Category: MLT
MLT – Nomura
First look
The deterioration in leasing markets now appears to be manifesting itself in MLT’s core property portfolio. 3Q09 results were characterised by a 2.3% q-q fall in gross property income, a 6.5% q-q rise in outgoings and a 3.5% q-q fall in net income as portfolio occupancy fell 1.2pp q-q to 97.1%. We expect lower rental growth expectations to impact capitalisation rates and valuations, and, ultimately, MLT’s book value of S$0.88/unit. REDUCE maintained, with a PT of S$0.48/unit.
Property income down 3.5% q-q
MLT – CNA
Mapletree Logistics Q3 DPU down 19.6% on year
Mapletree Logisticis Trust has reported a third quarter distribution per unit of 1.48 cents, down 19.6 per cent from a year earlier.
The fall in DPU was mainly due to the enlarged number of units as a result of a rights issue in August last year. However the DPU was the same as in the second quarter.
Net property income for the three months ended September rose 9.5 percent to S$44 million.
MapletreeLog said the result reflects the resilience of its portfolio which continues to enjoy high occupancy rates and sustained rental rates.
Looking ahead, the logistics REIT said it expects pressure on occupancy and rental rates to ease a little with the improving outlook.
It added that the impact of the economic crisis on the current capital and real estate markets has thrown up some acquisition opportunities in Asia which it intends to look into.
MLT – DB
3Q09 results in line; focus returning to acquisitions
MLT’s 3Q09 DPU of 1.48cts (flat QoQ, -20% YoY) was in line with expectations. NPI rose 9.5% YoY on accretion fr new acquisitions but fell 3.5% QoQ due to a S$2.2m doubtful debt relating to a pre-termination of a lease in S’pore.
Impact of the downturn filtering through. Overall occupancy declined slightly fr 98.3% to 97.1% with tenant retention dipping fr 80% to 74%. Rental reversions were flat in 3Q with continuing focus on tenant retention. ~80% of leases expiring in 2009 have been renewed. Rental in arrears rose slightly to 1.8% (fr 1%) of revenue primarily on the pre-termination of the lease. Gearing remains stable at 38.1% with avg borrowing cost a low 2.7%. Only S$19m of working capital loans are due for renewal in 4Q09 which is
sufficiently met with its S$78m RCF.
Acquisitions expected. Mgmt is currently in advanced negotiations for some acquisition opportunities both in S’pore and offshore (Japan, HK) & have noted more realistic pricing fr sellers (indicative cap rates of ~9% for selected deals in S’pore). Its Sponsor also continues to incubate the pipeline of devt projects with ~S$300m completed or nearing completion. Mgmt reiterated that it has no plans to raise equity purely for recapitalization with any potential fund raising to be motivated by accretive acquisitions. We have raised our FY09-11E DPU slightly by 2-3% to reflect lower than expected financing cost, and believe MLT is on track to meet our FY09E DPU of 5.87cts. We maintain our Buy rating with revised TP of S$0.82 (fr S $0.81) with attractive valuations at 7.8% FY09E yield and 0.85x P/B. MLT is well positioned to weather the downturn with its well-diversified portfolio and recovering credit & capital markets could revive its acquisition-led business model and catalyst shr price performance.
SREIT – OCBC
3Q09 results preview
Results preview. Four of the S-REITs under our coverage are releasing 3Q CY09 results this week, with the rest following suit in the next two weeks. Ascott Residence Trust (ART) is likely to give a poor YoY showing compared to an exceptional Olympics-driven 3Q08. For Frasers Centrepoint Trust (FCT), we expect QoQ improvements due to greater contributions from Northpoint as asset works wrap up. Our 3Q forecasts for Mapletree Logistics Trust (MLT) are fairly cautious as we expect lower occupancy levels to put a dampener on 2H09 earnings. Dilution from equity fundraising activity drives our estimate of YoY declines in DPU for CapitaCommercial Trust (CCT), CapitaMall Trust (CMT) and MLT.
Focus on occupancy & reversion data… Our primary focus will be on occupancy and rent metrics provided by the various REITs, especially in the industrial and office space. Industrial space occupancy has continued to fall, potentially leading to a moderation in portfolio occupancy at MLT (prev: 98.3%). We expect the rate of decline of achieved office rents at CCT and Suntec REIT to slow versus 1H09. Occupancy at Suntec City Office Towers fell from 96.3% as of March-end to 92.5% as of June-end as tenants redelivered part of previously-leased space. We will be looking for Suntec to at least maintain or improve that level. We will also be looking for evidence of occupancy stabilization at ART – the next challenge will be increasing rates, which requires sustained high occupancy levels.
…and on forward guidance. The tone of manager guidance versus 2Q CY09 is also worth watching. We believe managers are likely to be more optimistic in describing the outlook for the next six months (whether it is calling for stabilization or some sort of recovery depending on the property sub-sector). Guidance provided on capital market activity is also significant. We had previously highlighted FCT, Suntec and MLT as likely candidates for an acquisition/cash call two-for-one in the near-term. At last quarter’s briefing, MLT’s manager indicated interest in third-party acquisitions, provided these buys are coupled with an equity issue to at least maintain (or reduce) current gearing levels. But in October, it walked away from a fund raising proposal. Market skepticism towards cash calls has increased in the past three months in our view, which may affect managers’ position on this issue. We maintain our NEUTRAL stance on the sector, and see continuing opportunities for yield arbitrage. Top picks are ART and FCT.
MapleTree – SGX
LIFTING OF TRADING HALT
Mapletree Logistics Trust Management Ltd. (the “Manager”), the manager of Mapletree Logistics Trust (“MapletreeLog”), yesterday received a capital fund raising proposal.
A trading halt was requested while the Manager considered the proposal. After evaluating the proposal and MapletreeLog’s potential property acquisitions and the timeline for their completion, the Manager decided that it was not in the best interest of MapletreeLog and its unitholders to proceed with the fund raising proposal at this time.
Accordingly, the trading halt is lifted.
Link : SGX