Category: CRCT
CRCT – SGX
CRCT’s Third Quarter 2007 Distribution Exceeds Forecast(1) by 9.0%(2)
Achieved close to 100% occupancy rates at Wangjing Mall and Xinwu Mall
Distribution Per Unit in CRCT (“DPU”) for Third Quarter 2007(4) is 1.71 cents (6.80 cents on an annualised basis), which is 9.0%(2) higher than the forecast1 DPU of 1.57 cents (6.24 cents on an annualised basis) for the same period.
Mr Lim Beng Chee, Chief Executive Officer of CRCTML, said, “CRCT has outperformed our forecast to deliver 1.71 cents to unitholders(3) for Third Quarter 2007(4). Our continuous diligence in pro-actively managing our malls has been the driver for the robust growth in occupancy rates and increased shopper traffic across the portfolio. Going forward, we expect the overall net property income of the portfolio to improve significantly. CRCT’s portfolio size is also set to grow from S$805.7 million(5) to S$1.20 billion(6) with the recently announced proposed yield accretive acquisition of Xizhimen Mall in Beijing. The acquisition of this prime mall is expected to raise CRCT’s future DPU to above the current quarter’s annualised DPU of 6.80 cents, further driving long term growth prospects for unitholders. We look forward to unitholders’ support for the proposed acquisition of Xizhimen Mall at the forthcoming extraordinary general meeting.”
(1) Based on the forecast shown in CRCT Prospectus dated 29 November 2006 (“the Prospectus”)
(2) Actual annualised Distribution Per Unit for the period from 1 July 2007 to 30 September 2007 versus the forecast annualised Distribution Per Unit for the same period
(3) After the first distribution payment which was paid on 24 September 2007 and as disclosed in the Prospectus, subsequent distribution will be paid on a semi-annual basis for the six-month periods ending 30 June and 31 December of each year within 90 days after each of the said dates
(4) For the period from 1 July 2007 to 30 September 2007
(5) Based on CRCT’s existing portfolio of seven properties as at 30 September 2007
(6) After taking into account the proposed acquisition of Xizhimen Mall
CRCT – BT
CapitaRetail China Trust in $336m deal
CAPITARETAIL China Trust (CRCT) – the first pure-play China retail real estate investment trust (Reit) in Singapore – has entered into a deal to buy a mall in Beijing for $336 million from CapitaRetail China Incubator Fund (CRCIF).
Located in Xizhimen in Xicheng district, Beijing, Xizhimen Mall is part of Xihuan Plaza, and has a gross rentable area of 73,857 sq metres. This is CRCT’s first acquisition since its listing on the Singapore Exchange in December 2006.
CRCIF is a US$450 million private equity fund sponsored by CapitaLand Limited to buy completed malls in China. CapitaLand holds a 30 per cent stake in the fund, while the remaining equity is held by pension funds, insurance companies and corporations. CRCT enjoys the first right of refusal to purchase malls held by CRCIF.
Commenting on the purchase, Lim Beng Chee, CEO of CapitaRetail China Trust Management (CRCTM), said: ‘Sitting atop one of Beijing’s only two key transportation hubs with an average commuter flow of 300,000 on weekdays and 600,000 on weekends, Xizhimen Mall is well-positioned to capture the tremendous daily pedestrian traffic to the mall.’
He added that Xizhimen Mall along with the trust’s other retail malls will position CRCT favourably to capture the city’s strong retail growth opportunity which has averaged about 12 per cent annually in the last decade. CRCTM is the manager of CRCT.
Post-acquisition, CRCT’s portfolio asset size will grow from its current portfolio of seven properties valued at $763.7 million to $1.16 billion.
The other properties are Wangjing Mall, Jiulong Mall and Anzhen Mall in Beijing, Qibao Mall in Shanghai, Zhengzhou Mall in Zhengzhou, Jinyu Mall in Huhehaote, and Xinwu Mall in Wuhu.
Xizhimen Mall was valued at $338.4 million and $340 million respectively by two independent property valuers, Colliers International (Hong Kong) Limited and Knight Frank Petty Limited.
Hsuan Owyang, chairman of CRCTM, said the trust is on track to achieve its target portfolio size of $3 billion by 2009.
Xizhimen Mall is expected to achieve a net property income yield (NPI yield) of 5.7 per cent next year, based on an average mall occupancy rate of 88.7 per cent, and an NPI yield of 6.4 per cent in 2009, assuming 100 per cent committed occupancy rate.
The proposed acquisition, which is subject to conditions including unitholders’ approval, includes a conditional agreement for CRCT to buy the planned extension of the current Basement 1 of the mall from the original developer of Xihuan Plaza – Beijing Finance Street Construction Development.
The extension would increase the GRA of Xizhimen Mall by 15.6 per cent and would provide direct pedestrian connectivity to the underground Mass Rapid Transit station. The extension is expected to increase overall shopper traffic and enhance shopper flow within the mall.
To help fund the purchase, the trust said it is looking to raise about $280 million from an equity fund raising. It expects to fund the remaining purchase consideration through borrowings.
CRCT – SGX
CRCT to acquire Xizhimen Mall in Beijing
Proposed yield-accretive acquisition enlarges CRCT’s portfolio asset size to more than S$1.1 billion and strengthens CRCT’s retail foothold in Beijing Singapore, 18 October 2007 – CapitaRetail China Trust Management Limited (“CRCTML” or the “Manager”), the manager of CapitaRetail China Trust (“CRCT”), is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”), as trustee of CRCT, has today entered into a conditional sale and purchase agreement with CapitaLand Retail Trustee Pte. Ltd., as trustee of CapitaRetail China Incubator Fund (“CRCIF”), for CRCT to acquire Xizhimen Mall, with a Gross Rentable Area (“GRA”) of 73,857 Square Metres (“sq m”), at an agreed property price of S$336.0 million. This transaction would mark CRCT’s first acquisition since its listing on Singapore Exchange Securities Trading Limited on 8 December 2006.
Based on the agreed property price of S$336.0 million and an average occupancy rate of 88.7%, Xizhimen Mall is expected to achieve a net property income yield (“NPI yield”) of 5.7% in Forecast Year 2008, The committed occupancy rate, which registered 87.1% as at 11 October 2007, is expected to reach close to 100% within the next few months.
The mall is expected to attain a NPI yield of 6.4% in 2009, assuming 100% committed occupancy rate. The proposed acquisition is thus yield accretive to CRCT unitholders when compared to CRCT’s implied property yield of approximately 3.3%, based on CRCT’s closing unit price of S$2.78 as at 17 October 20071 .
The proposed acquisition also comprises an agreement to purchase, when completed, the planned extension of the current Basement 1 of the mall (“Phase 2”) with a GRA of approximately 11,539 sq m from the original developer of Xihuan Plaza, Beijing Finance Street Construction Development Co., Ltd., subject to certain conditions being fulfilled. The extension would increase the GRA of Xizhimen Mall by 15.6%.
Phase 2 would provide direct pedestrian connectivity to the underground Mass Rapid Transit (“MRT”) station for Line 2 and the future Line 4, and to the National Railway Beijing North station situated next to the mall. The completion of this extension is expected to increase overall shopper traffic and enhance shopper flow within the mall, hence providing further upside to the mall’s overall rentals. With the strong leasing performance at the existing Basement 12, and the favourable price to be paid for Phase 2, we are confident that the acquisition of Phase 2 would provide growth to CRCT unitholders.
Two independent property valuers, Colliers International (Hong Kong) Limited (“Colliers”) and Knight Frank Petty Limited (“Knight Frank”), were commissioned by the Manager and Trustee respectively to value Xizhimen Mall. Colliers and Knight Frank have valued the property at S$338.4 million3 (RMB1,692.0 million) and S$340.0 million3 (RMB1,700.0 million) respectively, as at 30 September 2007.
Mr Hsuan Owyang, Chairman of CRCTML, said, “The yield-accretive acquisition of the prime Xizhimen Mall will grow CRCT’s portfolio asset size from its current S$763.7 million4 to S$1.16 billion5. With the secured and proprietary pipeline of quality assets from CapitaLand-sponsored private China retail property funds, as well as from potential direct acquisitions from the market, CRCT is on track to achieve its target portfolio size of S$3.0 billion by 2009. On the back of rising consumerism and growing retail sales in the Chinese retail market, we remain committed to deliver stable and growing distributions with sustainable total returns, through leveraging on our multi-pronged strategy, to our unitholders.”
Mr Lim Beng Chee, CEO of CRCTML, said, “Sitting atop one of Beijing’s only two key transportation hubs with an average commuter flow of 300,000 on weekdays and 600,000 on weekends, Xizhimen Mall is well-positioned to capture the tremendous daily pedestrian traffic to the mall. The commuter traffic will be further strengthened with Xizhimen Mall’s Phase 2 extension plan, which would provide direct pedestrian connectivity to the MRT station and the adjacent railway station from the Basement Level. The acquisition of Xizhimen Mall will also extend CRCT’s market presence to the western part of Beijing, allowing it to benefit from the large pool of middle-class shoppers and tenancy demand in areas such as Beijing Finance Street and Zhongguancun District.
Together with Anzhen, Jiulong and Wangjing Malls in other locations in Beijing, Xizhimen Mall will position CRCT favourably to capture the city’s strong retail growth opportunity which has averaged approximately 12% annually in the last decade.”
1 The “implied property yield” is calculated as the net property income of CRCT’s existing portfolio in Forecast Year 2008 over the value imputed to the portfolio by investors in CRCT, as reflected by the price at which CRCT Units are currently trading on Singapore Exchange Securities Trading Limited.
2 Committed occupancy rate for Basement 1 is 84.5% as at 11 October 2007
3 The valuers have assumed the exchange rate of S$1 = RMB5.00
4 Based on CRCT’s existing portfolio of seven properties as at 30 June 2007
5 After taking into account the proposed acquisition
Source : SGX
REITs – UOBKH
Mixed Performances In Turbulent Times
Growth was 1H07 theme. For the most part of this year, growth has been the main theme of the real estate investment trust (REIT) sector. The best-performing REITs for 1H07 were high-growth REITs such as CapitaRetail China Trust (CRCT), Capital Mall Trust (CMT) and CDL Hospitality Trust which saw returns in excess of 40%. As the market has turned cautious with the bottoming out of interest rates in April and May, most REITs have fallen from their highs in May and June. The recent correction has resulted in the decline of most REITs.
Boring REITs offer capital protection. In turbulent times, the market’s appetite for risk falls sharply and risk premiums shoot up. The focus then shifts from growth to capital protection and income preservation. Investors should consider boring REITs. Though less exciting, they have the lowest growth premiums built into their stock prices. We look for REITs with low price-to-book values for capital protection and high-yield REITs for income preservation. In addition, we prefer REITs with a greater focus on the Singapore economy given the latter’s safe haven status. ParkwayLife REIT (Parkway) and Macquarie MEAG Prime REIT (MMP) stand out in terms of yields and price-to-book ratios.
Avoiding logistic REITs for the time being. With slower asset appreciation and rental reversion, REITs focusing on the logistics segment rely on acquisitions to drive growth. As risk premiums go up, the increase in cost of capital makes it more expensive to fund new acquisitions on yield-enhancing terms.
Buying opportunities for the brave. The current market turbulence may represent an opportunity to pick up some high-quality REITs at depressed prices. For the bottom-fishing investor, we recommend CapitaCommercial Trust (CCT), K-REIT Asia (K-REIT), CRCT and CMT for their ability to grow organically and via acquisitions. As the market recovers, these higher-quality REITs are likely to be the first to stage a rebound. As seen in the market rebound this week, these REITs had the bigger price appreciation.