Category: MMP
MMP – SGX
COMPLETION OF ACQUISITION OF RETAIL PROPERTY IN CHENGDU
Further to the announcements of 22 August 2007 and 23 August 2007, Macquarie Pacific Star Prime REIT Management Limited (“Manager”), the Manager of Macquarie MEAG Prime Real Estate Investment Trust (“MMP REIT”), is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited, the Trustee of MMP REIT (“Trustee”), has today completed the indirect acquisition of Renhe Spring Department Store in Chengdu, China (the “Property”).
The total purchase price of RMB350 million (equivalent to S$70 million) and other acquisition costs have been fully funded by debt.
Pursuant to the Business Cooperation Agreement dated 28 August 2007 between PRC WFOE and Chengdu Renhe Spring Department Store Co., Ltd (“Rendong”), the property management functions in respect of the Property will be carried out by Rendong.
With the completion of this acquisition, MMP REIT’s portfolio has been enlarged and comprises nine assets located in Singapore, Japan and China, valued in aggregate at approximately S$1.8 billion.
MMP – SGX
SGX-ST Announcement
ESTABLISHMENT OF WHOLLY-OWNED SUBSIDIARY
The Trustee is the sole shareholder of the SPV and beneficially entitled to the entire issued share capital of the SPV, which is comprised in US$2.00.
None of the directors of the Manager, nor of the controlling unitholders of MMP REIT, has any interest, direct or indirect, in the above transaction.
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.
MMP – BT
MMP Reit takes full control of mall in Chengdu
100% stake represents yield accretion of 3.4% on annualised basis
INSTEAD of acquiring a 50 per cent stake, Macquarie MEAG Prime Real Estate Investment Trust (MMP Reit) is now taking full control of Renhe Spring Department Store in Chengdu, China, for 350 million yuan (S$70.3 million). MMP Reit had in April this year announced that it would acquire a half stake in the 101,000 sq ft department store owned by Renhe Spring Group for 150 million yuan. The property, valued at 340 million yuan as at Dec 31, 2006, was re-valued at 350 million yuan as at July 31 this year.
On the increased stake, Franklin Heng, chief executive officer of the Reit’s manager, Macquarie Pacific Star, said: ‘This is a win-win arrangement…Not only will the yield accretion of this transaction for MMP Reit now be higher, Renhe Spring Group will also have more financial resources for its expansion and development projects in China, over which MMP Reit will continue to enjoy a first right of refusal.’
Renhe Spring Group’s pipeline of opportunities in China includes two other prime retail properties in Chengdu with combined gross floor area of more than one million sq ft.
The 100 per cent stake in the department store represents a yield accretion of 3.4 per cent on an annualised basis to MMP Reit’s distribution per unit, assuming full debt financing.
Between 2005 and 2006, Renhe Spring Department Store registered about 23 per cent of year-on-year retail sales growth and, for 2006, its sales were 263 million yuan.
The 350 million yuan price tag comprises 310 million yuan in cash and the assumption of an interest-free debt of 40 million yuan owed to Renhe Spring Group and repayable over seven years. Renhe Spring Group will also continue to operate the department store for a fee of 0.8 per cent of the gross turnover.
Renhe Spring Group guarantees annual net distributable profits of 26.4 million yuan, which is secured for two years by the sum of 20 million yuan to be deducted from the consideration and held in escrow.
With the completion of MMP Reit’s acquisitions in Japan in May and assuming the acquisition in China is fully funded by debt, MMP Reit’s gearing will be 31.8 per cent.
MMP Reit comprises eight properties including a 74.23 per cent stake in Wisma Atria, a 27.23 per cent stake in Ngee Ann City, and six properties in Tokyo.
MMP – SGX
MMP REIT TO INCREASE ITS 50% STAKE IN PRIME CHENGDU RETAIL PROPERTY TO 100%
HIGHLIGHTS
- MMP REIT to pay consideration of RMB350 million (equivalent to S$70 million)
for a 100% stake in the property - Yield accretion of acquisition will be 3.4%, assuming 100% debt financing
- Guaranteed net distributable yield out of China of 7.54% p.a. or RMB26.4 million(equivalent to S$5.28 million) p.a., for two years
- MMP REIT to enter into Business Cooperation Agreement with the Renhe Spring Group
- MMP REIT retains first right of refusal to the Renhe Spring Group’s pipeline of opportunities in China
Source : SGX