a-iTrust posts 25% rise in Q4 DPU

ASCENDAS India Trust (a-iTrust) said yesterday that distributable income for its fourth quarter ended March 31 rose 26 per cent to $15.6 million from a year back.

Distribution per unit (DPU) for the quarter rose 25 per cent to 2.05 cents, bringing the full year’s DPU to 7.54 cents.

The 24 per cent rise in full-year DPU was ‘driven by strong performance of the assets’ and exceeded the DPU forecast of 6.85 cents stated in its 2007 listing prospectus. Distribution is semi-annual, so the DPU for Q3 and Q4, which amounts to 4.07 cents, will be payable on May 26.

Total property income for the fourth quarter rose 13 per cent to $30.8 million from the year-ago Q4, while net property income grew 8 per cent to $17.4 million. For the full year, total property income grew 15 per cent to $118.1 million, from $102.7 million in the previous year, while net property income rose 9 per cent to $66.2 million.

Net asset value attributable to unitholders was 89 cents per unit as at March 31.

Jonathan Yap, chief executive of the trust’s manager, said: ‘Our results reflect the strong cash generation of our assets and robust demand for space in our properties.’

a-iTrust has a portfolio of 4.8 million square feet of completed space in Bangalore, Chennai and Hyderabad. The occupancy rate for its portfolio was 98 per cent at the close of the fourth quarter, above market occupancy rates of 72 per cent to 87 per cent in the three cities, the trust said.

During the year, leases for 24 per cent of the portfolio’s space expired, out of which 89 per cent was renewed. The trust manager said that it intends to ‘renew or replace expiring leases in advance’. About 13 per cent of space is due for renewal in the next year.

‘Apart from organic growth, we are developing buildings on land owned by the trust, to give us new income stream,’ said Mr Yap.

These include plans to develop 1.5 million square feet of space in international tech parks in Bangalore and Chennai. The trust also owns 2.7 million sq ft of space which is largely within an approved special economic zone in the Bangalore tech park, which can potentially be further developed.

As at March 31, a-iTrust’s total borrowings of $79 million reflected a gearing level of 9 per cent.

The trust’s shares closed 0.5 cent down at 50.5 cents yesterday.

Underlying Portfolio Strength

• Results were in line with estimates
• Secured income base
• Acquisition possibilities present upside surprise
• Upgrade to BUY, TP S$0.65 based on DDM

Results in line. Ascendas India Trust (AiT) reported 4Q09 results in line with our expectations. Gross revenues and NPI grew by 13% and 8% to S$17.4m and S$16.1m respectively. Growth was driven by (i) income contribution from Crest, (ii) positive rental reversions, (iii) higher operations and maintenance income. Distributable income came in 25% higher to 15.6m, translating to a DPU of 2.05 cts. For FY09, AiT delivered a DPU of 7.54 Scts, translating to a yield of 15%.

As of 31st March’09. AiT recorded a 5% devaluation on its properties. This was a result of more conservative cap rates used by valuers. NAV declined to S$0.89 as a result.

Secured income base. Looking ahead, AiT has only 13% of its NLA up for renewal in FY10, we believe that AiT should be able to keep occupancies relatively stable given (i) each tenant accounted for <4% (ii) strong retention rate of 89% for expiring leases in FY09.

Headroom for growth. Potential upside surprise will come from its ROFR from Ascendas Land Int’l & Ascendas India Devt Fund, which are not currently factored in our models. Current gearing of 9% presents headroom of S$220m before reaching 35% gearing.

Upgrade to BUY, TP $0.65. At current levels, AiT presents attractive value for investors looking to leverage on the mid-long term growth prospects of India’s IT parks space while receiving a FY10-11 DPU yield of 12-14%. Upgrade to BUY, TP S$0.65 based on lower cost of equity assumptions (CE of 15%), in line our DBSV economist view of a bottoming of India’s economy in 1H09.

Ascendas India Trust, Chip Eng Seng secure loans

Trust gets $50m for refinancing, CES unit gets $60m for repayment

REAL estate business trust Ascendas India Trust (a-iTrust) and construction and property group Chip Eng Seng Corporation have secured loan facilities of $50 million and $60 million respectively – the former for refinancing and the latter for repayment of notes issued by a subsidiary.

For a-iTrust, its $50 million short-term loan, which matured on March 31, has been refinanced by the lenders, Citibank and DBS Bank, from April 1 under a new loan expiring on Sept 30, 2010, but at a higher interest rate.

The rate is 600 basis points above the Singapore dollar swap offer rate – which has been fixed at 1.046 per cent till May 29 – and works out to 7.046 per cent.

a-iTrust said that the impact of the higher interest rate on distribution to unitholders is less than 0.3 cent per unit for the financial year 2009/10.

This is due to the low gearing level, which was forecast to be below 10 per cent as at March 31.

Also, 40 per cent of the loan proceeds will be used for construction of new buildings, and the related interest expense will be capitalised.

a-iTrust,which owns real-estate for business use in India, added that its portfolio remains stable with a 98 per cent occupancy rate.

It has also renewed 90 per cent of the leases which expired in the fourth quarter ended March 31, resulting in a full-year tenant retention rate of 87 per cent.

More information on its performance is due on April 28 when it announces its full-year results.

For Chip Eng Seng Corporation, the $60 million loan was granted by Standard Chartered Bank to subsidiary CEL Development to finance the repayment of certain notes issued by the unit under a multi-currency medium term note programme.

Ascendas India Trust DPU rises 35% in Q3

ASCENDAS India Trust (a-iTrust) said yesterday that distributable income for its third quarter ended Dec 31, 2008 rose 36 per cent to $15.3 million, from $11.3 million a year earlier.

Distribution per unit (DPU) for Q3 rose 35 per cent to 2.02 cents. Distribution is semi-annual, so the Q3 distribution will be made with that of Q4. Including 3.47 cents already distributed for first-half FY 2008/09, the nine-month DPU comes to 5.49 cents.

Total property income for Q3 was $28.8 million – 7 per cent higher than the $27 million figure the previous year – while net property income grew 9 per cent to $17 million, from $15.7 million

Property income grew on the back of higher occupancy and resilient rental rates. Expenses grew at a slower pace mainly due to the fall in oil prices. As a result, net property income rose.

‘Notwithstanding current weak global economic conditions, a-iTrust’s portfolio occupancy edged up to 99 per cent from an already high level,’ said Jonathan Yap, chief executive of the trust’s manager. ‘Average portfolio rentals also improved since our last results announcement. These results demonstrate the portfolio’s resilience and appropriateness of its positioning vis-a-vis the target customers.’

a-iTrust’s portfolio comprises 4.8 million square feet of completed space in the key Indian cities of Bangalore, Chennai and Hyderabad. About 1.2 million sq ft of this space – or a quarter of a-iTrust’s current income-producing space – was renewed or leased in the nine months ended Dec 31, resulting in a higher average portfolio rental. The real estate investment trust (Reit) aims to renew or replace expiring leases in advance, it said.

‘Looking forward, less than 6 per cent of space is due for renewal in the current financial year, and less than 13 per cent in the next year,’ a-iTrust said. ‘The leases, with locked-in terms and expiries stretching beyond 2014, will also enable the trust to enjoy income stability.’

Barring unforeseen circumstances, a-iTrust is confident of meeting the FY 2008/09 DPU forecast of 6.85 cents stated in its 2007 listing prospectus.

The trust’s shares closed unchanged at 50 cents yesterday.