MCT – BT
MCT Q3 DPU beats forecast by 15.5%
MAPLETREE Commercial Trust (MCT) posted a distribution per unit (DPU) of 1.428 cents for the third quarter ended Dec 31, 2011, beating its forecast of 1.237 cents by 15.5 per cent.
This translates to an annualised yield of 6.7 per cent, based on MCT’s closing price of 85 cents on the last trading day of 2011.
Gross revenue of $49.7 million for Q3 exceeded forecast by 4.4 per cent and was 10.7 per cent higher than the unaudited pro-forma gross revenue for the same period the previous year following stronger revenue streams from VivoCity, new contributions from Alexandra Retail Centre (ARC) as well as tenants taking up additional space in PSA Building.
Consequently, net property income (NPI) rose 9.3 per cent to $33.8 million from $30.9 million in the corresponding period a year back (based on pro-forma numbers).
Cumulatively, from the commercial real estate investment trust’s (Reit) April listing date till Dec 31, 2011, a gross revenue of $127.4 million was recorded, up 4.9 per cent year-on-year due to stronger revenue flows from VivoCity and positive rent renewals.
Correspondingly, NPI also climbed 5.5 per cent to $88.2 million year-to-date and distributable income rose to $69.2 million, up 25.2 per cent on the back of higher net income and non-tax deductible items that were not factored in the pro-forma numbers.
So far, the DPU for the period spanning April 27, 2011 to Dec 31, 2011, stands at 3.717 cents, beating the IPO forecast of 3.334 cents by 11.5 per cent.
MCT’s total portfolio was also recently valued at $2.9 billion as at Nov 30, 2011, by DTZ Debenham Tie Leung (SEA) Pte Ltd, which triggered a revaluation gain of $62.4 million in the Reit’s books.
Gearing also improved by declining to 37.7 per cent from 38.5 per cent previously.
Going forward, management expects MCT’s portfolio which is located along the ‘Southern corridor’ of Singapore to benefit from the opening of MRT stations on the Circle Line extension, while the mix of office and retail together with a diversified tenant base would reduce risk and offer sustainability of earnings.
MCT ended trading unchanged at 86.5 cents yesterday.
CDL H-Trust – BT
CDLHT’s DPU rises 5.8% in fourth quarter
Its S’pore hotels, excluding Studio M, post Q4 RevPAR of $205, up 6%
CDL Hospitality Trusts (CDLHT), which has posted a 5.8 per cent year-on-year rise in distribution per stapled security for Q4 2011, continues to look for acquisition targets in Asia Pacific markets.
‘Singapore still remains our favourite market in terms of visibility and prospects,’ said Vincent Yeo, CEO of M&C Reit Management, the manager of CDLHT, at a media briefing yesterday.
The stapled group posted distribution per stapled security of 2.94 cents for Q4 2011, up 5.8 per cent from the same year-ago period. Over the same period, CDLHT’s gross revenue rose 13.4 per cent to $37.8 million – thanks to improved hospitality performance across the portfolio and contribution from Studio M Hotel in Singapore, which was acquired in May last year
Net property income for Q4 improved 12.7 per cent year-on-year to $35.5 million.
The stapled group, which makes semi-annual payouts, will distribute 5.71 cents per stapled security for the July 1-Dec 31, 2011 period, or 7.5 per cent higher than the same year-ago period. The payout for H2 2011 will comprise 5.33 cents of taxable income and 0.38 cent tax-exempt income. The counter ended 6.5 cents higher at $1.775 yesterday.
The group’s Singapore hotels achieved strong performance for Q4 as well as full-year 2011. Fuelled by the growth in visitor arrivals, revenue per available room (RevPAR) of the hotels here, excluding Studio M, rose 6 per cent year-on-year to $205 in Q4 2011, the highest Q4 RevPAR since CDLHT’s inception in 2006, supported by high average occupancy of 88.6 per cent in the quarter. Including Studio M, the RevPAR for the Singapore hotels increased 6.1 per cent to $200 in Q4 2011.
Full year 2011, the Singapore hotels’ RevPAR (excluding Studio M) climbed 6.9 per cent to $204, just a tad below the all-time high annual RevPAR of $207 achieved in 2008.
This was despite an increase in hotel room supply in Singapore and room nights being taken out of Orchard Hotel’s inventory during the year for refurbishment. Excluding Orchard Hotel, the RevPAR growth would have been higher at 10.2 per cent in FY 2011 compared to a year ago.
The group’s five Australian hotels – in Brisbane and Perth – also continued to perform strongly, bolstered by the buoyant natural resource sector and static supply of hotel rooms.
Full-year 2011 gross revenue rose 15.4 per cent to $141.1 million. Net property income improved 17.5 per cent to $135.2 million. Distribution per stapled security climbed 8.3 per cent to 11.05 cents.
Last year, the group finished refurbishing the 331-room Claymore Wing of Orchard Hotel. By mid-January 2012, it also completed upgrading all the rooms at Novotel Clarke Quay. Asset-enhancement initiatives this year are likely to focus on less ‘visible’ back-of-house works like chiller replacements to boost hotel efficiencies and create energy savings, says Mr Yeo.
Last year, CDLHT retained 10 per cent of its income available for distribution as working capital to fund capex on asset enhancement initiatives, resulting in a payout ratio of 90 per cent. A ‘good guide’ on 2012’s payout ratio is the low-90s, says Mr Yeo.
M&C Reit Management acknowledged that the outcome of the European debt crisis, the depth of the recession in some European countries and the health of the US economy may have an impact on Asian economies which may affect visitor arrivals and the hospitality sector.
‘There are indications in the market that some companies are exercising caution about travel budgets in view of the economic uncertainty,’ it added.
On the flip side, the range of new attractions in Singapore – including the first phase of the Gardens by the Bay and the River Safari – as well as the stronger events calendar in 2012 could continue to draw visitors to Singapore, it added.
CLT – DBSV
Growing presence in Changi
• Acquisition of Changi North Warehouse at initial yield of 7.7%
• Accretive to earnings, gearing to head up to 32.6%
• BUY, TP raised to S$1.13
Strategic acquisition of Changi North warehouse for S$35.2m. Cache Logistics Trust (Cache) announced the acquisition of a 4-storey ramp-up warehouse in Changi North International LogisPark for S$35.18m (all in cost of S$37m). The facility has a niche location in Changi North, which has limited upcoming competing supply, thus enjoying robust demand for space. The area caters to endusers operating in the air cargo industry. The vendor, Pan Asia Logistics, will lease back the facility for 10 years.
Accretive to earnings, gearing to head up to 32.6%. Initial yield is estimated to be c7.7%, in line with its current implied trading yield. We note that Cache has the financial capability to fund this acquisition. Assuming it is fully debt-funded, gearing is estimated to head towards 32.6%, which means that deployable headroom (to its regulatory limit of 35%) will be limited to a further cS$30m.
Further acquisitions could involve capital raisings. There is a visible pipeline of completed / completing warehouse properties from its sponsor CWT/C&P which could be on offer for Cache to acquire in the medium term. Hence, obtaining a credit rating will provide the REIT greater financial flexibility to gear up beyond 35%. In our view, potential acquisitions could also involve some form of capital raising exercise, which we have not factored into our estimates.
Maintain Buy, TP raised slightly to S$1.13. Our estimates are raised slightly to account for this acquisition. Cache continues to offer attractive prospective yields of close to 9%, which should have more upside in the event of more acquisitions.
CDL H-Trust – CIMB
Ending on a high
4Q11REVPARwas a record for the fourth quarter.Backed by a transformed tourism landscape, a larger dependenceon Asian travellers and resilient Asian consumption, we expect arrivals and REVPAR to hold upin 2012, despite headwinds.
4Q/FY11 DPU meets consensus and our forecasts, at 26/97% of our FY11. The slight miss in the full-year figure was due to higher retained income. We keep our DPUs and DDM target price (disc. rate: 8.6%) pending an analysts’ briefing, and introduce FY14 numbers. Maintain OP.
Ball still in hoteliers’ court
We are still expecting 3-5% growth in arrivals which should keep hotel occupancy at 84-86%, given a moderate 4% expected increase in rooms this year, which should allow hoteliers to raise rates. 4Q11 REVPAR of S$205 was its highest for 4Q (+6.0%), mainly on room-rate increases (+7.7%) to S$232, though occupancy dipped 1.4% pts yoy to 88.6%. Qoq performance was boosted by a return of rooms after the completion of upgrading work at Orchard Hotel, its largest asset.
Strong balance sheet
Asset leverage dipped to 25.3% from 26.5% on asset revaluations across its local and Australian properties. This positions it for debt-funded acquisitions and AEI. Management has remained prudent in retaining a larger portion of income (10% vs. 9% in FY10) to fund capex and working capital.
Trading below long-term average
While the stock has been re-rated by 16% since our last note in Dec 11, stock is still trading at 1.1x P/BV vs. its long-term average of 1.3x. Book valuations of about S$600k per room key for its local properties do not appear excessive especially when benchmarked against that of S$900k per room key for some market transactions.
StarHill Global – CIMB
Steady quarter
Rental step-ups for David Jones and AEI contributions from Starhill Gallery buffered AEI disruptions and negative office reversions. We anticipate a stable 2012, with earnings anchored by master leases,upside from AEI at Wisma Atria and a potential uplift from Toshin.
4Q/FY11 DPU broadly meets our estimates and consensus at 25%/97% of our numbers. The slight miss was due to higher borrowing costs. We slightly lower our DPU estimates but keep our DDM target price (disc. rate: 8.8%). We also introduce FY14 forecasts. Maintain Outperform.
Stable quarter
4Q11 NPI was flat yoy as AEI disruptions and negative office rental reversions were buffered by a full-quarter of rental step-up for David Jones and AEI contributions from Starhill Gallery. Positives were rising office occupancy, although negative office rental reversions slightly disappointed. Mitigation could come from slightly tightening occupancy and low office leases expiring in 2012. Enquiries and asking rents thus far are healthy.
Wisma Atria AEI
Disruptions have been moderate with retail occupancy at 94.8% in 4Q11. While pre-commitments are unchanged at 75%, we do not anticipate major problems in leasing out the remaining space given limited upcoming retail supply along Orchard Road and still-strong tourist arrivals. We expect pre-commitments to climb as AEI progresses.
Seeking appeal for Toshin
Starhill plans to appeal again for a review of the Toshin rental review mechanism after the Court’s recent unfavourable ruling. While failure to obtain any rental uplift could affect our DPU by 3% (we had factored in 10% rental uplift on renewal), downside should be capped by the upward-only rental-review clause and should be compensated by other sources such as rental improvements at a refurbished Wisma Atria.