Category: CMT
CMT – DBS
Results in line
Comment on Results
Results in line with expectations. CMT reported 1Q08 distributable income of $65.4m, up 27% yoy and beating its own forecast by 3%. This was achieved on a 24% jump in revenue to $121.1m. The group elected to distribute 88% of income or $58m in Q1, translating to a DPU of 3.48cts.
Strong organic growth. The better results were achieved on higher rental reversions, which were on the average 10.4% better than preceding levels, particularly at Tampines Mall, IMM Building, Bugis Junction and Plaza Singapura. The higher rentals were also a result of asset enhancement activities (AEI). Management estimates about 38% of DPU improvement since listing came from AEI activities.
More value creation from AEI going forward. Looking ahead, DPU growth is anticipated to come from value add activities at its malls. The group plans to spend $179m this year to decant valuable retail space to take advantage of its additional plot ratio. Positive contributions from these activities will kick in from FY09 as works are completed over FY08 and FY09. Current gearing is low at 35.3%, giving them debt headroom to buy up to S$1.2bn of assets.
Recommendation
We maintain our buy call on CMT with a price target of $3.93. FY08 and FY09 DPU of 15.4cts and 17.0 cts, translate to a yield of 4.4% and 4.9% respectively.
CMT – BT
SINGAPORE – CapitaMall Trust, Singapore’s largest property trust by market value, reported on Tuesday a 24 per cent rise in first-quarter distributable income, helped by stronger rentals at its shopping malls.
CapitaMall, 27 per cent owned by South-east Asia’s largest developer, CapitaLand, will pay $58 million (US$42.9 million) in distributable income for the January-to-March period, or 3.48 Singapore cents per unit.
That compares with $46.9 million in the year-earlier period.
CapitaMall competes with other Singapore-listed real estate investment trusts that own offices and retail malls, including Suntec Reit, Macquarie MEAG Prime and Frasers Centrepoint. — REUTERS
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.
CMT – BT
CMT issues 2-year notes
CAPITAMALL Trust, Singapore’s largest property trust, said yesterday it had issued $155 million worth of two- year fixed-rate notes bearing an annual interest rate of 3.25 per cent. The notes, issued under its $1 billion multicurrency medium-term note programme, will mature on April 1, 2010. The proceeds will be used mostly for general working capital, CapitaMall said in a statement.
CapitaMall competes with other Singapore-listed real estate investment trusts (Reits) which own offices and retail malls, including Suntec Reit, Macquarie MEAG Prime and Frasers Centrepoint. — Reuters
CMT – UOBKH
Proactive Enhancements
CapitaMall Trust (CMT) invests in quality income-producing real estate used for retail purposes. It owns 13 retail malls strategically located in suburban areas and downtown core. CMT is the largest retail REIT in Singapore with a market share of 13% for private retail stock. It also has a 20% stake in CapitaRetail China Trust (CRCT), a China-based retail REIT listed on Singapore Exchange. CMT was assigned a corporate rating of A2 with a stable outlook by Moody’s Investor Services.
Creating office blocks at Funan DigitaLife and Tampines Mall. CMT has received provisional permission to utilise unused gross floor area (GFA) of 385,500sf for Funan DigitaLife, which has only utilised 3.8 of its allowable plot ratio of 7.0. The unused GFA will be utilised to build a four-storey office block with an estimated net lettable area (NLA) of 277,630sf on top of the existing mall. NLA for retail will also increase 14% from 296,601sf to an estimated 338,360sf. In addition, CMT has been granted an increase in plot ratio for Tampines Mall from 3.5 to 4.2. The additional GFA of 95,000sf will be utilised to build an office block on top of the existing mall. We expect construction to be completed by 2H10 and have factored in contributions from the two office blocks starting 1Q11.
CMT provides 2008 distribution yield of 4.51%, a healthy spread of 2.35% over 10-year Singapore government bond yield of 2.16%. Our target price is S$3.83 based on the two-stage dividend discount model.