Suntec – BT
Suntec Reit’s Q3 DPU edges up
Beats forecast by 17.9%; income for distribution up 21.9% at $56.4m
SUNTEC Real Estate Investment Trust (Suntec Reit) yesterday posted distribution per unit (DPU) of 2.533 cents for the third quarter ended Sept 30, up 1.2 per cent year on year.
The DPU represented an annualised distribution yield of 8.4 per cent based on the Oct 24 unit price of $1.195.
Income available for distribution was $56.4 million, a 21.9 per cent year-on-year increase from $46.2 million.
According to the manager, ARA Trust Management (Suntec) Limited, 3Q2011 DPU outperformed its forecast by 17.9 per cent. On a year-to-date basis for the nine months ended September, DPU totalled 7.453 cents, exceeding the forecast by 12.4 per cent.
Yeo See Kiat, chief executive officer of the manager, said: ‘I am happy to report that we have once again delivered another quarter of high distribution income. This was achieved on the back of higher income contribution from MBFC properties (comprising Marina Bay Financial Centre Towers 1 and 2, and Marina Bay Link Mall) as well as prudent capital management approach that led to greater interest savings.’
Gross revenue for the quarter stood at $67.9 million, a 7.4 per cent increase over the previous year, mainly due to the consolidation of $7.5 million in revenue from Suntec Singapore.
In August, the trust raised its effective stake in Suntec Singapore from 20.0 per cent to 60.8 per cent.
Net property income for the quarter came in at $47.8 million, a decrease of $2.8 million or 5.6 per cent year-on-year.
For the office portfolio, the committed occupancy of Suntec City Office Towers as at end-September was 98.0 per cent whilst Park Mall office maintained full occupancy.
For the retail portfolio, the committed occupancy of Suntec City Mall was 96.5 per cent, whilst Park Mall and Chijmes achieved 100.0 per cent committed occupancy.
For jointly-controlled entities, One Raffles Quay maintained full committed occupancy, whilst MBFC properties stood at 98.5 per cent.
The overall committed occupancy for the office and retail portfolio stood at 98.6 per cent and 97.3 per cent respectively.
Suntec Reit units closed trading yesterday one cent up at $1.205.
MIT – BT
Mapletree Ind Trust Q2 DPU 10.8% above forecast
MAPLETREE Industrial Trust (MIT), which was listed in October last year, saw its distributable income increase 26.6 per cent to $31.6 million for the fiscal second quarter ended Sept 30, 2011, from a proforma $25.0 million the year before.
The distributable income was also 16.6 per cent higher than the forecast $27.1 million. MIT achieved a distribution per unit (DPU) of 2.05 cents – 10.8 per cent higher than the forecast 1.85 cents.
MIT, part of the Mapletree group, invests in income-producing real estate used primarily for industrial purposes – such as business park buildings and flatted factories – and real estate-related assets.
Its gross revenue climbed 18 per cent year-on-year to $59.4 million in the September quarter, due largely to higher occupancies in its properties and higher rental secured from both new and renewed leases that quarter, said its results announcement.
It also said that the acquisition of eight flatted factories and three amenity centres from JTC Corporation on Aug 26 also contributed to the increase in gross revenue – with the properties contributing about 4.3 per cent of the total gross revenue for the quarter.
With the acquisitions, MIT’s portfolio now comprises 81 properties located across Singapore.
The latest acquisitions were partly financed by new equity through an equity fund raising exercise completed on Aug 24, which raised about $176.9 million through the issue of about 165.5 million new MIT units.
MIT’s net property income for the period grew 22.9 per cent to $41.5 million. Its net income before tax and distribution rose 23.6 per cent to $30.4 million.
MIT had paid out an advance DPU of 1.14 cents to eligible unitholders on Aug 31, which represented the distribution from July 1 to Aug 22 to unitholders existing as at Aug 4 and prior to the issuance of the new units pursuant to the equity fund raising.
The payout of the distribution for the enlarged units in issue for the remaining period from Aug 23 to Sept 30 is 0.91 cents per unit. Accordingly, the weighted average DPU for the quarter is 2.05 cents.
Looking ahead, Mapletree Industrial Trust Management – the manager of MIT – said that if confidence continues to weaken across the global economies, the outlook in the manufacturing sector will be dampened. ‘Barring any additional shocks to the global economy, the manager expects market rents to stay flat in the near term.’
‘The MIT portfolio is larger and more diversified after the recent acquisition of the flatted factories portfolio from JTC. With a healthy balance sheet and only 8.2 per cent of leases due for renewal in the next six months, the manager is on track to exceed the forecast estimates for (the) financial year 2011 as stated in the IPO prospectus,’ it added.
MIT shares finished up half a cent at $1.135 yesterday.
CDL H-Trust – BT
CDLHT’s Q3 distribution per security up 9.1%
Distribution per security at 2.77 cents; group projects mixed outlook for the sector
CDL Hospitality Trusts, which posted a 9.1 per cent year-on- year increase in distribution per stapled security for the third quarter ended Sept 30, 2011, yesterday pointed to some headwinds for the Singapore hotel market ahead.
First, the 5.6 per cent projected increase in net hotel rooms inventory in Singapore next year is expected to contribute to a more competitive environment. On the demand side, the outcome of the European debt crisis and the health of the US economy may have an impact on Asian economies which may affect visitor arrivals and the hospitality sector, the stapled group said. ‘There are indications in the market that companies are becoming more cautious about travel budgets in view of the economic uncertainty,’ CDLHT said.
On a more upbeat note, it said that the Singapore hospitality sector is expected to continue to benefit from the addition of new leisure attractions, including the two recently launched US night clubs at Marina Bay Sands and the upcoming opening of the Transformers ride at Universal Studios Singapore.
CDLHT posted distribution per stapled security of 2.77 cents for Q3 2011, up 9.1 per cent from the same year-ago period. The stapled group, which makes distributions semi-annually, will not be making a payout for Q3.
It owns six hotels in Singapore – Orchard, Grand Copthorne Waterfront, M, Studio M, Copthorne King’s and Novotel Clarke Quay – and Orchard Hotel Shopping Arcade. Also in CDLHT’s portfolio are Rendezvous Hotel Auckland and five hotels in Brisbane and Perth.
For the first nine months of 2011, the distribution per stapled security is 8.11 cents, up 9.2 per cent y-o-y. The Q3 and nine-month distribution figures reflect payout ratios of about 90 per cent, as CDLHT is retaining about 10 per cent of income available for distribution as working capital to fund its capital expenditure requirements.
The distribution per stapled security for Q3 2011 and for the first nine months of 2011 translate into annualised distribution yields of 7.23 per cent and 7.13 per cent respectively, based on CDLHT’s $1.52 closing price yesterday. The counter slipped three cents yesterday. CDLHT’s results were released yesterday morning before the stock market opened.
In a note yesterday, Standard Chartered Bank analysts said they are reducing distribution per stapled security estimates for 2012-14 by 17-23 per cent as they now expect CDLHT’s portfolio revenue per available room (RevPAR) to fall 20 per cent next year before recovering by 10 per cent in 2013. ‘While our economists expect our key tourist markets to have economic growth of 5-6 per cent in 2012, we think Singapore could see a 2-4 per cent decline in tourist arrivals in 2012 if these economies grow slower than expected.’ It added that CDLHT has priced in a 21 per cent decline in RevPAR in 2012.
Year to date, the counter is one of the main underperforming Singapore Reits, falling 26 per cent compared with the Singapore Reit Index decline of 10 per cent, Stanchart added.
The stapled group’s gearing ratio rose from 21.1 per cent at end-September 2010 to 26.5 at end-September 2011.
For Q3 2011, CDLHT posted a 9.9 per cent y-o-y rise in income available for distribution to $29.6 million – of which $2.96 million will be retained as working capital to fund the capex, leaving about $26.65 million to be paid to security holders.
Gross revenue climbed 15.2 per cent to $36.4 million for Q3 2011 – due to improved hospitality performance across the portfolio and contribution from Studio M Hotel, acquired in Q2 2011 and which accounted for about $2.8 million of the gross revenue increase.
Net property income (NPI) posted a 12.7 per cent y-o-y rise to $33.99 million in Q3, due chiefly to the revenue boost from Studio M Hotel and contribution from the overseas properties. All hotels except for M Hotel, Copthorne King’s Hotel and Orchard Hotel recorded an improvement in NPI. For the first two properties, the drop was due to the absence in Q3 2011 of writebacks of property tax accruals booked in Q3 2010.
Orchard Hotel’s NPI slipped primarily because of a refurbishment which saw 2,268 rooms nights being taken out of its inventory during Q3 2011. In fact, Orchard Hotel was the only one of CDLHT’s Singapore hotels which registered a drop in RevPAR to the tune of 2.3 per cent in Q3 2011 over Q3 2010.
Overall, the Singapore hotels (excluding Studio M Hotel) posted 6.2 per cent y-o-y growth in RevPAR to $211 in Q3 2011. This is the second highest RevPAR that CDLHT has achieved in a quarter since its inception in 2006 – despite the weakness in travel demand in August. ‘Aside from the usual slowdown of travel from the western hemisphere due to the August summer holidays, three public holidays in Singapore in August 2011 – compared to only one in the same period last year – also curtailed business travel during the month,’ CDLHT said. Studio M Hotel continued to do well in Q3 2011, achieving RevPAR of $173, reflecting y-o-y growth of 13.6 per cent.
For Q3 2011, the group’s Singapore hotels (including Studio M) posted a 14.6 per cent y-o-y hike in combined hotel revenue to $81.5 million. Gross operating profit for the Singapore hotels rose 17.9 per cent y-o-y to $44.2 million in Q3 2011.
CDL H-Trust – CIMB
Backend-loaded contributions
While industry dynamics could weaken, we expect theimpact to be softened by upcoming tourist attractions, stronger Asian visitor arrivals and a refurbished Orchard Hotel. Balance sheet remains strong.We see value after its recent sell-down.
3Q11/9M11 DPU meets consensus and our forecasts, at 24%/70% of FY11. We expect backend-loaded contributions from a refurbished Orchard Hotel. Expecting lower REVPAR and payouts, we cut our DPU and DDM target (discount rate 8.6%). Still, maintain Outperform.
Completion of Orchard Hotel AEI
We expect the completion of upgrading work (mid-Sep 11) at its largest asset, Orchard Hotel, to buffer any softening in business in upcoming quarters. REVPAR for its local hotels expanded 6% yoy to S$211 or its second highest in history. Growth would have been stronger if not for upgrading work at Orchard Hotel, which took away 2,268 room nights (4%/1% of Orchard Hotel/total inventory) and weaker business travel in Aug.
Not expecting a repeat of 2009 yet
We do not expect a repeat of 2009 in
terms of tourist declines just yet with regional economies still expected to grow (albeit slower) and tourist arrivals in past months still fairly unscathed. We are, however, lowering REVPAR assumptions to factor in some slowdown. Management notes continued strong demand in Jul-Sep and attributed the less exuberant quarter to a weaker Aug from the presence of more public holidays this year.
Ammunition from strong balance sheet
We believe CDLHT’s low asset leverage of 26.5% continues to position it for debt-funded acquisition. Management remains prudent in retaining income to fund capex. With increased macro uncertainties, we are reducing distribution payout to 91% in FY12 (same as FY11) from 95%.
FCOT – OCBC
Moderate growth within expectations
4QFY11 DPU in line. Frasers Commercial Trust (FCOT) reported 4QFY11 gross revenue of S$30.4m, up 3.8% YoY due to higher contribution from Central Park and KeyPoint. This was partially offset by loss of revenue contribution from Cosmo Plaza following its divestment, and lower revenue from 55 Market Street (55MS) as a result of negative rental reversion. NPI, on the other hand, was up 4.8% YoY to S$24.3m, while distributable income was up 1.0% YoY to S$14.4m. For the quarter, DPU stood at 1.52 S cents, representing a slight 1.9% YoY decline. This brings the full-year DPU to 5.75 S cents, which is roughly within our and consensus expectations of 5.6 S cents and 6.0 S cents, respectively.
Improvement in occupancy rates. FY11 portfolio average occupancy rates tracked a substantial improvement from 90.8% in FY10 to 98.0%, underpinned by healthy rates of 97.8% for Singapore and 99.8% for Australia. We note that 55MS was one of the key drivers for the robust occupancy growth in Singapore. This helped to minimize the fall in its gross revenue contribution to 13.0%. In Japan, the occupancy rates remained unchanged at 93.6%.
Healthy portfolio WALE. As at 30 Sep, the weighted average lease to expiry (WALE) was about 3.6 years, aided by long Australian portfolio duration of 6.8 years. For FY12, 29.3% of the gross rental income is due for renewal, of which 16.0% is attributable to the expiry of China Square Central master lease arrangement. Management highlighted that the annualized halfyear unaudited net operating income for the underlying leases at the property is above the master lease net rent of S$17.55m per annum, hence presenting an opportunity for FCOT to enhance value. As such, it intends not to renew the lease but to take over the management of the property upon its expiry in Mar 2012 (committed occupancy increased to 95.7% in Sep from 94.5% in Jun).
Business outlook appears challenging. Looking ahead, FCOT expects the business environment to remain challenging, amid the current uncertain market condition and ongoing Eurozone debt situation. In view of this, it will focus on its active strategy to improve portfolio occupancy and rental rates while keeping its expenses low. The group will also embark on an early re-financing exercise of its existing debts due next year end to take advantage of the prevailing low interest rate environment. We are putting our Buy rating and S$0.87 fair value UNDER REVIEW due to a change in analyst coverage.