Category: MP REIT
MP REIT – BT
YTL snaps up interest in Macquarie Reit for $285m
Price is 52% above its last traded price, but 49% discount to net asset value
Malaysian conglomerate YTL Corp yesterday took over the Macquarie Group’s entire interest in Singapore-listed Macquarie Prime Reit in an all-cash deal worth $285 million.
YTL said it was paying 82 cents a unit for 247.1 million units in the Reit, about 26 per cent of the total, valuing the stake at $202.6 million.
The price is a 49 per cent discount to Macquarie Prime Reit’s net asset value, and a 52 per cent premium over its last traded price on Friday of 54 cents. Trading in Macquarie Prime was halted yesterday for the announcement.
The remaining $80 million is for Macquarie’s 50 per cent stake in the Reit manager, which will allow YTL to control the Reit, YTL Group managing director Francis Yeoh told reporters here yesterday.
Noting that the deal provides a 2009 yield of about 9.4 per cent, based on Bloomberg consensus estimates, Mr Yeoh said it offers ‘very compelling returns in Singapore dollar terms’ and illustrates his optimism about the Singapore property space.
The Reit currently owns $2.2 billion of retail and office properties in Singapore, Japan and China. It has stakes in Wisma Atria and Ngee Ann City along Orchard Road.
YTL is separately developing two luxury villas on Sentosa Island and last year bought the prime Westwood Apartments site at Orchard Boulevard for $435 million.
‘I’m very confident Singapore will pull through this little turbulence… Even if they have a crisis they will always come out ahead of the curve,’ he said. Mr Yeoh will be appointed the Reit manager’s executive chairman once the deal is completed.
Mr Yeoh said Macquarie Prime will be rebranded Starhill Global Reit and will be YTL’s main vehicle for strategically acquiring yield accretive prime retail space in Asia and the West. He added he will be working with principals in the fashion, food and watch and jewellery industries to boost yields in its luxury malls.
Keith Magnus, Merrill Lynch’s head for Singapore and Malaysia investment banking and YTL’s strategic adviser for the transaction, said: ‘Challenging equity and debt conditions on account of the sub-prime crisis and tightening credit market conditions have led to attractive valuations.’
In February this year, Macquarie Prime, then known as Macquarie MEAG Prime Reit, said it was undergoing strategic review that could see the Macquarie Group selling its stake in the Reit. It is said to have received more than 20 expressions of interest from unnamed parties.
In May, MEAG Munich Ergo AssetManagement sold its 25 per cent stake in the Reit’s manager to Singapore-based fund management company Pacific Star. The deal left Pacific Star and the Macquarie Group each with an equal share of the Reit manager. Macquarie’s 50 per cent stake has now been bought by YTL.
The YTL Group already controls Bursa Malaysia-listed Starhill Reit, the country’s largest Reit with four properties in Kuala Lumpur valued at about US$430 million. Mr Yeoh did not rule out any merger of the two Starhill Reits, saying that ‘as long as there is equitable interest for all, we will do it.’
MP REIT – SGX
HIGHLIGHTS
• 3Q 2008 DPU of 1.78 cents achieved, 15.6% higher than 3Q 2007
• Singapore properties continue to demonstrate strong performance
• S$220 million of loans refinanced during the quarter at competitive rates
• Strategic review concluded; to assess and implement new strategic initiatives with new sponsor, YTL Corp
More detail, click here
MP REIT – BT
YTL buys 26% of Macquarie Prime Reit
Malaysia’s YTL Corp Bhd on Tuesday bought Macquarie Bank’s 26 per cent stake in Singapore-listed Macquarie Prime Reit for $202.6 million, a 49 per cent discount to the Reit’s net asset value.
The deal, which works out to 82 cents per unit, is at a 17 per cent premium over its 30 day volume weighted average price and 52 per cent over its last traded price.
YTL also bought over Macquarie Bank’s 50 per cent share in Prime Reit Management Holdings, the reit manager and with its stake in the Reit, will be able to control operations. The all-cash deal is valued at a total of $285 million.
AIG – BT
AIG has direct stake in three listings here
Its largest stake is in Macquarie Prime Reit, followed by First Lease & Jiutian
Ailing insurer American International Group (AIG) has direct and significant stakes in Singapore listings Macquarie Prime real estate investment trust (Reit), First Ship Lease Trust and Jiutian Chemical Group, Bloomberg data showed.
About 10 other firms listed here are exposed to investment funds owned by the world’s largest insurer, which was thrown a life-line on Wednesday in the form of a US$85 billion government loan.
AIG directly owns 10.9 per cent of Macquarie Prime Reit, which works out to $75.3 million based on yesterday’s closing price of 72 cents. It also holds 0.9 per cent stake of the Reit through two AIG-managed international funds, known as the Singapore bond and Acorns of Asia balanced funds.
First Ship Lease Trust has about 8 per cent, or 40.4 million shares, held directly by AIG. This is worth $34.4 million based on the last closing price of 85 cents. AIG also holds an additional 1.6 per cent of First Ship through the same two international funds.
China-based Jiutian Chemical Group has nearly 4 per cent in the direct hands of AIG. The 64.6 million shares is equivalent to $4.84 million, according to yesterday’s closing price of 7.5 cents. Two AIG-managed funds – AIG South-east Asia small companies fund and Southeast Asia small and mid-cap fund – owns another 0.3 per cent.
AIG has not declared changes in shareholding to the Singapore Exchange.
First Ship Lease Trust called AIG late afternoon on Wednesday regarding the company’s shareholding and was told that AIG would be holding on to its stake for now, chief financial office Cheong Chee Tham told BT.
‘We have received no indication from AIG on selling,’ he said.
Macquarie Pacific Star spokesperson said: ‘Macquarie Pacific Star, the manager of MP Reit, maintains regular communications with the Reit’s substantial unitholders,’ adding that AIG has held its stake in the Reit since its listing in September 2005.
‘However, we are not in a position to speak on behalf of them. AIG, as a substantial unitholder, is required to inform the market of any change in their interest in MP Reit.’
AIG-managed funds are also invested in other stocks including S-chips Ferrochina, Fibrechem Technologies and Synear Food Holdings, property firms Ho Bee Investment and Hotel Properties, marine players STX Pan Ocean and Swiber Holdings, as well as Raffles Education Corporation and Raffles Medical Group. All stakes are below 0.5 per cent.
Fibrechem and Raffles Medical have not contacted AIG on their shareholdings, spokesmen said. Ferrochina and Raffles Education declined comment.
As the US Treasury rushes to save AIG, Wall Street has turned its attention to Morgan Stanley, after the Financial Times reported that the US investment bank was in preliminary merger talks with parties including Wachovia, the fourth largest US bank based on assets, and China Investment Corporation. This follows the declared bankruptcy of Lehman Brothers in the same week.
Morgan Stanley directly owns 12 per cent of United Industrial Corporation (UIC), a property unit of Singapore’s second largest bank United Overseas Bank, Bloomberg data showed. It also holds another 1.36 per cent in UIC through its asset management and investment divisions.
Some 10 per cent of logistics firm CWT is also held by Morgan Stanley. It holds 9.79 per cent directly and 0.25 per cent through its asset management arm. ‘Everything remains well and unchanged now,’ CWT chief financial officer Lynda Goh told BT.
Lehman has no significant direct investment in stocks here, according to Bloomberg.
MP REIT – BT
Moody’s downgrades MP Reit’s ratings
Moody’s Investor Services has on Monday downgraded the corporate family and unsecured ratings of Macquarie Prime Reit (MP Reit) to Baa2 and Baa3 respectively. The outlook for the ratings is stable.
The credit rating agency said this concludes the rating review for downgrade which commenced on Feb 26 2008 after MP Reit announced a comprehensive strategic review.
‘The downgrade reflects overall weaker financial flexibility for the trust, which has resulted in its recent refinancing requiring a second ranking security being granted over its assets, due to the strategic review’ says Kathleen Lee, Moody’s vice president and lead analyst for the trust.
‘In addition, whilst the refinancing is welcome, it highlights the relatively limited access the trust has to bank / debt markets given the security and the fact the new loan is only for two years,’ adds Ms Lee.
As a result over 90 per cent of its debt is now maturing at the end of 2010 in a rather unusual lumpy maturity profile and with a large exposure to the currently shut CMBS market.
‘The need for a second ranking security and the large amount of debt maturing at one time is highly unusual for an investment grade entity’, commented Ms Lee.
The rating downgrade was also in part driven by the ongoing strategic review which creates significant uncertainty surrounding the reit’s future operating and strategic profile.
On the other hand, the rating continues to be supported by MP Reit’s good quality asset profile, its ability to generate stable and recurring incomes and its sound financial metrics with TD/TA leverage at 28%, EBITDA/Interest at 4/0x and Debt/EBITDA at 8.3x. This operating profile and financial metrics remain solidly investment grade and counterbalance the weaknesses outlined.
The outlook is stable reflecting these strengths and the limited refinancing risk before 2010.
Upward pressure on the rating is unlikely in the next near term given the ongoing strategic review, the Reit’s limited financial flexibility and the lumpy debt maturity profile.
On the other hand, downward rating pressure could emerge if the strategic review results in asset sales narrowing the Reits operating profile or an increase in leverage.
Credit metrics that may evidence such pressure could include fixed-charge coverage (EBITDA/ interest) falling below 3.0x, debt to EBITDA exceeding 10.0x and total debt to assets exceeding 45% on a sustained basis. A change in the ownership of the manager or the relationship with Macquarie Bank might also be negative but would depend on who was replacing them.
MP Reit was listed on the main board of the Singapore Stock Exchange in September 2005. Its original portfolio consists of strata ownership of two parts of two landmark retail /office properties, Wisma Atria and Ngee Ann City, both on Orchard Road, Singapore’s premier street for shopping and tourism. In 2007, MP expanded its geographical reach by adding 7 retail properties in Japan and another retail property in Chengdu (China) which raised the value of its portfolio from S$1.93 billion to S$2.21 billion as at end-2007.