MCT – BT
MCT expected to be ready for listing in early 2011
Trust's portfolio may include VivoCity, HarbourFront, PSA Building
(SINGAPORE) Mapletree Commercial Trust (MCT), which could include VivoCity, is expected to be ready for initial public offering (IPO) early next year.
The trust is expected to raise at least $500 million, Mapletree Investments chief financial officer Wong Mun Hoong said yesterday.
While there is no minimum size that Mapletree is targeting for MCT, it 'will be a sizeable IPO' of a few hundred million dollars to one billion dollars.
MCT can be ready for listing in the first half of 2011, Mr Wong told reporters on the sidelines of a press briefing on Mapletree Industrial Trust's IPO.
The portfolio is expected to include VivoCity as the anchor asset, Merrill Lynch HarbourFront, PSA Building and Mapletree Business City (MBC), an integrated business hub with Grade A specifications located on Alexandra Road.
Mapletree is currently evaluating the assets' readiness.
'VivoCity is a good anchor asset to have,' Mr Wong said, pointing to its rental resilience during the financial crisis. According to him, VivoCity currently has a value of close to $2 billion.
PSA's retail podium is currently undergoing asset enhancement to offer 87,500 square feet of net lettable retail space, which Mr Wong estimated would take 18 months to complete, while MBC is in the process of filling up its 1.78 million sq ft of net leasable space.
'Depending on the readiness, we may or may not include some of these (assets),' Mr Wong said. 'Investors are looking for good-quality investment propositions, so we will look at something that we believe will be attractive.'
He noted that Mapletree was not in a hurry to raise cash through the MCT listing, given its more than $2.5 billion of debt facility and cash available to invest.
Mapletree will consider MCT's IPO size with a view of providing sufficient liquidity and, at the same time, maintaining its strong exposure to MCT's earnings growth.
If it is launched, MCT would be the fourth real estate investment trust (Reit) by Temasek's fully owned Mapletree Investments, which also listed Mapletree Logistics Trust in 2005 and jointly launched Lippo-Mapletree Indonesia Retail Trust with Lippo Group in 2007.
Mapletree yesterday launched the Mapletree Industrial Trust IPO, which is set to raise up to $1.19 billion in gross proceeds assuming full overallotment is exercised. Mr Wong said that Mapletree was also looking at setting up private real estate funds in China and Japan.
There are currently no plans to list the Mapletree India China Fund (MIC Fund) that was set up in 2008. But once the US$1.2 billion fund is fully invested, Mapletree may set up a pure China fund of US$750 million for commercial and residential projects.
Mapletree hopes to raise US$300-US$500 million for the Japan fund to acquire 10 to 15 assets, Mr Wong added. These would be off-CBD office buildings and data centres with long leases and large anchor tenants.
K-REIT – Lim and Tan
Why Wait For Circular?
• The transactions between the 2 companies:
– K-Reit buys the 1/3 stake in Marina Bay Financial Centre Towers 1 (NLA of 57,671 sqm) &2 (95,867 sqm) as well as the Marina Bay Link Mall (8,776 sqm; MBFC Acquisition ) for $1426.8 mln / $2450 psf.
(K-Reit’s portfolio rises from $2.5 bln to $3.4 bln, 90% of which will be in the prime Raffles Place and Marina Bay precinct. Weighted average lease to expiry increases from 5.7 years as at end Jun ’10, to 7.8 years. Percentage of NLA committed under long term leases of 5 years or more increases from 36% to 64%.)
– K-Land provides $29 mln rental support for the fitting-out periods when rent and maintenance charges will not be received, till Dec 2014.
– K-Land buys GE Tower / Keppel Tower (NLA of 430,112 sf; KTGE divestment) for $573 mln / $1332 psf. K-Reit recognizes $26.3 mln profit. K-Land will redevelop this into a residential project with 5.6x gross plot ratio.
– K-Reit will borrow $821 mln, utilize $41.5 mln proceeds from last year’s rights issue and sale proceeds from the KTGE divestment to finance the acquisitions. There will be no need to issue new units as with the acquisition of One Raffles Quay (ORQ).
COMMENTS
1. The MBFC Acquisition is no surprise, being expected by investors, especially since the towers were fully committed.
2. But what is disappointing is that the 2 companies chose to be reticent about what really matters most to investors, ie is the acquisition yield accretive ? (Investors would just have to wait for the circular to be released.)
3. Fact is, K-Reit is selling the 2 “old” assets at a yield of 3.23% (Net attributable profit of $18.5 mln / $573 mln sale price). Reticence suggests yield from MBFC Towers 1&2 may be lower. (According to the statement, pro-forma Distributable Income / DPU for 2009 drop to $44.072 mln from $70.519 mln; and to 3.27 cents from $5.28 cents respectively.)
4. One could “surmise” that there will be little yield accretion, thanks largely to the record low interest rate environment, which allows K-Reit to borrow cheap (average borrowing cost to drop to 3.05% from 3.54% ) and push gearing once again to the hilt of just under 40% from 15.2% before the latest transactions. (We have been wondering which among the property-related companies will be able to benefit from record low rates after rushing to lower their gearing in the aftermath of the Financial Crisis – just look at K-Reit for instance.)
5. K-Land merits a BUY, being a clear beneficiary of the latest inter-group transactions, having made it clear its intention to redevelop the 2 CBD-fringe office buildings into residences, itself a positive for office rentals. (Technically, K-Land looks good too.)
6. As for K-Reit, the unnecessary uncertainty as the circular is being “finalized” suggests HOLD remains appropriate for now. We maintain preference for CapitaCommercial Trust, which should soon decide on the redevelopment of the Market Street CarPark.
(K-Land owns 612,588,450 K-Reit units, or 45.64% of the total issued. Keppel Corp’s total deemed interests, including K-Land’s, totals 1,020,022,898 units or 75.99%.)
K-REIT – BT
KepLand, K-Reit shuffle assets in $2b deal
Some analysts taken by surprise over leg of swap involving Keppel Towers, GE Tower
Keppel Land and its unit K-Reit Asia have agreed to an asset swap with transaction values totalling almost $2 billion. Keppel Land is selling its one-third stake in Phase One of Marina Bay Financial Centre (MBFC) to K-Reit for $1.427 billion or $2,450 per sq ft of net lettable area, which includes a rental support. It will reap a net gain of some $321 million from the divestment.
MBFC Phase One comprises two fully leased Grade A office towers and the Marina Bay Link Mall. Keppel Land’s stake, including a rental support of up to $29 million, was valued at $1.421 billion as at Oct 5.
At the same time, K-Reit is offloading Keppel Towers and the adjacent GE Tower in Tanjong Pagar to Keppel Land for $573 million.
Keppel Land will convert both office towers into a freehold residential project and will fork out a development charge of some $5.8 million. This means the total price works out to $1,201 psf per plot ratio. Both buildings were valued at $576 million assuming they were put to residential use.
The transactions will bring Keppel Land net cash proceeds of $812 million and cut its gearing sharply. On a proforma basis, its net debt to equity ratio as at Dec 31 last year will drop to 0.5 per cent from 22 per cent.
This will support Keppel Land in its search for property deals in Singapore, China, Vietnam, Indonesia and India, said the group’s chief financial officer Lim Kei Hin at a briefing yesterday.
The proceeds ‘will allow us to have virtually zero debt and we will have enough fire-power in our arsenal to be able to pursue acquisitions of both residential and commercial properties,’ he said.
K-Reit, on the other hand, will have to borrow $821 million from banks to pay for the MBFC stake. This is after using $570 million from the sale of Keppel Towers and GE Tower and $41.5 million from its rights issue last year for the purchase. K-Reit’s aggregate leverage will rise to 39.1 per cent after the deals, up from 15.2 per cent as at June 30.
The bundled deal will be subject to the approval of Keppel Land’s minority shareholders and K-Reit’s minority unitholders at their respective extraordinary general meetings. Keppel Land owns a stake of 45.5 per cent in K-Reit as at March 2.
According to Mr Lim, Keppel Land got a good opportunity to acquire prime freehold land in the central business district and ride on growing demand for city living.
In particular, Tanjong Pagar has come under the spotlight as more high-end condominiums emerge in the area. Recent launches such as Altez and 76 Shenton have attracted buyers willing to splurge more than $2,000 psf. Plans to relocate the ports and the Malaysian railway station are also paving the way for rejuvenation.
The authorities have approved the conversion of Keppel Towers and GE Tower to residential use. Together, the sites have a gross floor area of 481,800 sq ft and Keppel Land plans to launch a 620-unit project there in two to three years’ time, after existing office leases end.
The residential project will comprise a 45-storey tower and a 26-storey tower, with commercial space at ground level.
For K-Reit, the transactions gave it a chance to expand and upgrade its portfolio, said CEO of the Reit’s manager Ng Hsueh Ling. While both Keppel Towers and GE Tower are enjoying ‘good’ occupancy levels, they are 19 and 17 years old respectively and will need more maintenance with time, she explained.
Meanwhile, the purchase of the MBFC stake will raise K-Reit’s presence in Raffles Place and Marina Bay. Analysts have long expected Keppel Land to divest its MBFC stake to K-Reit, but some were surprised by its purchase of Keppel Towers and GE Tower. At the briefing, several also raised questions about the pricings of the deals.
Asked if K-Reit’s MBFC stake purchase would be yield-accretive for unitholders, Ms Ng said that it would ‘generate greater returns’ but details would be released only when the circular has been lodged with and approved by the authorities.
According to Standard Chartered analysts Regina Lim and Wong Yan Ling in a note, the price K-Reit paid for the stake is above the ‘consensus estimate’ of $2,300 psf.
UOB-Kay Hian analyst Vikrant Pandey reckoned K-Reit might have obtained higher bids for Keppel Towers and GE Tower if there was an open tender.
Cushman & Wakefield managing director Donald Han felt that transaction prices for both the MBFC stake and Keppel Towers and GE Tower are in line with market levels. The bigger problem for investors today lies in finding deals to put their money in, he said.
PST – BT
PST adds MPP vessel class to the mix
IN a bid to diversify its vessel holdings, Pacific Shipping Trust (PST) has secured charters for two new 24,000-tonne multi-purpose vessels (MPPs) valued at US$30 million each.
The ships will be leased for 10 years to Xiamen Ocean Shipping Company China, a wholly owned subsidiary of Cosco China.
The charter rate for each vessel is US$14,900 per day. When delivered in September and December 2012, the vessels are expected to add US$108 million to PST’s total contracted revenue – an increase of 23 per cent that will take its total contracted revenue until October 2022 to US$570 million.
PST’s trustee-manager PST Management (PSTM) finalised both the chartering and vessel-building deal with shipyard Dalian Shipbuilding Industry Company.
At a briefing yesterday, when an analyst pointed out that the charter rate of US$14,900 per day was ‘rather high’, PSTM’s acting chief executive officer readily admitted it is.
‘This is a negotiated structure that we have with Cosco Xiamen,’ said Teo Choo Wee. ‘In return for this, we give them an option at the end of year 10 to purchase the vessel for US$14.7 million.’
Though some global reports show demand has softened for MPPs of late, Mr Teo said it will pick up. ‘The global fleet number of MPPs is small, but demand- wise, I think, is increasing.
‘With the number of infrastructure projects increasing globally, especially in developing countries and emerging markets, there will be tremendous requirements to transport specialised or project cargos, and we expect the demand for this type of vessel to continue,’ he said.
PST’s latest acquisition is meant to diversify its asset holdings and income sources. Prior to the new agreement, its fleet of 14 vessels consisted of 12 container ships, almost all of which are leased by its parent company Pacific International Lines (PIL).
The other two vessels are new additions, introduced in late June. PST bought two Cape-size 180,000-tonne bulk carriers for a total of US$123.2 million from Mitsubishi Corporation. They will be chartered to China-based steel company Jiangsu Shagang Group.
Cosco Xiamen coming on board as a charterer reduces PST’s reliance on PIL as its major income driver. Cosco Xiamen will make up 19 per cent of total contracted revenue, with Chinese steelmaker Jiangsu Shagang at 34 per cent and PIL at 35 per cent. CSAV accounts for the remaining 12 per cent.
Mr Teo said the decision to purchase and charter MPPs mirrors the actions of parent company PIL. In mid-June, PIL diversified into MPPs, lodging four new-build orders with Dalian Shipyard.
‘Cosco Xiamen was initially interested in taking over PIL’s vessels, but they were already committed in PIL’s keep,’ said Mr Teo. ‘So the decision was to explore with PST. The result is two direct deals with the two companies, Dalian and Cosco Xiamen.’
PIL will help fund the pre-delivery financing for PST.
PST was not left with much cash, said its chief financial officer Ivy Lim, with 12 per cent of the cost of the Shagang vessels paid up and another 3 per cent of the sum due in December.
PIL will therefore make a series of advances to PST, which includes the total amount as well as a 0.125 per cent arrangement fee of US$41,250 owed to PIL.
Currently, PSTM’s debt- to-asset ratio stands at 1:1. ‘But we plan to increase this slightly with the two vessels,’ said Ms Lim. ‘We haven’t finalised the final amount yet, but when we evaluate the financing structure, it will depend on the best course of debt and best course of equity we can get in the market. We put in very conservative numbers, and the numbers still make sense to our shareholders.’
Yesterday, PST’s shares closed unchanged at 31.5 cents.
AIMSAMPIREIT – SGX
Level of Subscription
AIMS AMP Capital Industrial REIT Management Limited, as manager of AIMS AMP Capital Industrial REIT (“AIMSAMPIREIT“, and the manager of AIMSAMPIREIT, the “Manager“), wishes to announce that valid acceptances and excess applications for a total of 670,009,453 Rights Units (as defined herein), representing 130.5% of the total number of Rights Units available under the fully underwritten renounceable rights issue (the “Rights Issue“) of 513,309,781 new units in AIMSAMPIREIT (the “Rights Units“), were received as at the close of the Rights Issue on 7 October 2010 (the “Closing Date“).
The valid acceptances received include the acceptances by AIMS Financial Group, AMP Capital Investors (Luxembourg No. 4) S.A.R.L., Dragon Pacific Assets Limited, APG Algemene Pensioen Groep N.V., Universities Superannuation Scheme Limited, Indus Asia Pacific Master Fund, Ltd, Hunter Hall Investment Management Ltd and Cohen and Steers Asia Limited, of their aggregate pro rata entitlement of 326,512,107 Rights Units, representing 63.6% of the total number of Rights Units under the Rights Issue.
Details of the valid acceptances and excess applications received are as follows:
|
Number of Rights |
Units % of Rights Issue |
|
|
Valid acceptances |
506,083,252 |
98.6 |
|
Excess applications |
163,926,201 |
31.9 |
|
Total |
670,009,453 |
130.5 |