Author: tfwee

 

FrasersCT – BT

FCT buys 27% of Malaysian H-Reit

M’sia is its first overseas market expansion because of its familiarity

FRASERS Centrepoint Trust (FCT) yesterday said it has paid $46.6 million to buy 27 per cent of a Malaysian real estate investment trust (Reit), kick-starting its overseas expansion.FCT is buying 84.6 million units – or 27 per cent – of Hektar Real Estate Investment Trust (H-Reit). H-Reit was listed on Bursa Malaysia in December last year, and is now the only Malaysian-listed Reit investing purely in retail assets, FCT said.

The strategic partnership will also see FCT’s parent company Frasers Centrepoint Limited (FCL) acquire 40 per cent of H-Reit’s manager Hektar Asset Management Sdn Bhd. FCL will gain board and exco representation in the management company.

FCT paid RM1.21 (53 Singapore cents) for each unit in H-Reit, a slight premium to its closing price of RM1.18 yesterday. The trust will start to see contributions from its new purchase in the July-September financial quarter this year, said Christopher Tang, chief executive of FCT’s management team.

H-Reit owns two suburban retail malls with a total net lettable area of 944,500 sq ft in Malaysia at present. The malls – Subang Parade in Selangor and Mahkota Parade in Melaka – house more than 230 major international and domestic retailers and enjoy a combined footfall of more than 279,000 people per week.

‘The Reit gives us a platform to grow further in Malaysia,’ said Mr Tang. ‘We want to use it as a vehicle to acquire more properties.’

FCT has chosen Malaysia as its first overseas market to expand into because of its familiarity, said Mr Tang. In addition, FCT’s parent company FCL has a strong network in the country. Both H-Reit’s sponsor Hektar Group and FCL will work together to rebrand the Reit and the malls in its portfolio. FCT also said there could be possible collaboration between the two parent companies in real estate projects, providing a steady acquisition pipeline for H-Reit.

Mr Tang also said that the FCT is eyeing China’s second-tier cities for future acquisition opportunities as it looks to continue expanding overseas. However, the majority of growth in the near future will come from Singapore, where the Reit has yet to exercise its option to acquire the flagship The Centrepoint.

FCT’s shares closed one cent down at $1.76.

May 17, 2007 FCT No Comments »

CDL – GS

CDL REITS, gs remains a BUY with target price $2.13

– What’s changed . CDLHT net income for 1Q07 rose 40% yoy to S$11.3 mn helped by a 25% jump in RevPAR for its 4 Singapore hotels. Distribution per unit (DPU) for the latest quarter of 1.75 cents exceeded management’s projections by 28%. On an annualized basis, DPU was 7.1 cents, slightly lower than our FY07 forecast of 7.72 cents. We attribute the difference to seasonality, and highlight that all operating metrics since listing in July ’06 suggest good health 1) Revenue grew 60% to S$18.0m (from S$11.3m in 3Q06); 2) RevPAR grew 9.3% to S$153 (from S$140 in 3Q06); and, 3) Net Property Income grew 62% to S$16.7m (from S$10.3m in 3Q06).


– Implications. We believe 1Q07 results were positive and remain comfortable with our FY07 earnings and DPU forecasts. We continue to favor the Singapore hotel sector and are confident of demand absorbing the expected 10% growth in hotel rooms between end-2008 and end-2006. We note that for Singapore hotels, 1Q is traditionally the weakest quarter because of holidays such as the Lunar New Year in February. RevPAR for its Singapore hotels in 3Q06 and 4Q06 were 15% and 20% higher than in 1Q06 respectively. Given a stronger 2H07 and sustained visitor growth, we expect CDLHT to deliver 2-yr EPS CAGR of 8.5% per annum over FY07-09F.


– Valuation. We maintain our DCF based 12-m TP of S$2.13 for CDLHT, implying a share price upside potential of 16.4% and total returns of 20.6%. We like the dynamics for hotels in Singapore and look to CDLHT’s acquisition of the 440 room Copthorne Orchid as a catalyst. This hotel is subject to a right of first refusal granted by CDLHT’s sponsor Millennium & Copthorne.
May 5, 2007 CDL H-Trust No Comments »

CDL – DBS

CDL REITS, DBS remains a BUY with target price $2.20

– Revenue was in line, net investment income was slightly above our expectations due to higher occupancy levels. The 1Q07 gross revenue registered at S$18m and net property income hit S$16.7m, both 30% and 32% above the proforma numbers. The portfolio enjoyed higher occupancies (from 82% to 84%) and higher weighted average room rate (S$182 vs S$162) than the proforma numbers with RevPAR increasing from S$132 to S$153, an increase of 16%. The New Zealand property enjoyed occupancy of 78% at an average daily rate of NZ$142 and RevPAR of NZ$111. The DPU for the quarter hit 1.75cents, or an annualised rate of 7.1cents, 27.7% above the proforma forecast.

– The outlook for the hotel market continues to be strong with tight supply situation in Singapore and high demand from both business and leisure travellers. Singapore Tourism Board (STB) expects number of visitor arrivals growing at a CAGR of 6.4% from 2006 to 2015. On the supply front, the addition of 2,849 rooms by the end of 2008 may be inadequate in the face of robust demand. In New Zealand, the Ministry of Tourism said growth would be at 4.9% y-o-y and rising to 59.8 mn in 2012, underpinned by increased exposure of New Zealand as a tourist destination. We expect growth of 15% in room rates in Singapore for 2007. Further growth is also expected through CDL REIT’s expansion plans locally as well as overseas, especially in high-growth countries like China, India, Vietnam and the United Arab Emirates. The group plans to increase contribution of overseas contribution from 10% currently to 40%.

– With the potential asset injection from parent M&C or via third-party acquisitions, as well as the continued increase in business travel volume to Singapore and around the region, we remain positive on CDREIT. Maintain BUY with no change in assumption and TP of S$2.20 backed by DCF calculation.

May 5, 2007 CDL H-Trust No Comments »

CDL – BNP

CDL REITS, bnp remains a BUY with target price $2.28

– CDREIT, a BNPP Top Buy, will benefit from Singapore’s rising room rates over the next few years, driven by strong growth in tourist numbers but a limited supply of new hotel rooms. It plans to double its SGD846m portfolio over the next three years We maintain our BUY rating on this scarcely-covered stock, with a TP of SGD2.28.
– Robust 1QFY07 earnings growth . CDREIT posted a 37.8% increase in net property income of SGD16.7m in 1Q07. DPU was SGD0.0175 with an annualised yield of 3.8%. Overall occupancy rose from 78% in 1Q06 to 84% in 1Q07, while RevPAR rose 25.4% from SGD122 (ADR SGD157) to SGD153 (ADR SGD182) over the same period.


– Bold acquisition plans to drive DPU growth . CDREIT has a strong sponsor (Millennium and Copthorne) with a portfolio of 101 hotels globally. The management plans to double its existing portfolio (SGD846m) within the next three years, and intends to concentrate its acquisition efforts in the Asia Pacific and Middle East regions. We are confident that the management’s aggressive acquisition targets will underpin continual increases in DPU.

– Dynamic pricing underpinned by rising demand . Against the background of an improving tourism market, we believe stocks with leveraged plays in this segment could see further re-ratings in valuations, underpinned by higher RevPARs. The dynamics of revenue contribution in the hospitality segment are generally robust, considering that hotel operators respond very quickly to surging demand with higher room rates.

– Ascendant revision in hotel rates to drive DPU growth . CDREIT’s strong operating trends will continue to feed through to 2008. New supply of rooms are likely to be limited to only 2% in 2007 and 6% in 2008, with visitors growth estimated to grow by between 6-7% annually. We expect the ascendant revision in hotel rates to continue to drive DPU growth. Maintain BUY with a target price of SGD2.28.

May 5, 2007 CDL H-Trust No Comments »

CMT – GS

CAPITAMALL remains a BUY

– CMT said on Thursday that it has earlier received planning permission from the Urban Redevelopment Authority for Funan DigitaLife Mall to erect a 9 storey commercial building utilizing GFA of approximately 385,000 sf. CMT’s manager is, however, appealing to URA on an alternative waiver scheme so as to achieve a more efficient floor plate for the proposed development of an office block and to minimize disruptions to the retail tenants. We continue to have a positive bias on the stock, as CMT has shown a remarkable track record in generating incremental earnings growth from its portfolio of assets.


– Analysis . The addition of space at Funan has always been a possibility as CMT had during its IPO in 2002 said that this property, which was part of its initial portfolio, had unutilized GFA. We think given the existing shortage of CBD office space in Singapore, it is timely if CMT quickly brings on additional office space at Funan, which is located within the CBD. Assuming building efficiency of around 80%, we estimate the addition of space can generate some S$30 mn in revenue a year, almost 7% of our FY2007 forecasted revenue, on rentals of approximately S$8 psfpm. We do not see this addition of office space at Funan diluting the predominantly retail mall flavor of CMT. Also, we think this trust has enough debt capacity to fund the addition of new space even though the impending addition of 3 malls should raise the gearing for CMT from 37% to 41%.

– Implications. We await the details on the costs, timing and plans for the new office space at Funan and as such we put our earnings estimates and target price under review. We continue to like CMT’s top quality management plus its attractive organic and acquisition growth prospects. On current valuations, CMT trades at a 3.3% dividend yield. Risks include the inability to continue executing on growth via accretive acquisitions and an interest rate spike.


May 5, 2007 CMT No Comments »