Category: A-REIT
AREIT, CMT – DBS
West Side Story
Extreme Makeover – Jurong Edition: The government’s proposal to turn Jurong into a commercial and entertainment hub is a major concerted effort to transform the Jurong Lake District into a unique lakeside destination for leisure and business over the next 10-15 years. This is likely to have a positive impact on property capital values there in the long term.
Go West: Plans for the 360ha land area, close to the size of Marina Bay, includes developing the area around the Jurong East MRT station into a commercial hub serving the west region and creating a new leisure destination around Jurong Lake. About 70ha of land is allocated for development into a vibrant commercial hub with 5.4msf of GFA for office use while a further 2.7msf GFA is slated for retail, entertainment, F&B and other complementary uses. There is potential for 2,800 hotel rooms and more than 1,000 private residential units. The other major development would involve converting 220ha of land and 70ha of water into a major leisure destination with plans for 4-5 new ‘edutainment’ attractions in addition to current attractions.
Western Exposure: The office component is sizeable and would likely complement the existing business needs catering to R&D, biotech, pharmaceutical, and chemical industries. However, development will take place over 10-15 years in tandem with market demand and take-up, allaying fears of oversupply in the medium-term. The government will adjust its land supply and consequently, the development timeframe, through the Government Land Sales (GLS) mechanism. In terms of beneficiaries, CMT (BUY, TP S$3.93) has established a presence in this area through Jurong Entertainment Centre and IMM Building that could benefit from higher population mass, while A-REIT (BUY, TP S$2.80) has properties in the International Business Park that could benefit from higher capital values in the long-term. TT International is also developing a big-box retail scheme, to be completed in 2009.
AREIT – BT
$484m gain in value of A-Reit properties
The trust attributes the 14.2% surge to improving industrial property market
ASCENDAS Real Estate Investment Trust (A-Reit) said yesterday the book value of its investment properties rose $483.6 million – about 14.2 per cent – during the latest annual valuation exercise.
A-Reit attributed the increase – from the previous book value at Feb 29, 2008 – to an improving industrial property market, which has led to higher occupancy and higher rents across its portfolio.
The latest valuations will be reflected in A-Reit’s financial statements for the year ending March 31, 2008, the trust said.
Valuations were revised upwards across all sectors, with the business & science parks sector registering the largest appreciation of $244.4 million.
Properties in the high-tech industrial sector appreciated $116.5 million, while those in the light industrial sector (including flatted factories) and logistics & distribution centres registered gains of $60.2 million and $63.2 million respectively.
A-Reit’s third development property – HansaPoint@CBP, which was completed in January 2008 – appreciated by $43.2 million, or 166 per cent, from its development cost. Post-revaluation, the annualised net property income yield of the property portfolio is about 6.4 per cent, which is in line with the prevailing market, A-Reit said.
The adjusted net asset value, based on the Dec 31, 2007 balance sheet, will be $1.85 per unit.
The valuations were done by DTZ Debenham Tie Leung, CB Richard Ellis, Chesterton and Jones Lang LaSalle, A-Reit said.
The trust said the increases in valuation are testament to the ‘manager’s proactive asset management strategies in maintaining high occupancy rates and the manager’s ability to deliver value to unit-holders by pursuing attractive acquisitions and development opportunities while maintaining a disciplined approach to ensure risks are mitigated’.
A-Reit’s shares closed nine cents higher at $2.29 yesterday. The stock price has shed 6.9 per cent since the start of the year.
AREIT – SGX
COMPLETION OF THE ACQUISITION OF GOODMAN’S STAKE IN ASCENDASMGM FUNDS MANAGEMENT LIMITED AND UNITS IN A-REIT
The Board of Directors of Ascendas-MGM Funds Management Limited (“AMFML”), as manager of Ascendas Real Estate Investment Trust (“A-REIT”, and manager of A-REIT, the “Manager”) wishes to announce that Ascendas Investment Pte Ltd, a wholly-owned subsidiary of Ascendas Pte Ltd, had on 26 March 2008, completed its acquisition of 40% interest in the Manager comprising 400,000 ordinary shares in the ordinary share capital of the Manager from Goodman Singapore Industrial Management (Aust) Pty Limited (“Goodman”).
At the same time, Ascendas Land (Singapore) Pte Ltd (“ALSPL”), has completed the acquisition of 83,241,801 units in A-REIT (“Units”), representing 6.28% of the total issued Units (the “A-REIT Sale Units”) from Goodman Singapore Pte Limited (“GSPL”).
Following the completion, AMFML is now a wholly-owned subsidiary of Ascendas Investment Pte Ltd and an indirect wholly-owned subsidiary of Ascendas Pte Ltd and Jurong Town Corporation; and it has been renamed as Ascendas Funds Management (S) Limited.
Further, following the completion, Mr Gregory Leith Goodman, Mr James Hodgkinson and Dr Peter Dodd have relinquished their directorships in AMFML. The Board of the Manager now comprises:
Mr Lew Syn Pau (Chairman of the Board)
Mr David Wong (Audit Committee Chairman)
Mr Benedict Kwek (Audit Committee Member)
Mr Swee Kee Siong (Non-Executive Director)
Ms Chong Siak Ching (Non-Executive Director)
Source : SGX
A-Reit – SGX
24 March 2008, Singapore – Ascendas-MGM Funds Management Limited (the “Manager”), the manager of Ascendas Real Estate Investment Trust (“A-REIT”) is pleased to announce that A-REIT has signed a put and call option agreement (“Option Agreement”) today to acquire 8 Loyang Way 1, a light industrial property for S$25.0 million from Seow Khim Polythelene Co Pte Ltd (the “Vendor”).
Mr Tan Ser Ping, Chief Executive Officer of the Manager said, “We are pleased to have the opportunity to acquire 8 Loyang Way 1 from Seow Khim Polythelene, a leading manufacturer of consumer plastic products. Being a sale and leaseback transaction, this acquisition will provide us with a stable and predictable income stream and will contribute positively to the DPU for our unitholders. “ The acquisition of the Property will be accretive to A-REIT’s DPU. The annualised pro forma financial effect of the acquisition on the DPU for the financial year ended 31 March
2007 would be an additional 0.03 cents per unit (1).
(1) Assuming that: A-REIT had purchased, held and operated the properties for the whole of the
financial year ended 31 March 2007 (based on 77 properties); the acquisitions were funded using
the optimal gearing level of 40% debt and 60% equity; and in respect of the Properties, the
Manager had elected to receive its base fee 80% in cash and 20% in units and its performance fee entirely in units.
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AREIT – CIMB
Taking over the helm
Ascendas acquires Goodman’s stakes in A-REIT
A-REIT announced that its parent Ascendas Pte Ltd, through its wholly-owned subsidiaries, had made a double acquisition, by:
1) Purchasing the Goodman Group’s 40% equity stake in Ascendas-MGM Funds Management Limited, the manager of A-REIT, for an undisclosed cash consideration on a willing-buyer willing-seller basis.
2) Purchasing Goodman’s 6.28% direct stake of 83,241,801 units in A-REIT for about S$158.16m on a willing-buyer willing-seller basis.
The acquisition of the shares and units is expected to be completed within 10 business
days from the signing of the agreements.
The impact
Goodbye, Goodman! Upon the completion of the share and unit sales, Goodman will fully relinquish its co-manager role in Ascendas-MGM Funds Management Limited and holdings in A-REIT. Ascendas would then have a 26.77% holding in A-REIT. A-REIT’s manager, Ascendas-MGM Funds Management, would become a wholly-owned subsidiary of Ascendas and will be renamed Ascendas Funds Management (S) Limited.
May open doors to overseas acquisitions. This is a long-awaited move which will leave Ascendas with full control of A-REIT. We see this as positive for A-REIT, potentially opening doors to acquisitions out of Singapore from its parent, Ascendas. Ascendas has at least two overseas funds that may form part of the acquisition pipeline. They are the Ascendas ASEAN Business Space Fund, and the China Industrial and Business Park Fund, both of which acquire and develop industrial properties in their respective regions. However, any acquisition is more likely to happen in the medium to long term, as A-REIT has committed to some S$338m worth
of development projects and has already signed MOUs to acquire S$201m worth of properties over 2008-10.
Valuation and recommendation
Upgrade to Outperform from Neutral; but lowered target price to S$2.60 (from S$2.83). Our target price has been reduced to S$2.60 from S$2.83, in line with a higher cost of equity assumption used in-house. The discount rate in our DDM valuation has been raised to 6.7% from 6.2%.
We are, however, upgrading A-REIT to Outperform after the 15% decline in its share price since late January, vs. the market’s 3% drop. We also like Ascendas’s positive move to take full control of the helm. A-REIT has several things going for it, including:
1) conservative capital management (88% of its debt is on fixed interest rates at a weighted average cost of 3.39% and weighted average term of 3.9 years);
2) low asset leverage of 38.9%, well below the regulatory limit of 60%;
3) venture into development projects which offer property yields higher than the 6-7% yields for completed industrial buildings;
4) high rental reversions for its business park as a result of demand spilling over from the office sector; and
5) strong income streams secured on long leases averaging 6.2 years.