TCT says Q1 profits up 9.7%

Treasury China Trust (TCT) on Monday posted a 9.7 per cent gain in first quarter net profit to S$7.71 million, up from S$7.03 million a year ago.

Helped by assets acquired over the prior year, this translates to a quarterly earnings per unit of 3.0 cents compared to 2.7 cents in the same period last year.

As a Singapore-listed entity, TCT's reporting currency is in Singapore dollars, which takes into account its appreciation against the Chinese yuan.

Gross revenue for Q1 leapt 33.5 per cent year-on-year to S$25.97 million, while net property income rose 28.4 per cent to S$15.99 million.

TCT’s The HQ secures tenants for retail mall

TREASURY China Trust’s (TCT) landmark development, The HQ, has achieved 27 per cent pre- commitment of its expanded retail mall, its trustee- manager, Treasury Holdings Real Estate, said yesterday.

Hongqiao Century Cinema, the existing cinema operator of eight years, accounted for one of the three additional leasing transactions recently secured by the Singapore- based business trust, which focuses on commercial real estate in China.

TCT said Hongqiao’s lease terms reflect a 175 per cent increase in rent.

The cinema operator will surrender its existing lease prior to its expiration in 2013, to undertake a ‘substantial refit’ of the premises, estimated to cost over six million yuan (S$1.2 million).

The 2,530-square-metre cineplex will reopen in 2013 with contemporary interior design and state-of- the-art DTS and SRD digital stereo projection equipment.

It is part of the 88,000 sq m expanded retail mall of The HQ’s 264,000 sq m fully integrated commercial complex, which was formally launched in October 2011.

The extension is currently under construction and scheduled for completion in September 2013.

The HQ had, in late February, secured a 12-year lease agreement for nearly 4,300 sq m with various brands under the banner of the Inditex Group from Spain. Led by Zara’s 2,000 sq m flagship shop, Inditex will launch seven of its retail formats at The HQ.

Additionally, high-end supermarket Ole’ will be the anchor tenant at The HQ, leasing a sprawling 5,500 sq m of space.

The largest Ole’ store in Shanghai will replace the existing Parkson facility of 2,500 sq m.

‘These high- profile retail leasing transactions complement and enhance the unique retail offering of The HQ and also serve as a strong testimony to the attractiveness of this flagship development,’ said Richard David, CEO of TCT.

TCT gained 3.5 cents to close trading at $1.43 apiece yesterday.

TCT to start private equity funds in China

TREASURY China Trust (TCT) has received the Chinese government’s equity investment management licence enabling it to establish an equity investment management business in Shanghai.

This is a major step in TCT’s growth as a significant entity in the Chinese business sector, its trustee manager, Treasury Holdings Real Estate Pte Ltd, said yesterday.

‘This is a major coup for TCT, providing as it does direct access to China’s huge store of renminbi deposits whilst dramatically expanding TCT’s reach and prospects of influence within the Chinese market,’ said Richard David, chief executive officer of TCT.

The licence permits TCT, through its wholly-owned Shanghai-based subsidiary, to raise domestic renminbi capital in a private equity format for reinvestment across a multitude of investment classes.

Additionally, the business approval allows TCT to act as a general partner and to proactively manage renminbi invested funds.

TCT is in discussions with a number of domestic insurance companies and private banking units with the intention of launching its first fund this year.

Next month will see the completion of TCT’s Beijing Logistics Park, which is being put up for sale.

‘It has become a highly specialised industry, and in this context given TCT’s stated focus in the short to medium term on China’s burgeoning retail sector, it is appropriate that this property be marketed for sale,’ said Mr David.

The 75,028 sq m logistics project has achieved 100 per cent leasing pre-commitment.

The leases, signed by China’s largest online retail platform Taobao and logistics provider Shun Feng Express, exceed the rental established for the property, which will provide in excess of 30 million yuan of annual revenue.

TCT units rose 2.5 cents to close trading at $1.34 apiece yesterday.

TCT’s Beijing Logistics Park up for sale

TREASURY China Trust’s (TCT) development property, Beijing Logistics Park, has been placed on the market for sale, its trustee manager, Treasury Holdings Real Estate Pte Ltd, said yesterday.

This follows the achievement of a 100 per cent leasing pre-commitment for the property, which is scheduled for completion in April 2012.

China’s largest online retail platform, Taobao, has entered into a three-year lease of the property for a total lettable area of 65,083 sqm. It will be established as Taobao’s central distribution hub for north-east China.

The remaining 8,579 sq m will be occupied by Shun Feng Express, a logistics provider servicing domestic and international networks, committed through a three-year lease expiring in June 2015.

TCT said both leases exceed the rental established for the property and will provide in excess of 30 million yuan (S$6 million) of annual revenue.

‘It has become a highly specialised industry, and in this context given TCT’s stated focus in the short to medium term on China’s burgeoning retail sector, it is appropriate that this property be marketed for sale and … we remain confident of a positive outcome for this investment,’ said Richard David, CEO of TCT.

The 75,028 sq m logistics project forms part of the Beijing Airport Logistics Park.

TCT units rose half a cent to close trading at $1.315 apiece yesterday.

Treasury China Q4 income falls short of its forecast

TREASURY China Trust (TCT) yesterday posted a net property income of $15.9 million for the three months ended Dec 31, 2011, up 31.9 per cent from $12 million a year earlier.

In renminbi terms, Q4’s net property income of 78.68 million yuan (S$15.9 million) was 4.6 per cent lower than TCT’s own forecast of 82.47 million yuan.

Meanwhile, gross revenue for the quarter rose 27.4 per cent to $26.1 million, underpinned by the continued strengthening of its portfolio occupancy, and the increase in underlying average rent per square metre.

This was in turn driven by an average 8.5 per cent increase in rent for the 32 leases negotiated during the quarter.

Earnings per unit for Q4 2011 slipped to 8.1 cents from 8.7 cents for Q4 2010.

For the full year ended Dec 31, 2011, TCT’s net property income was $58.1 million, 0.8 per cent lower than its forecast. Gross revenue was $93.2 million.

For the period from May 19 to Dec 31, 2010, net property income was $22.6 million on revenue of $39.6 million. TCT, a Singapore-based business trust focusing on commercial real estate in China, was listed in June 2010.

TCT did not declare any distributions for the financial period, citing the ongoing uncertainty in China’s liquidity environment and its current development of The HQ – a retail and office complex in Shanghai.

TCT’s chairman, Richard Barrett, called the decision to delay the declaration of a distribution ‘one of prudence’, in order to ensure liquidity should bank lending be further tightened.

Mr Barrett also issued a note of caution for 2012: ‘Despite the (Chinese) government’s decision on Feb 17, 2012, to reduce the reserve requirement ratio by 0.5 per cent, equivalent to approximately 380 billion yuan in additional liquidity, the prospect of increased certainty from banks as to the availability of funding for the real estate sector remains patchy at best.’

The reserve requirement ratio refers to the amount of funds Chinese banks are required to hold with the central bank.

In a separate filing to the Singapore Exchange yesterday, the group also clarified that TCT, its intermediate holding companies, and its project companies are ‘in compliance with their respective debt covenants.’

TCT units fell 11 cents to close trading at $1.39 per unit yesterday.