Author: tfwee

Cambridge – BT

Cambridge Reit’s net 8.8% above forecast

CAMBRIDGE Industrial Trust (CIT), a real estate investment trust, yesterday said that its distributable income in the quarter to March 31 came to $7.4 million, exceeding forecast by 8.8 per cent. This means 1.434 cents per unit is available to unitholders.

Trust manager CIT Management Ltd said the total income of $7.4 million represents an annualised yield of 7.09 per cent, based on the closing price of 82 cents per unit on March 30.

CIT’s gross revenue came to about $11 million, with net property income of $9.4 million. The trust said the higher gross revenue for the quarter was due to rental revenue from two properties acquired during the quarter – 63 Hillview Avenue and 55 Ubi Avenue. Independent valuers priced the two at $91 million.

Net property income was 5 per cent higher than forecast, due to higher revenue and lower actual property expenses of $1.6 million, due mainly to lower land rent, property tax and non-routine expenses.

CIT said it expects to deliver the projected yield and is on track to increase its portfolio through further acquisition of properties.

The management company’s chief executive, Wilson Ang, said: ‘Besides completing the acquisition of two new properties this quarter, we have also announced four option agreements worth $58.3 million which, upon completion, will contribute an additional annual gross revenue of $5.71 million.

‘Together with signed MOUs worth $115 million as at March 31, 2007, we are targeting to acquire approximately $500 million worth of properties this year.’

tfwee April 27, 2007 ESR No Comments »

MLT – DBS

Acquisition pipeline remains strong

Comment on Results

MLT reported 1Q07 results in line with our expectations. Gross revenue grew 116% yo- y to S$28.8m, due mainly to additional income contributed from new properties acquired. Net distributable income increased by 84% y-o-y to S$15.3m. DPU rose by 35% y-o-y to 1.48 cents and moving forward, a better DPU is expected to achieve in 2Q07.

Outlook

The sponsor, Mapletree Investments Pte Ltd, has a development pipeline in Vietnam, China and Malaysia, with total estimated value of S$315.0m. First on MLT s acquisition list is the multi-tenanted logistics and warehousing facility in Vietnam. Construction was completed in Jan 07 and once it is fully leased, MLT is expected to acquire this property. In the medium to long term, MLT would be exploring the India, Thailand and Taiwan markets. However, around 75% of the portfolio would still comprise assets from Singapore, Hong Kong and Japan.

Recommendation
As at 31 Mar 07, the group has announced 13 acquisitions (approximately S$467.0m) which were pending completion. With a target balance of around S$400-500.0m, MLT is on track to achieve the acquisition target of S$1.0bn in 2007. Based on DCF valuation, we have a target price of S$1.46 (assumed acquisitions of S$1bn p.a. from 2007 to 2009). Maintain Buy.

tfwee April 27, 2007 MLT No Comments »

Suntec – DMG

Office segment continues to shine

Suntec Reit S 2Q07 distributable income grew 19% yoy and 3.7% qoq to $28m. The results were boosted by healthy organic growth within its flagship assets, contributions from additional Suntec office space and better cost management. Looking ahead, the group should continue to leverage into the rising office leasing market with a sizeable 80% of its office NLA scheduled to be renewed over FY07-09. In addition to a sizeable retail renewal profile, value-add activities at Suntec retail mall should underpin bottomline growth. Maintain Buy with a revised price target of $2.20. This translates to a potential absolute return of 14% over the next 12 months.

Another record quarter. Suntec Reit reported 2Q07 distributable income of $28m, up 19.3% yoy, bringing 1H07 distribution income to $55.1m, an increase of 20.5% over previous period. However, 2Q07 and 1H07 DPU rose a more modest 8.5% and 9.5% to 1.97cts and 3.86cts respectively due to a 9% enlargement in issued units. There was a $613.6m revaluation surplus which lifted book NAV to $1.83.

Strong organic growth. Office revenue accounted for 37% of topline in Q2. This stream of income notched a 23% yoy rise to $17.1m aided by increased occupancy of 99.2% and new contributions from the 30172sf strata title space acquired at Suntec City and higher contracted rental rates. Transacted rents continued to climb to $8.50-9psf/mth compared to the average outgoing levels of $4.60-4.80psf.

Robust lease reversion schedule. Outlook remains positive with 33% and 40% of office NLA to be renewed in FY08 and FY09. This should enable Suntec to leverage into the robust office leasing market. Plans to buy more office strata space at Suntec should deepen the group s exposure to the rising office sector.

Retail income to benefit from AEI. Apart from the renewal of 54% of retail NLA over the next 2-3 years, retail revenue should be lifted by the asset enhancement initiatives such as establishment of a youth and fashion zones at Suntec Mall. An estimated 60-72% of these areas have been pre-committed.

Maintain Buy with revised price target of $2.20. Suntec is currently trading at FY07 and FY08 yields of 4.1% and 4.6%. While Suntec does not have a visible pipeline, near term growth would be underpinned by strong performance of the office leasing market.

tfwee April 27, 2007 Suntec No Comments »

Suntec – DBS

Time is ticking

2Q07 results hit by dilution. Higher office rental revenue (+23%) from both Suntec and Park Mall, with higher occupancy and rental rates as well contributions from Suntec Strata acquisitions and muted retail rental revenue (+0.9%) supported the growth in gross revenue and net property income of 8.1% and 10.3% respectively. Distribution income grew 19.3% yo-y, delivering 2Q07 DPU of 1.965 cents which translates to DPU yield of 3.9%. With the recent private placement of 120m new units (net proceeds of S$176.6m) to fund the buyback programme for Suntec strata units, there was a dilutive negative impact from a larger unit base in the absence of yield accretion coming through with only 30,172 sf of Suntec office strata space (S$40.7m) acquired to date. As such DPU growth of 8.5% y-o-y did not keep pace with growth in distribution income, and was below expectations.

No acquisitions, but value of portfolio value grew. Along with its 2Q07 results, Suntec has revalued its portfolio upwards by another S$613.6m, mainly attributed to Suntec City (office +30%, retail +14%) in addition to the Suntec Strata space buyback which raises portfolio to S$3.8bn and reduce debt to assets ratio to 23.3% from 27.7% in 1Q07, further increasing debt headroom for acquisitions. Accordingly, NAV per unit is raised to S$1.80, from S$1.43 in FY06. Moving forward, we continue to see Suntec as a strong beneficiary of asset reflation, backed by strong rental growth. However, we are cautious on prospects of acquisitions for Suntec, as the strata buy back programme is not gaining pace. Office capital values are on the rise, compressing physical yields with immediate yield accretion prospects looking increasingly remote.

Office rents continue to surge by 20%, within expectations. Office rents in Suntec City continue to surge, achieving rents of S$8.00-S$9.50 psf from S$6.50-S$8.00, within expectations. We reiterate that Suntec continues to be a beneficiary of spillover demand from tight vacancy and bullish rentals in the CBD spilling over to secondary locations.

Maintain Buy, TPS$2.20. While time is ticking with dilution from deferred units soon to take effect in FY08, strong positive rental reversions are expected to outpace the negative effects of dilution for Suntec’s distribution income which we have factored into our DCF projections. Despite the lack of visibility on acquisitions without the backing of a developer sponsor, i) asset reflation remains a key theme for Suntec, ii) retail enhancements well under progress iii) beneficiary of circle line – once completed in 2010-2011 for both the Suntec office and retail portfolios iv) kicker in traffic flow with Singapore’s position as major MICE hub and Integrated Resorts. With target price of S$2.20 backed by DCF valuation unchanged, we maintain our Buy recommendation on Suntec.

tfwee April 27, 2007 Suntec No Comments »

MapleTree – OCBC

On target for S$1bn acquisition per year

Growth again due to acquisitions. Mapletree Logistics Trust (MLT) reported a good set of 1Q07 results. Revenue was up over 116% YoY and 7% QoQ to S$28.8m, and distributable income improved 84.2% YoY and 23% QoQ to S$15.3m. Distributable income per unit (DPU) was less robust, improving by 33% YoY and 2% QoQ to 1.48 cents. This is slightly better than OIR’s forecast of 1.40 cents. The bulk of the growth came from the acquisition of 25 properties (worth S$785m) over the last 12 months and 8 properties over the last quarter. MLT currently has a portfolio of 49 properties worth about S$1.5bn and will acquire a further 13 properties worth about S$470m in 2H07. This should bring its total asset size to about S$2.0bn. MLT is well positioned to continue its growth strategy and we see an annual acquisition of S$1.0bn per year as not improbable.

Next markets in South Korea and Vietnam. Presently MLT’s country/ territory exposure is in Singapore, Malaysia, China, and Hong Kong. MLT recently announced a mega acquisition of 5 assets worth S$350m in Japan, a project worth S$17.8m in Xian, and 2 projects worth S$13m in Malaysia. We expect it to enter more new markets in 2H07; namely South Korea, Vietnam and India. All these acquisitions are likely to boost its DPU. We have thus revised up our FY07 and FY08 DPUs from 5.6 cents and 5.9 cents to 6.2 cents and 6.5 cents, respectively.

Successfully raised S$349m. The key event over the last quarter was the successful raising of fresh equity. A gross proceed of S$349m was raised with the issue of 296.822m new units at a weighted cost of S$1.176 per unit. The proceeds of the new equity have been used to finance the acquisition of 15 recently bought properties and to refinance other older acquisitions. With the new equity, MLT’s gearing has fallen back to about 40% range. More importantly, it means that MLT can raise a war chest of S$300m if it maximizes its gearing to 60%.

Maintain BUY with higher fair value. MLT has done well since our last report; appreciating from S$1.19 to our fair value of S$1.33. However, at the current pace of acquisition, our target asset size of S$3.0bn is likely to be breached by 2008. We have thus revised up our target size to S$4.0bn. This, together with lesser dilution from the issue of fewer new units, has a positive impact on our fair value estimate. We have thus revised up our fair value from S$1.34 to S$1.50 and maintain our BUY recommendation.