Category: ESR
Cambridge – BT
New CEO at Reit manager CITM
SINGAPORE’S first independent real estate investment trust (Reit), Cambridge Industrial Trust (CIT), will see Wilson Ang Poh Seong step down as chief executive of the Reit manager Cambridge Industrial Trust Management (CITM). He makes way for Christopher Calvert, formerly the CEO of MacarthurCook Ltd (Asia).
Mr Ang was part of the team that initiated and launched the initial public offering (IPO) of CIT in July 2006.
In February, Oxley Group, led by executive chairman Michael Dwyer (formerly chief executive and managing director of Allco), acquired an effective 20 per cent interest in CITM by procuring 33 per cent of the equity in Cambridge Real Estate Investment Management (CREIM)). Oxley’s stake was acquired from Chan Wang Kin – until then a director of CREIM and CITM – who was also part of the team that initiated the Reit. CREIM held a majority stake of 60 per cent of CITM at the time.
In August, National Australia Bank and Oxley Group formed a joint venture to take an 80 per cent stake in CITM.
Since then, Finian Tan, who was also part of the IPO team of CIT, has resigned from the board of CITM.
When contacted, Mr Ang said that he had not intended to leave CITM when Oxley first took a stake in February. However, he added that the new board will take CIT ‘to the next level’. Mr Ang, who still holds 420,000 units in the Reit, said that he has not decided on his future plans yet.
Separately, CITM said yesterday that it has reached an agreement with three banks for a $390.1 million syndicated term loan to CIT. The funds will be fully utilised to refinance all of CIT’s existing debt facilities. The three banks are HSBC, nabCapital (a division of National Australia Bank) and RBS. The effective interest rate will be about 6.6 per cent per annum including amortisation of upfront costs.
CITM said that CIT’s distribution per unit in 2009 will be reduced by about 0.9 cents per unit per annum.
In terms of forward commitments that may have required debt funding, CITM said that it has reached an agreement with the seller of 29 Tai Seng Avenue to extend the option agreement to June 30, 2009, and the completion is subject to market conditions having supported an equity fund raising by CIT. It has also reached an agreement with the seller of 75 Tuas Avenue to terminate an earlier option agreement.
Cambridge – SGX
PRESS RELEASE
CAMBRIDGE INDUSTRIAL TRUST TO REFINANCE WITH S$390.1 MILLION TERM LOAN
Coordinating Lead Arrangers : The Hongkong and Shanghai Banking Corporation Limited; nabCapital, a division of National Australia Bank; and The Royal Bank of Scotland plc
Tenor : 3 years from drawdown
Loan: S$390.1m syndicated term loan, fully funded by the Coordinating Lead Arrangers. Completion of the Loan is subject to standard documentation. A portion of the Loan is subject to syndication on normal market conditions.
Effective Interest Rate: 6.6% per annum (approximately), including amortisation of upfront costs.
DPU Impact: CITM anticipates that CIT’s distribution in 2009 will be reduced by approximately 0.9 cents per unit per annum(1). (1) Note that amortisation of upfront costs does not affect the level of distributions to unitholders.
Properties mortgaged: CIT’s existing property portfolio excluding 16 Tuas Avenue 18A
Mr Chris Calvert, CEO of CITM said, “We are addressing the short-term refinancing risk that has been affecting CIT.
“Investors in CIT now have a highly stable income stream, driven by CIT’s long average lease term and high level of tenant security deposits, and following successful completion of the new loan facility, will be coupled with three years of debt financing. Given the current economic climate, this will be a welcomed position.”
Commenting upon the refinancing, Dr Chua Yong Hai, the Chairman of CITM said, “In the current economic circumstances it is pleasing to note that CIT has been able to retain the support of its existing lenders, HSBC and RBS. It is also pleasing that the National Australia Bank – through nabCapital, its institutional banking and capital markets business – has become a lender, adding to the role its nabInvest business has taken as a shareholder in the REIT’s manager. This is an excellent demonstration to REIT investors of the importance of strong sponsorship,” says Dr Chua.
Standard and Poor’s Ratings Services affirmed CIT’s ‘BBB-‘ credit rating on 6 October 2008.
CITM has decided to refinance using conventional debt, in lieu of a Shariah compliant facility. The Board recognises the strategic importance and potential benefits to CIT of becoming Shariah compliant and will continue to investigate whether this direction is in the best interest of unitholders in the medium term.
In terms of forward commitments that may have required debt funding, CIT has reached agreement with the seller of 29 Tai Seng Avenue to extend the option agreement to 30 June 2009 (or such other mutually agreeable date) and the completion is subject to market conditions having supported an equity fund raising by CIT. CIT has reached agreement with the seller of 75 Tuas Avenue to terminate the option agreement relating to that property.
Cambridge – BT
SINGAPORE – Cambridge Industrial Trust, which owns 43 warehouses and factories in Singapore, said on Thursday that chief executive Ang Poh Seong had quit with immediate effect and that he will be replaced by Chris Calvert.
Mr Ang’s departure was not related to any differences of opinion with its board of directors, the firm said in a statement to the stock exchange, but it did not say why he was leaving.
Mr Calvert, 38, is an Australian citizen who was previously CEO of a firm called Blaxland Funds (Asia).
Cambridge Reit shares fell 2.4 per cent on Thursday and have lost more than 60 per cent of their value in the last three months as the Singapore economy slipped into recession. — REUTERS
Cambridge – Phillip
There is no change to the story. Revenue growth comes from acquisitions and rental increases. There should not be any significant acquisitions in the near term given the faltering sources of capital from the dismay capital market and tight credit environment. CIT current gearing is 38% and it would be wise not to push the to make acquisitions.
3QFY08 results. CIT reported 3QFY08 results with gross revenue of S$18.3 million (+35.8% YoY), net property income of S$16.2 million (+40.4% YoY) and distributable income of S$11.8 million (+35.5% YoY). DPU however dropped from 1.70 cents to 1.49 cents (-12.4%).
Top concern is refinancing. CIT has S$337 million of debt (91%) that is due in Feb 2009. We are expecting borrowing terms to be a lot more critical and borrowing cost to escalate. We raise our interest cost assumption to an effective rate of 4.78%
Drop in DPU. The main reason for the fall in DPU in this quarter is because management fee was paid out entirely in cash. Although there isn’t a fixed policy on the payout method, this was in contrast to the approximately 63% of fees paid out of new issuance in units in the previous two quarters. On the flip side, management reasoned that new units are dilutive and even more so at depressed price level where a greater number of units have to be issued.
Valuation and recommendation. We do not foresee near term acquisition activities and our gross revenue assumptions remain intact for now, bolstered by built-in rent escalation. We reduce our DPU estimations by 5.2% and 17.6% for FY08F and FY09F respectively mainly due to higher borrowing expenses. Currently CIT trade at close to 65% discount to NAV, which we believe is a reflection of market’s perception to the inherent refinancing risk. Our DCF derived fair value is $0.48 ($0.92 previously). Maintain BUY on valuation basis. Risk to our projections would be falling occupancy level.
Cambridge – CIMB
Worth a chance
• Maintain Outperform. We expect new demand for industrial space to ebb in tandem with an expected economic downturn. CCT has a small asset size with tenant concentration risk, unlike its much larger peers, A-REIT and MLT. Nonetheless, we expect its rental income to stay visible in the medium term with all its tenants on long leaseback arrangements with built-in rent increases. Management is working on the refinancing of significant short-term debt that would be due by Feb 09 and early closure could provide catalysts in the short term.
• Unchanged DDM-derived target price of S$0.52 (discount rate 9.6%). Despite our earlier increase in cost-of-debt assumptions, forward dividend yield in FY09 remains attractive at 17.3% due to overselling of the stock. CIT remains the cheapest industrial REIT under our coverage, with a P/BV of 0.36x and forward yields of 17.3%. S-REITs are trading at 0.51x P/BV and forward yields of 13.6% on average. We remain positive on the resilience of the industrial sector, anchored by a long weighted average remaining lease term of 5.9 years in CIT’s case. Maintain Outperform.