Category: MI-REIT
MI-REIT – BT
Three property, infrastructure funds allay fears
Two MacarthurCook funds and one Macquarie fund update financial positions
THREE property and infrastructure funds yesterday issued statements in a bid to allay market concerns about tighter credit, and to provide updates on their financial positions.
Facing a possible rating downgrade by Moody’s Investors Service, MacarthurCook Industrial Reit (MI-Reit) reassured investors that it is ‘advanced in negotiations’ to refinance a $220 million facility maturing in April 2009. Discussions should be finalised in January next year.
Moody’s said on Tuesday that MI-Reit, with a Baa3 corporate family rating, ‘faces significant refinancing risks’ as this amount of debt is not covered by available committed facilities.
Moody’s review also reflected concerns over MI-Reit’s asset and tenant concentration, which could be ‘much greater…than is consistent with a Baa3 rating.’
To this, MI-Reit said that its income is protected by a long lease expiry profile. For instance, only 3.6 per cent of the trust’s rental income will be subject to lease expiry in FY2010.
Head lease arrangements and a diversified portfolio of quality tenants also contribute to income security, it added. Around 36 per cent of rental income comes from manufacturing facilities which ‘tend to have higher tenant retention rates in an economic downturn’.
MI-Reit ended trading yesterday with an unchanged unit price of 33 cents.
Another fund, the MacarthurCook Property Securities Fund, also updated investors on its operations yesterday.
‘While interest rates around the world are now trending down, the ability to source competitively priced debt, combined with the anticipated slowing in economic growth, continues to be a concern for the market,’ said Richard Haddock, chairman of fund parent MacarthurCook Fund Management Ltd.
A priority is to further reduce debt and prudently manage its underlying portfolios, said the MacarthurCook Property Securities Fund. One strategy is to cut its weightings on unlisted property and use those funds to reduce debt.
A third fund, the Macquarie International Infrastructure Fund Limited (MIIF), said yesterday that it has no bilateral dealings with known troubled financial institutions.
According to the fund, borrowings held by its underlying businesses have remaining maturities of three to 14 years, and most of its interest exposures are also hedged for the medium to long term.
MIIF also said that its businesses are performing strongly in line with management’s expectations. It therefore expects income this year to be comparable with that received last year.
The unit price for MIIF rose 2.5 cents yesterday to close at 37.5 cents.
FCOT, MI-REIT – BT
By EMILYN YAP
CREDIT rating agencies have turned more pessimistic on two real estate investment trusts (Reits) in Singapore: Frasers Commercial Trust (FCT) and MacarthurCook Industrial Reit (MI-Reit).
Standard & Poor’s (S&P) Ratings Services yesterday changed its CreditWatch status on BB-rated FCT from positive to developing. The revision arose from concerns over FCT’s debt of $70 million, which will be due on Nov 22.
‘FCT has yet to finalise its refinancing plans to the level of certainty we expected,’ said S&P credit analyst Wee Khim Loy.
FCT owes $70 million to the Commonwealth Bank of Australia, due next month. In addition, it owes the bank $400 million and $150 million, which will fall due in July and December 2009 respectively.
According to S&P, FCT has said it is making progress in obtaining firm commitment from a consortium of banks to refinance the debts. This is helped by the financial flexibility and satisfactory credit profile of Frasers Centrepoint Ltd (which owns 18.27 per cent of FCT) and Fraser and Neave Ltd (which owns Frasers Centrepoint).
S&P expects FCT to have firm committed refinancing arrangements ready by Oct 31. Otherwise, FCT’s rating may be placed on CreditWatch negative or lowered.
Separately, Moody’s Investors Service yesterday placed MI-Reit’s Baa3 corporate family rating on review for a possible downgrade.
With ‘dramatically changed market conditions’, MI-Reit is ‘likely to retain much greater asset and tenant concentration than is consistent with a Baa3 rating’, said Moody’s lead analyst for the trust, Kathleen Lee.
The review also recognised refinancing risks facing MI-Reit. The trust has 91 per cent of its total debt or $201 million falling due next April, which is not covered by available committed facilities.
Nonetheless, Moody’s noted that MI-Reit’s credit metrics still have reasonable headroom against its bank loan covenants. Its revenue stream is also supported by a relatively long- lease maturity profile, mitigating the effects of low asset diversification and moderate tenant concentration.
Moody’s review will focus on MI-Reit’s progress in securing committed financing for debt maturing in April next year. It will also consider management’s strategy in improving the asset portfolio and revenue streams in the next 1-2 years.
MI-REIT – BT
By EMILYN YAP
SINGAPORE – Three property and infrastructure funds issued statements on Wednesday in a bid to reassure investors of their financial positions.
The Macquarie International Infrastructure Fund Limited (MIIF) said that its businesses are performing strongly in line with management’s expectations.
The fund revealed that it has no bilateral dealings with known troubled financial institutions, and the earliest maturity date for borrowings held by underlying businesses stands at 2011.
Facing a possible rating downgrade by Moody’s, MacarthurCook Industrial Reit (MI-Reit) said that its income is secured by a long lease expiry profile, head lease arrangements and quality and diversified tenants.
MI-Reit added that it is in negotiations to refinance debt maturing in April 2009. Negotiations should be finalised in January next year.
The MacarthurCook Property Securities Fund also highlighted its commitment to further reduce debt and prudently manage its underlying portfolios.
MI-REIT – BT
Three MI-Reit properties gain $1.3m in revaluation
Revaluations raise carrying amount for portfolio to $554.1m from $553.6m
THREE properties under MacarthurCook Industrial Reit (MI-Reit) have gained $1.3 million in value from a year ago in the latest revaluation exercise.
MI-Reit’s manager, MacarthurCook Investment Managers (Asia) Ltd, yesterday released new independent valuations for seven industrial properties as at Sept 1. The value of four other properties remained unchanged from the previous year.
Together, the seven properties were valued at $227.6 million as at Sept 1, against $226.3 million a year ago.
Their total book value as at June 30, 2008, was $227.1 million.
The revaluations have raised the carrying amount for MI-Reit’s portfolio to $554.1 million, up from $553.6 million reported on June 30, 2008.
MI-Reit has 21 properties in its portfolio – 20 in Singapore and one in Japan. Independent valuations for the remaining 14 properties will be obtained throughout the financial year.
For the first quarter ended June 30, MI-Reit reported a distributable income of $6.62 million, 68 per cent higher than in the same period last year.
This followed a 94 per cent increase in net property income to $9.12 million.
Distribution per unit (DPU) rose 55 per cent year-on-year to 2.35 cents in 1Q09. In a press release last month, MacarthurCook Investment Managers (Asia) said that it expects to deliver a DPU that is in line with recent performance for the coming year.
While the US economic slowdown and global inflation could affect Asia, ‘we expect the demand for industrial properties in Singapore and in the Asian region to remain healthy on the back of strong prospects for Asia, albeit at a less brisk pace’, said CEO and executive director of the Reit manager, Craig Dunstan.
‘Given this economic scenario, organic growth in the portfolio will drive returns in the near future,’ he added.
‘However, we expect to resume our active acquisition growth strategy once capital market conditions improve.’
MI-Reit’s units gained 0.5 cents yesterday to close at 76 cents.
The counter has slid around 29.6 per cent from the start of the year.
MIREIT – BT
By ANGELA TAN
MacarthurCook Investment Managers (Asia) Limited, the manager of MacarthurCook Industrial Reit(MI-Reit), on Tuesday announced a distributable income of S$6.6 million for the first quarter ended June 30, 2008 — up 67.8 per cent or S$2.7 million higher than a year ago.
The distribution per unit (DPU) of 2.35 cents for the quarter outperforms the 1Q 2008 DPU of 1.52 cents by 54.6 per cent and exceeds the previous quarter’s performance by 5.9 per cent.
The books closure date to determine the entitlement to the 1Q 2009 DPU of 2.35 cents is 20 August 2008 and the date payable is 22 September 2008.
The growth in distribution during the quarter was largely driven by rental contributions from the acquisitions of nine additional properties during the last financial year. In addition, pre-determined rental escalations for two of the properties have contributed to the organic growth of the portfolio.
The manager expects to deliver, for the coming year, a DPU that is in line with its recent performance.