this, CCT appears to be changing its strategy by going for pre-completed and untenanted assets. This raises the risk profile and reflects the difficulty in acquiring accretively. As part of the agreement, CCT has granted CapLand a 99-year lease for the service apartments for S$79.3m. We estimate the GFA of the apartments at about 160,350 sq ft, which means selling price of about S$495psf. This appears a little low considering that residential units are going for substantially higher in the area.
Expect divestment gains. Separately, Quill Capita Trust, the Malaysian associate of CCT, will be buying CCT’s interest in Wisma Technip. The acquisition price of RM125m will result in CCT recognizing a divestment gain of RM4.4m (about S$2.0m), but the transaction is not expected to complete until 4Q07.
Raffles City asset enhancement. CCT is presently enhancing Raffles City. It is decanting space used for mechanical and engineering equipment and this in turn will release about 41,000 sq ft of space for retail use. The new space will be spread over 3 levels and will encompass building a 3-storey island podium. The estimated capex is about S$56m and funding will be via debt. We see no issues with respect to debt funding. Construction has started and completion is expected by end 2007.
Maintain HOLD. The outlook for the office sector remains good for the next two years due to limited supply. CCT is the key beneficiary of this macro trend. Hence we anticipate strong organic earnings growth. However, at present trading level, we see limited upside potential. We thus maintain our HOLD rating with a fair value estimate of S$2.62, based on a target asset size of S$5.5bn.