CDLHTrust – CIMB
On track
• On track. 1Q09 results are in line with consensus and our expectations. DPU of 1.97cts forms 26% of our forecast for FY09 and was up 10% qoq (one-off expenses in 4Q08 for additional property tax with respect to 2006-07 and one-off MCST fees paid to Liang Court Complex). Net property income of S$20.6m declined 21.2% yoy, in line with falling tourist arrivals in Singapore and weakening demand for hotel accommodation.
• REVPAR down 20%. CDLHT’s Singapore portfolio occupancy hit a record low of 74.8%, down 8.9% pts from 4Q08. Revenue per available room (REVPAR) declined 20.2% qoq.
• Refinancing in the bag. CDLHT has secured a 3-year S$350m facility from DBS Bank to refinance all its S$297m debt due in Jul 09. This is made up of a S$270m term loan and a S$80m committed revolving credit facility. Based on the announced interest margin of 2.6% p.a., we estimate all-in cost of debt of 4.3%, below our assumption of 4.5%. The facility is secured on all of CDLHT’s five Singapore properties. Separately, CDLHT has another S$300m uncommitted multi-currency unsecured bridging loan facility, also with DBS. After the refinancing, asset leverage will be 19.7%.
• Maintain Outperform and DDM-based target price of S$0.68. The rest of 2009 would be difficult for CDLHT if visitor arrivals, which have been declining in the past 10 months, worsened. Although the rate of decline had slowed in Mar 08, more downside is possible if swine flu escalates into an epidemic. Nonetheless, we draw comfort that: 1) CDLHT’s properties are operated by seasoned hotel players; 2) management is working closely with the operators to drive revenue and contain cost; 3) there are no refinancing issues till 2012; and 4) Singapore’s experience with SARS has resulted in more precautionary measures in place. Thus, swine flu may not be as great a threat as feared. In the event of a further occupancy decline, CDLHT remains protected by its fixed rent component, which we estimate would translate into a DPU of 3.42cts, assuming a 90% payout (see report dated 27 Mar 09). Based on the last closing price of S$0.58, this would be a yield of 5.9%. Maintain target price of S$0.68 (discount 10.8%), still based on DDM valuation.
CCT – CIMB
Still holding strong
• Broadly in line, occupancy stable. 1Q09 results are broadly in line with consensus and our expectations. DPU of 3.24cts forms 29% of our forecast for FY09, up 19.6% qoq due mainly to better net property income margins and trust expenses (down from one-off expense in 4Q08 for abortive cost for Market Street Carpark development). Net property income of S$69.9m was up 6.5% qoq as property-related expenses (excluding property tax and property management fees) declined 20%. Portfolio occupancy at 96.7% was up marginally from 96.2% in 4Q08, and remained materially higher than the islandwide average of 90%.
• Lease renewals on track. About 44.2% of office leases and 32.8% of retail leases expiring in FY09 have been renewed to date. Reversions were positive at 49% above preceding rates, typically signed three years earlier. Rents signed for CCT’s Grade A office buildings remain in the double-digit range amid market news that rents for some Grade A office buildings have fallen to single digits. Major tenants include Legg Mason (One George Street), CapitaLand (Wilkie Edge), BNI (Robinson Point) and foodcourt operator Koufu (Market Street Carpark). With good progress in lease renewals, committed occupancy at the end of April improved 1% pt over 1Q09 to 97.7%.
• Refinancing for debt expiring in 2009 secured. Management says it has obtained a letter of commitment for S$160m from a bank .This will be a 3-year-term loan secured on HSBC Building to be drawn down when its existing facility expires in mid-year. From the announced margin of 3% p.a. (inclusive of fees), we estimate an all-in cost of about 4.7%. This is still within our cost-of-debt estimate of 5%. With this, CCT has secured all refinancing of debt due in 2009.
• Maintain Outperform, earnings forecasts and target price of S$1.12. Management’s ability to improve occupancy in an environment of falling rents and rising vacancy is reassuring. We believe CCT’s distribution in FY09 will stay relatively stable, anchored by its top 10 tenants with a long weighted average lease term to expiry of 6.4 years. These top 10 tenants also contribute 50% to CCT’s monthly gross rental income. Maintain Outperform and DDM-based target price of S$1.12 (discount 10.4%).
CCT – BT
CAPITACOMMERCIAL Trust (CCT) on Thursday said that Q1 distributable income rose 27 per cent to $45.4 million – from $35.9 million a year earlier – as it saw contributions from recently-acquired properties One George Street and Wilkie Edge.
FCOT – BT
SINGAPORE – Singapore’s Frasers Commercial Trust said on Thursday it may consider a rights issue as an option to refinance its debt, however the company said no firm decision has been taken on the plan.
a-iTrust – BT
a-iTrust posts 25% rise in Q4 DPU
ASCENDAS India Trust (a-iTrust) said yesterday that distributable income for its fourth quarter ended March 31 rose 26 per cent to $15.6 million from a year back.
Distribution per unit (DPU) for the quarter rose 25 per cent to 2.05 cents, bringing the full year’s DPU to 7.54 cents.
The 24 per cent rise in full-year DPU was ‘driven by strong performance of the assets’ and exceeded the DPU forecast of 6.85 cents stated in its 2007 listing prospectus. Distribution is semi-annual, so the DPU for Q3 and Q4, which amounts to 4.07 cents, will be payable on May 26.
Total property income for the fourth quarter rose 13 per cent to $30.8 million from the year-ago Q4, while net property income grew 8 per cent to $17.4 million. For the full year, total property income grew 15 per cent to $118.1 million, from $102.7 million in the previous year, while net property income rose 9 per cent to $66.2 million.
Net asset value attributable to unitholders was 89 cents per unit as at March 31.
Jonathan Yap, chief executive of the trust’s manager, said: ‘Our results reflect the strong cash generation of our assets and robust demand for space in our properties.’
a-iTrust has a portfolio of 4.8 million square feet of completed space in Bangalore, Chennai and Hyderabad. The occupancy rate for its portfolio was 98 per cent at the close of the fourth quarter, above market occupancy rates of 72 per cent to 87 per cent in the three cities, the trust said.
During the year, leases for 24 per cent of the portfolio’s space expired, out of which 89 per cent was renewed. The trust manager said that it intends to ‘renew or replace expiring leases in advance’. About 13 per cent of space is due for renewal in the next year.
‘Apart from organic growth, we are developing buildings on land owned by the trust, to give us new income stream,’ said Mr Yap.
These include plans to develop 1.5 million square feet of space in international tech parks in Bangalore and Chennai. The trust also owns 2.7 million sq ft of space which is largely within an approved special economic zone in the Bangalore tech park, which can potentially be further developed.
As at March 31, a-iTrust’s total borrowings of $79 million reflected a gearing level of 9 per cent.
The trust’s shares closed 0.5 cent down at 50.5 cents yesterday.