Category: MP REIT
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
MMP – SGX
Macquarie Bank Ltd has increased it holding from 25.96 % To 26.30 %.
Date of change of Deemed Interest: 10-08-2007
MapleTree, MMP – BT
Mapletree Log, Macquarie MEAG Reit post better income
ANOTHER two real estate investment trusts have reported better performances.
For Mapletree Logistics Trust (MLT), gross revenue for Q2 2007 was $34.1 million, up 82.6 per cent year-on-year.
MLT said that this was mainly due to contributions from 30 new properties acquired during the year.
Compared to a book value of $1 billion a year ago, its portfolio of properties has since doubled to reach $2.1 billion as at 30 June.
Net property income for the quarter was $30 million, up 85.9 per cent, while distributable income attributable to unitholders was $17.7 million, up 83.6 per cent.
Distribution per unit (DPU) for the quarter of 1.59 cents was 33.6 per cent higher year-on-year and 7.4 per cent higher than the previous quarter.
Reiterating MLT’s ‘growth by acquisitions’ strategy, Chua Tiow Chye, CEO of Reit manager Mapletree Logistics Trust Management Ltd (MLTML) said: ‘For the current year-to-date, we have completed $654 million of acquisitions and have another $166 million of acquisitions that have been announced but are pending completion. This means we have achieved 82 per cent of our $1 billion target for 2007.’
Mr Chua also said the MLT’s funding structure will continue to be optimised.
As at June 30, MLT’s leverage ratio was 54 per cent compared to 39 per cent as at March 31, 2007.
At the end of Q2 2007, 55 per cent of MLT’s total borrowings of $1.182 billion were hedged, he added.
In January, MLT raised $349 million through a fund-raising exercise, offering 296.8 million new units. MLTML deputy CEO and CFO Richard Lai said it was ‘exploring various options of going to the markets for fund raising’ for future acquisitions. MLT expects to have a portfolio worth $5 billion by 2010.
About 20 per cent of its future pipeline will come from sponsor Mapletree Investments which is developing projects in Vietnam, China and Malaysia.
MLT’s share price closed at $1.33 per unit, down 3 cents from the previous day.
Separately, Macquarie MEAG Prime Real Estate Investment Trust (MMP Reit) reported yesterday that gross revenue for Q2 2007 increased 5.5 per cent year-on-year to $23.6 million, due mainly to higher-than-expected rents achieved for retail space in the basement of Wisma Atria, as well as for office space.
Contributions from six newly acquired properties in Tokyo were also booked for the first time.
Net property income was up 3.5 per cent at $17.9 million while distributable income was $14.3 million, up 4.7.
The DPU of 1.50 cents for the quarter was 4.2 per cent higher compared to the 1.44 cents achieved for the previous corresponding period.
MMP Reit share price ended the trading day at $1.25 unchanged.