MLT – JPM
3Q09 results – flat-lining – ALERT
• Mapletree announced 3Q09 results, with DPU of S$0.0148/unit, flat Q/Q but higher than J.P. Morgan estimates on the back of tax savings as a result of government tax rebates in Malaysia and China. Gearing for the trust as of 30 Sep 09 is 38.1%, book value stood at S$0.88/unit. Stock will trade ex-3Q09 distribution on 28 Oct 09.
• Operations still under pressure: Net property income declined 3.5% Q/Q as a result of depreciation of the HK$ and Rmb, an increase in vacancy rates in Hong Kong and China assets, and a pre-termination of a lease in Singapore. The occupancy rate declined 1.2% Q/Q, with the average reversion rate flat compared to previous prevailing rentals due to the trust’s priority in retaining tenants. We expect 4Q09 results to flat-line at best.
• No change to trust’s strategy: Management reiterated its “yield +growth” strategy during the conference call and indicated that it was in an advance stage of evaluating accretive third-party acquisition opportunities in Singapore, Japan, and Hong Kong. Funding for potential acquisitions will still be through a mix of debt and equity. In addition, management highlighted that approximately S$300 million of the sponsor’s development pipeline has been completed or is nearing completion, and the trust will tap into the pipeline when appropriate.
• Management execution is the key to share price performance: The trust has this year moved to a “new strategy”, in which management will try to bundle acquisitions together with permanent/stable funding structure being put in place at the same time. While we believe this is the right shift in strategy for MLT, it is difficult in execution given the much smaller deal size for logistic assets. A demonstration of a good execution of equity fund raisings together with yield-accretive acquisitions would be necessary, in our view, before the stock could rerate. We therefore maintain our Neutral rating on the stock.
FirstREIT – BT
First Reit Q3 DPU falls to 1.90 cents
FIRST Real Estate Investment Trust (First Reit) reported third-quarter distributable income of $5.22 million, versus $5.26 million a year earlier, its manager Bowsprit Capital Corporation said yesterday.
Distribution per unit (DPU) for Q3 to Sept 30 was 1.90 cents, compared with 1.92 cents in the previous corresponding period.
Based on First Reit’s closing price of $0.715 on Oct 20, and annualised DPU of 7.62 cents, yield was healthy at 10.7 per cent for Q3, Bowsprit said.
The healthcare Reit’s gross revenue and net property income remained stable at $7.6 million and $7.5 million respectively.
Bowsprit chief executive Ronnie Tan said: ‘We have seen stronger occupancy at our three Indonesians hospitals, as more patients stayed back to seek medical care instead of travelling abroad.
‘Continuing growth in this sector will provide an upside potential for First Reit as our Indonesian assets enjoy a variable rental growth component in addition to annual escalation.’
In Singapore, demand for private nursing care continues to grow steadily as the population ages, Mr Tan said.
First Reit said that its balance sheet remains strong and its gearing of 15.6 per cent is significantly lower than the regulatory limit of 35 per cent.
The Reit has received approval from the authorities for asset enhancement works at its Adam Road Hospital, expected to start soon. Extension works are also proposed at Lentor Residence.
‘First Reit will continue its ongoing review of the financial attractiveness of various projects in the pipeline, such as the Tech-Link healthcare logistics and distribution centre in Singapore that received temporary occupation permit on Sept 2, 2009,’ Bowsprit said.
PST – BT
PST’s Q3 distributable income surges 60%
PACIFIC Shipping Trust (PST) achieved a 60 per cent surge in distributable income to US$6.9 million for the third quarter ended Sept 30, 2009, up from US$4.3 million a year ago.
This came on the back of a 39 per cent jump in gross revenue to US$15.6 million.
Distribution per unit (DPU) for the three months fell to 0.818 US cents from 1.0953 US cents due mainly to the implementation of PST’s revised distribution policy to encourage prudence amid the credit crunch, as well as an increase in the number of issued units. In absolute terms, the amount of US$4.8 million to be distributed is up 30 per cent year on year.
The jump in gross revenue was mainly contributed by charter hire from the vessels CSAV Laja and CSAV Lauca. In line with better revenue, net cash generated from operations grew 17 per cent to US$13.5 million.
Net profit more than doubled to US$7 million from US$3.2 million, partly as a result of the adoption of hedge accounting on Oct 1, 2008 and the repayment of loans from the proceeds of the preferential offering in Q3 FY2008.
‘With the improving global economic outlook, we envisage opportunities to enter into asset acquisitions. By increasing our cash balance through income retention, PST should be well-positioned to explore value-accretive expansion opportunities, while maintaining its prudent financial management strategy. This strategic growth plan will translate into sustainable rewards for our unitholders in the long term,’ said Alvin Cheng, CEO of PST trustee-manager PST Management (PSTM).
In the preceding quarter ended June 30, 2009, PSTM announced that it was revising distribution policy to strengthen its cash position in anticipation of favourable investment opportunities arising in the next 12 to 18 months, while indicating then that the distribution for this quarter would not be less than 70 per cent of PST’s available distributable income. Looking ahead, management will review its distribution policy depending on prevailing market conditions.
‘As a conservatively geared shipping trust with no immediate refinancing needs or pressing financial obligations, PST is building up its cash reserves to equip ourselves with the financial flexibility to seize value-accretive opportunities that we believe will emerge along with the gradual economic recovery,’ said Mr Cheng.
The books’ closure date is Oct 30 and payment will be made on Nov 26.
a-iTrust
a-iTrust posts 3% climb in Q2 distributable income
ASCENDAS India Trust (a-iTrust) yesterday reported distributable income of $14.1 million for the second quarter ended Sept 30, up 3 per cent from $13.8 million a year ago.
Distribution per unit (DPU) for the three months rose to 1.85 cents, from the previous corresponding quarter’s 1.82 cents.
The trust, which owns business space in India, said that total property income for the quarter rose 2 per cent to $30.4 million, ‘despite the difficult business environment globally’.
Income held up as the trust was able to sustained an average occupancy of 97 per cent, or 98 per cent including committed leases.
Total property expenses, on the other hand, fell 20 per cent to $11.2 million on the back of lower operating, maintenance and security charges as a result of cost management (such as repackaging and retendering of contracts); and lower utilities expenses as the price of oil remained lower than a year ago. As a result, second-quarter net property income rose 22 per cent year-on-year to $19.2 million.
Gearing was 13 per cent as at Sept 30, 2009, compared with 9 per cent as at March 31, 2009. The increase was due to the additional borrowings taken to fund development projects.
Looking ahead, a-iTrust said that its performance will continue to be influenced by the performance of its tenants as well as conditions in the local property market.
‘a-iTrust’s net property income continued to grow despite the global downturn, because of the resilient demand for its properties and cost management,’ it said in a filing.
‘While the economic recovery remains fragile and uncertain, we will focus on what we can control – enhancing the competitive edge of our properties, strengthening relationships with our tenants, maintaining cost discipline, and seeking opportunities to invest in future growth.’
MLT – BT
MapletreeLog looking to buy assets in Asia
MAPLETREE Logistics Trust (MapletreeLog) is in advanced talks to buy assets in Asia, as its business outlook improves.
MAPLETREE Logistics Trust (MapletreeLog) is in advanced talks to buy assets in Asia, as its business outlook improves.
It said this yesterday as it reported a net property income of $44.1 million for the third quarter ended Sept 30 – 9.5 per cent higher than a year ago.
‘We are in a position to consider some growth in line with our ‘yield plus growth’ strategy,’ said Chua Tiow Chye, CEO of trust manager Mapletree Logistics Trust Management. ‘With less competition from buyers in the region, we believe sellers will be less demanding in terms of asking prices and cap rates for disposing of their properties.’
For instance, MapletreeLog believes that deals commanding a capitalisation rate of about 9 per cent in Singapore are possible.
It emphasised that the acquisitions will be accretive, and will not lead to significant movement in its gearing. It will fund purchases through a mix of debt and equity, and capital from any equity fund-raising exercise will not go towards recapitalisation.
As at Sept 30, MapletreeLog’s aggregate leverage ratio was 38.1 per cent, slightly higher than the 37.8 per cent three months previously. It says it faces no refinancing risk this year; it has $19 million of working capital loans due for renewal in Q4, which can be covered by committed revolving credit facilities.
MapletreeLog’s amount distributable in Q3 was $28.8 million, reflecting an increase of 13.2 per cent over the same period last year.
Nevertheless, available distribution per unit (DPU) fell because of the larger unit base from a rights issue in August last year. The DPU in Q3 was 1.48 cents, 19.6 per cent less than the 1.84 cents a year ago.
Adjusting for the rights issue, the proforma DPU in Q3 last year would have been 1.31 cents, translating to a year-on-year growth of 13 per cent.
The occupancy rate across MapletreeLog’s portfolio dipped from 98.3 per cent in June to 97.1 per cent as at Sept 30. But ‘while the environment remains challenging, we expect pressure on occupancy and rental rates to ease a little with the improving outlook’, said Mr Chua.
The counter closed unchanged yesterday at 75 cents.