AscottREIT – BT
Ascott Reit’s Q4 distributable income falls 20%
ASCOTT Residence Trust (ART) yesterday announced a distributable income of $10.32 million for the fourth quarter of 2008, a fall of 20 per cent from the previous corresponding period’s $12.85 million because of one-off expenses.
The one-off expenses amounting to about $1.7 million related mainly to a refurbishment cost. ART said that excluding this one-off item, distribution could have been just 6 per cent lower due to higher finance costs.
Distribution per unit (DPU) for the quarter also fell 20 per cent year-on-year, to 1.69 cents.
For its serviced residences, the Pan-Asian residence real estate investment trust registered a 4 per cent year-on-year in revenue per available unit (RevPAU) to $133 for the three months ended Dec 31, 2008. This was mainly because demand for serviced residences in China saw a fall after the Beijing Olympics.
For the full year, distributable income was 19 per cent better at $53.7 million. As Ascott Residence Trust Management Limited (ARTML) chief executive Chong Kee Hiong said of ART’s FY2008 performance, ‘everything is still up’. ARTML, the trust’s manager, is a subsidiary of CapitaLand.
DPU for the full year rose 14 per cent to 8.78 cents, a distribution yield of 17.4 per cent based on ART’s closing price of 50.5 cents per unit on Thursday.
The higher distribution was due to strong operating performance in 2008, a result of organic growth as well as contributions from new acquisitions.
However, rental income might decrease the coming year, as Mr Chong expects tenants to renew on shorter terms. ‘It is quite clear that people are renewing for shorter stays, and the average length of stay will drop.’
Revenue for the quarter came to $47.7 million, 11 per cent higher year-on-year. Full-year revenue was $192.4 million, a 24 per cent increase. Upon completion of its latest acquisition in Vietnam, ART’s portfolio will expand to 38 properties worth $1.53 billion in 11 cities.
Mr Chong said: ‘We will continue to apply cost containment measures as well as control our discretionary capital expenditure to maximise asset yield.’
ART expects its operating performance in 2009 to ‘remain profitable but lower than 2008’.
Suntec – BT
Suntec Reit distribution income surges
Jump of 31.7% to $44.1m for the Oct-Dec period; DPU for quarter also up at 2.858 cents
SUNTEC Real Estate Investment Trust (Suntec Reit) has reported a distribution income of $44.1 million for the quarter ended Dec 31, 2008, a jump of 31.7 per cent.
The distribution per unit (DPU) for the quarter came to 2.858 cents, up 25.4 per cent year-on-year. This works out to an annualised DPU of 11.339 cents, representing a yield of 17.4 per cent based on Suntec Reit’s closing unit price of 65 cents on Jan 21.
Suntec Reit has changed its financial year-end from Sept 30 to Dec 31, and for the 15 months ended Dec 31, achieved a DPU of 13.303 cents.
For the October-December 2008 quarter, gross revenue rose 16.8 per cent to $63.5 million and net property income jumped 28.1 per cent to $47.9 million.
Regarding Suntec Reit’s dividend payout ratio, CEO of ARA Suntec, Yeo See Kiat, said: ‘We’re giving 100 per cent. We’ve been giving 100 per cent since day one.’ ARA Suntec is the manager of Suntec Reit.
When asked about the request by some Reits to the government for a reduction in the minimum payout ratio to Reit unit-holders to as low as 50 per cent and yet still enjoy tax concessions, Mr Yeo said temporarily lowering the cap would give Reits a bit of flexibility in these tough times. However, Suntec Reit is not considering such a temporary measure, Mr Yeo noted, adding that if Suntec Reit had wanted to, it could have lowered its payout ratio to the currently-permissible cap of 90 per cent.
When asked whether Suntec Reit intends to pass the Budget’s tax rebates to retailers seeking to benefit from the government measure, Mr Yeo said that he might be willing to talk to the retailers on an individual basis but Suntec Reit had to go through the Budget concessions in detail before it could give a clear answer.
Asked about refinancing, Mr Yeo said: ‘We have worked very hard to maintain our credit rating.’ Suntec Reit’s average all-in financing cost for the quarter was 3.26 per cent and its gearing stood at 34.3 per cent as at Dec 31, 2008.
‘Whilst our next major refinancing is only due in December 2009, we are currently working on the refinancing ahead of its maturity,’ Mr Yeo added.
FCT – BT
FCT distributable income down 6% in Q1
FRASERS Centrepoint Trust (FCT) has announced income available for distribution of $10.4 million for its first quarter ended Dec 31, 2008, which is 6 per cent lower than a year ago.
Distribution per unit (DPU), however, was 1.67 cents, higher than 1.61 cents previously, as DPU for the latest quarter was based on 100 per cent of FCT’s income available for distribution compared with 90 per cent in year-ago quarter.
FCT said that gross revenue for the quarter ended Dec 31, 2008 was $19.5 million, a decrease of 3.2 per cent over the corresponding period last year, mainly due to the planned vacancies at Northpoint as part of the additions and alteration work to re-position the mall. The decrease was partially offset by the higher rental rates for new and renewed leases achieved in Causeway Point and higher turnover rent.
It said that it continued to make positive rental reversions with the bulk of the rentals of new and renewed leases during the quarter contributed by Causeway Point, which showed an average increase of 18.9 per cent from the preceding period. The occupancy rate had improved from 87.7 per cent as at Sept 30, 2008 to 88.7 per cent as at the end of the December quarter.
Actual property expenses for the quarter ended Dec 31, 2008 were $6.7 million, higher than the previous corresponding period by $0.5 million or 7.5 per cent, mainly due to higher property tax and staff costs. Net property income for the December quarter was $12.8 million, which is $1.1 million or 8 per cent lower than the same period last year.
Commenting on the outlook, FCT said that its property portfolio is suburban in nature, located next to key transportation hubs, catering to local/regional needs where there are no or limited alternative shopping choices. Suburban malls have their own population catchment.
During the current economic conditions, FCT’s portfolio of suburban malls will likely provide defensive cashflow.
CMT – CIMB
Could be cheaper
• In line. 4Q08 results were in line with Street and our expectations. 4Q08 and full year DPU were 3.65cts and 14.29cts respectively. Full year gross revenue of S$510.9m was up 18.3% yoy mainly on contributions from Atrium@Orchard and Raffles City. Portfolio occupancy improved marginally to 99.7%, up from 99.6% in the last quarter.
• Cap rates, asset values up. As at 1 Dec 08, CMT saw a marginal 1.9% increase in its asset values across its portfolio over their last valuation on 1 Jun 08 despite moderate cap rates expansion by 15 to 25 bps. With this valuation, asset leverage remained unchanged at 42% from the last quarter.
• AEI updates. Sembawang Shopping Centre which had been closed since early 2007 for asset enhancement works opened on 22 Dec 08. NLA had increased by 32% to 128,241 sf; whilst average monthly rents increased 48.8% to S$7.41psf. Todate, 98% of the NLA has been committed. Separately, asset enhancement works at Lot One Shoppers’ Mall were also largely completed. NLA had increased 6.6% to 216,982sf whilst average monthly rents had increased 20.5% to S$12.10psf.
• The billion dollar headache…CMT has S$986m of debt due for refinancing this year. This is some 31% of its total debt of S$3.2bn. Cash and committed credit facilities are sufficient to pay off only S$110m or 11% of the debt due in 2009. Due to the large quantum of the debt and relatively high leverage of 42%, management is likely to have to resort to both recapitalisation and debt to complete the refinancing. We are of the view that, with no changes in regulatory policies, the management is not likely to reduce payout of dividends to repay debt as the total distributable income of S$238m is only 24% of 2009 debt.
• Maintain Underperform, lower target price of S$1.66 (from S$1.90). We further cut our estimates assuming a 10% drop in rents from Atrium@Orchard and lower growth rate of 2% from CRS and the subsidiary portfolio. Our DPU falls 13-16% over 09-10 to 13.12cts and 12.01cts respectively. We also introduce our FY11 DPU estimates. Although CMT’s price has declined 31% from its last peak of S$2.18 in Nov 08, leading P/BV to fall from 0.9x to the current 0.68x, investors could look to a lower entry point in view of potential recapitalisation and dilution. Maintain Underperform.
MapleTree – DBS
Stable and Resilient
MLT reported their 4Q08 results in line with estimates, mainly due to contributions from its robust acquisitions over FY08. Looking ahead, the trust doed not face major refinancing needs. A low gearing of 38.5% combined with an unencumbered underlying asset portfolio underpins its balance sheet strength. Maintain BUY, TP$0.44 based on DCF. MLT is currently trading at c.14% FY09-10 DPU yield.
Results in Line. MLT reported a 4Q08 topline of S$52.4m (+ 30% yoy, 14% qoq) on top of a 43% yoy growth in distribution income to S$28.3m. DPU was 1.46 Scts, an -18% yoy was due to higher share base from rights issued completed in 2H08. For FY08, the trust delivered a DPU of 7.24cts. Assets were revalued upwards by c. S$94m (+ 3.3%), resulting in an NAV of S$0.89. Gearing is at a low of 38.5%.
No major refinancing needs. We view that MLT does not face major refinancing needs as short-term debt of c. S$218m is just 7% of total portfolio which is currently unencumbered. These assets will form a strong collateral base for further new loans when needed. In addition, the trust has more than sufficient lines to meet its debt obligations. Post recap balance sheet remains robust (38.5% gearing) and is poised to ride out current tough economic times well.
Buy for sustainable yield. We believe MLT is likely to continue to deliver a sustainable yield of c. 14% FY09- 10 fully diluted yield. Our forward earnings estimates reflect a 10% decline in portfolio occupancy over FY09. Rolling forward our valuations, we derive a TP of S$0.44. Maintain BUY.