Industrial REITs – OCBC
Summary: Industrial REITs have proven its defensive nature YTD, having generally outperformed both the broader REIT sector and STI. On the operational level, they also put up a strong showing. Going into 2012, we expect the industrial REITs to adopt a more cautious stance on their acquisition plans. On a brighter note, despite the lower expected investments, we still anticipate industrial REITs to rake up a good set of financial performance in 2012, thanks to their proactive approaches on investment/ asset enhancement activities over the past year, built-in rental escalations and possibly further positive rental reversions. We continue to maintain our OVERWEIGHT view on the industrial-REITs subsector. Industrial REITs, we note, offer one of the highest DPU yields in the REIT space. This is in addition to the relative stability and earnings visibility in their portfolio, backed by longer term leases, diversified tenant base and security deposits. In addition, they now have stronger financial positions and greater access to capital, unlike the difficult times seen in the global financial crisis. We maintain our BUYs for A-REIT and MLT, and single out CACHE as the preferred pick for this subsector.
Charities and Cause – 2011
Attention to Readers of Singapore REITs
Thank you for taking the time in expressing your view on the poll that was conducted from Nov 22 to Nov 30 2011. Children and Youth has the highest number of votes during the polling period. Thus, we have decided to donate to the Children’s Aid Society.
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PST – BT
Income distribution forecast tough: PST
PACIFIC Shipping Trust (PST) – which will be taken private by its holding company after unitholders voted in favour of the proposed delisting yesterday – said forecasts on its income distribution could be inaccurate given the current economic uncertainty.
PST was responding to BT queries after the unitholders’ meeting yesterday, during which it also responded to criticisms that the independent financial adviser’s (IFA) report on the delisting did not account for the significant boost to revenue from recent ship acquisitions.
In early October, holding company Pacific International Lines proposed to buy up the remaining 40 per cent of PST that it does not own. The shipping firm offered 43 US cents in cash per unit, a price that the IFA, PricewaterhouseCoopers Corporate Finance, reported to the independent directors as fair.
Stuart Hong, who holds under 2 per cent of PST through his investment firm Unisysco Holdings, wanted to know the impact that the acquisition of nine vessels for charter last year would have on income distribution, he told BT on Tuesday.
On Wednesday, PST responded, saying that an independent valuer had reviewed revenue contributions from newly acquired vessels to arrive at the charter-attached valuations of the new vessels, and these were factored into the IFA’s assessment of PST’s revised net asset value.
When asked yesterday about how the additional revenue would flow through to the income available for distribution, PST said any forecast or projection of future income and distribution of the trust depends on key assumptions. These include counterparty performance, potential charter renewals and rates, the distribution policy and the timing and pricing of any equity fund raising, said PST, adding that the independent directors had made the same point to the 80-odd unitholders at the meeting.
‘Given the uncertainties in the current economic climate and the market, any such assumptions relating to the future performance of the business may not be accurate,’ it said. ‘A forecast based on such assumptions could be potentially misleading to unitholders as to the outlook for PST.’
Asked to comment yesterday, Mr Hong would only say that the meeting was ‘an opportunity to talk face-to-face and address the opposing side’s arguments’.
K-REIT – BT
K-Reit’s Aussie tower gets anchor tenant
K-Reit Asia’s 50 per cent-owned 8 Chifley Square – a premium office tower that is under construction in Sydney – has found its first anchor tenant for 40 per cent of its net lettable area.
The office, whose development is due for completion in the third quarter of 2013, is located in the heart of Sydney’s central business district, at the junction of Hunter Street and Elizabeth Street. The other 50 per cent owner is Mirvac Property Trust, a member of the Mirvac Group.
The building will have an estimated 205,700 square feet of net lettable area.
The tenant, Australian law firm Corrs Chamber Westgarth, has pre-committed to about 87,000 square feet of space for a 12-year term, over levels nine to 18 of the 30-storey building.
Ng Hsueh Ling, chief executive of K-Reit Asia Management, said: ‘The strong pre-commitment level affirms our positive sentiments on the Australian office market. We anticipate healthy demand for the remaining space.’
The building features a ‘village’ concept where tenants can lease one to three floors of contiguous office spaces which are interconnected and improve interactivity between its occupants. It will also have 36 car park lots and 156 bicycle lots across two basement levels.
K-Reit Asia, which is sponsored by Keppel Land Limited, has an asset size of about $6 billion, comprising eight commercial properties.
In Australia, K-Reit Asia also owns a 50 per cent interest in 275 George Street in Brisbane, and an office tower at 77 King Street in Sydney.
In Singapore, K-Reit Asia owns Bugis Junction Towers, a one-third interest in Marina Bay Financial Centre Towers 1 & 2 and Marina Bay Link Mall, an 87.5 per cent interest in Ocean Financial Centre, a one-third interest in One Raffles Quay and 92.8 per cent of the strata area in Prudential Tower.