MLT – DB
3Q09 results in line; focus returning to acquisitions
MLT’s 3Q09 DPU of 1.48cts (flat QoQ, -20% YoY) was in line with expectations. NPI rose 9.5% YoY on accretion fr new acquisitions but fell 3.5% QoQ due to a S$2.2m doubtful debt relating to a pre-termination of a lease in S’pore.
Impact of the downturn filtering through. Overall occupancy declined slightly fr 98.3% to 97.1% with tenant retention dipping fr 80% to 74%. Rental reversions were flat in 3Q with continuing focus on tenant retention. ~80% of leases expiring in 2009 have been renewed. Rental in arrears rose slightly to 1.8% (fr 1%) of revenue primarily on the pre-termination of the lease. Gearing remains stable at 38.1% with avg borrowing cost a low 2.7%. Only S$19m of working capital loans are due for renewal in 4Q09 which is
sufficiently met with its S$78m RCF.
Acquisitions expected. Mgmt is currently in advanced negotiations for some acquisition opportunities both in S’pore and offshore (Japan, HK) & have noted more realistic pricing fr sellers (indicative cap rates of ~9% for selected deals in S’pore). Its Sponsor also continues to incubate the pipeline of devt projects with ~S$300m completed or nearing completion. Mgmt reiterated that it has no plans to raise equity purely for recapitalization with any potential fund raising to be motivated by accretive acquisitions. We have raised our FY09-11E DPU slightly by 2-3% to reflect lower than expected financing cost, and believe MLT is on track to meet our FY09E DPU of 5.87cts. We maintain our Buy rating with revised TP of S$0.82 (fr S $0.81) with attractive valuations at 7.8% FY09E yield and 0.85x P/B. MLT is well positioned to weather the downturn with its well-diversified portfolio and recovering credit & capital markets could revive its acquisition-led business model and catalyst shr price performance.
First Reit – SGX
- DPU for the period at 1.90 cents per unit
- Annualised DPU of 7.62 Singapore cents translates to distribution yield of 10.7%
- Committed to maintaining a payout policy of 100% of distributable income for FY 2009
SINGAPORE – 22 October 2009 – Bowsprit Capital Corporation Limited (“Bowsprit”), the Manager of First Real Estate Investment Trust (“First REIT”), Singapore’s first healthcare real estate investment trust, today reported that its distributable income for the third quarter ended 30 September 2009 amounted to S$5.2 million which was similar to that achieved in the corresponding period last year.
Correspondingly, 3Q 2009 distribution per unit (“DPU”) remained steady at 1.90 Singapore cents. Based on its closing price of S$0.715 on 20 October 2009 and the annualised DPU of 7.62 Singapore cents, First REIT registered a healthy distribution yield of 10.7% for the period.
Gross revenue and net property income also remained stable at S$7.6 million and S$7.5 million respectively as compared to the previous corresponding period.
Reflecting substantially lower market interest rates for fixed deposits, the Group’s interest income for 3Q 2009 decreased 85.4% to S$7,000, whilst trustee fees and finance costs grew by 11.1% and 28.5% respectively. Increase in finance costs was due to higher interest cost for the loan facility which was refinanced in June 2009.
FCT – BT
Frasers Centrepoint Trust (FCT) said that the income it will distribute to unitholders for Q4 remained flat at $12.8 million. Distribution per unit for the quarter ended September 30, 2009 fell slightly to 2.04 cents, from 2.05 cents a year ago.
Q4 2009 net property income increased 25 per cent year-on-year to $17.6 million, supported by topline growth and tight cost controls. And income available for distribution rose 23 per cent year-on-year to $12.2 million, but income distribution to unitholders remained stable year-on-year, as an additional $2.3 million of retained income was paid out in Q4 2008.
For the full year, distribution to unitholders rose 4 per cent to $46.9 million, from $45.2 million a year ago. DPU also rose slightly by 3 per cent to 7.51 cents, from 7.29 cents the previous year.
AITRUST – BT
Ascendas India Trust (a-iTrust) on Thursday reported that Q2 distributable income rose to $14.1 million, up 3 per cent from the $13.8 million a year ago.
Distribution per unit (DPU) rose in Q2 FY 09/10 to 1.85 Singapore cents, up from 1.82 cents in the corresponding quarter last year.
The trust, which owns business space in India, said total property income increased by 2 per cent in to $30.4 million.
Total property expenses, on the other hand, was $11.2 million or 20 per cent lower due to 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, net property income rose 22 per cent year-on-year in Q2 FY 09/10 to $19.2 million.
Looking ahead a-iTrust said that its performance will continue to be influenced by the performance of its tenants and conditions in the local real estate 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. ‘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.’
CCT – CIMB
Outlook remains negative
• Maintain Underperform and target price of S$0.83. We now assume less severe declines in occupancy for 2010 in view of CCT’s resilience so far. However, we also expect steeper falls from current passing rents in 2010 (from no change earlier) as rents of expiring leases in CCT’s key office buildings over the next two years are significantly higher than market rents. Separately, we have assumed 20% growth for its hotel business in Raffles City in 2010, in line with our positive expectations for CDLHT. Our DPU estimates fall by 2.7% for 2010 but rise by 3% for 2011. We also roll our target price one year forward. Our DDM-derived target price remains S$0.83. Maintain Underperform as catalysts in the medium term are still lacking.
• In line. 3Q09 results met our expectations but were above consensus. YTD DPU of 5.18cts forms 74% of our full-year estimate. 3Q09 DPU of 1.85cts (24% of our fullyear forecast) declined 40.1% yoy due to a bigger unit base after its rights issue.
• Portfolio passing rents up 4.3% qoq. Net property income of S$77.1m in the quarter was up 15.5% yoy and 5.1% qoq, aided by strong rental reversions and improved operating margins, including a one-off property tax rebate. Average monthly passing rents rose 4.3% qoq to S$8.49psf from S$8.14psf in 2Q09. This was in-between CBRE’s estimate for Grade A office rents of S$8.80psf/month and prime office rents of S$7.50psf/month.
• StarHub’s lease ended; portfolio occupancy down to 94%. CCT’s portfolio occupancy dipped to 94% from 96.2% primarily due to the non-renewal of lease by major tenant StarHub at StarHub Centre. Improved occupancy at Golden Shoe Carpark (+6.4% pts), Wilkie Edge (+2.2% pts) and Six Battery Road (+1.5% pts) mitigated the impact.
• P/BV may increase. CCT’s P/BV of 0.7x is below the SREIT sector’s average of 0.8x. However, we do not think CCT is cheaper than its peers as we expect another round of asset devaluation in December to close the P/BV gap.