MP REIT – SGX
HIGHLIGHTS
• 3Q 2008 DPU of 1.78 cents achieved, 15.6% higher than 3Q 2007
• Singapore properties continue to demonstrate strong performance
• S$220 million of loans refinanced during the quarter at competitive rates
• Strategic review concluded; to assess and implement new strategic initiatives with new sponsor, YTL Corp
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CDLHT – BT
CDL Hospitality Trusts (CDLHT) on Thursday said that its third quarter distributable income rose 29.7 per cent to S$24.4 million, up from S$18.8 million a year ago.
Distribution per unit for 3Q 2008 was 2.93 Singapore cents, 24.2 per cent higher than the 2.36 Singapore cents reported for the same period last year. Net property income for the three months ended September 30, 2008 rose 21.3 per cent to S$27.3 million, from S$22.6 million in 3Q 2007.
The trust, which is Singapore’s only real estate investment trust (Reit) based on hotel properties, said that room revenue per available room (RevPAR) rose to $214 in Q3 2008, from $176 a year ago.
‘We are pleased to have been able to report robust growth in this quarter on the base of organic growth across CDLHT’s portfolio of hotels despite turmoil in the global financial markets,’ said Vincent Yeo, chief executive of the Reit’s manager.
‘Looking ahead over the short term, the events of the last few months will have some impact on our business, but steps have been taken to protect the profitability of CDL HT,’ he said. ‘The Reit remains positive of the general outlook over the medium and long term.’
MP REIT – BT
YTL buys 26% of Macquarie Prime Reit
Malaysia’s YTL Corp Bhd on Tuesday bought Macquarie Bank’s 26 per cent stake in Singapore-listed Macquarie Prime Reit for $202.6 million, a 49 per cent discount to the Reit’s net asset value.
The deal, which works out to 82 cents per unit, is at a 17 per cent premium over its 30 day volume weighted average price and 52 per cent over its last traded price.
YTL also bought over Macquarie Bank’s 50 per cent share in Prime Reit Management Holdings, the reit manager and with its stake in the Reit, will be able to control operations. The all-cash deal is valued at a total of $285 million.
CCT – CIMB
Concerns remain
• Met expectations. 3Q08 results were in line with Street and our expectations. DPU of 3.1cts grew 45.1% yoy to form 29% of our forecast of 10.55cts for FY08. Gross revenue of S$92.5m was up 52.6% yoy primarily on maiden contributions from One George Street and strong rental reversions. YTD DPU forms 78.4% of our full-year estimate, in line.
• One George Street diversified earnings. One George Street has diluted the concentration of revenue from Raffles City. In order of significance, the top three revenue contributors were: Raffles City (31.2%), 6 Battery Road (22.1%) and One George Street (15.5%). Together, they contributed 69% to CCT’s gross revenue in the quarter.
• Occupancy at 99%. Committed occupancy on a portfolio basis remained high at 99%, above islandwide office occupancy of 92.2% as at 2Q08. Average monthly rents for CCT’s office properties were S$7.20 psf in the quarter.
• Our key concerns for CCT are: 1) downward asset revaluation which would decrease its debt headroom and increase asset leverage; and 2) 57% of its debt (S$1,456m) is due over 2009-10. The pressure to refinance significant debt at a reduced credit rating of Baa1 (from an earlier A3) is likely to increase its cost of debt. A saving grace is CCT’s resilient income from a 5-year minimum income support for One George Street, long leases for HSBC Building and a stable retail segment in Raffles City.
• Maintain Underperform and target price of S$1.17. Our target remains based on DDM valuation with a discount rate of 10.4%.
FrasersCT – CIMB
Resilient in a downturn
• Full year in line. 4Q08 results were in line with Street and our expectations. DPU of 2.05cts forms 29% of our full-year forecast of 7.08cts. Full-year DPU of 7.29cts forms 103% of our estimate. Gross revenue of S$22.1m for the quarter was up 11.4% yoy, driven by a strong performance from Causeway Point and the newly refurbished Anchorpoint. Full-year gross revenue of S$84.7m was up 9.2% yoy. Growth in distributable profit was stronger than gross revenue on a yoy basis at 11.3% boosted by Hektar REIT’s contributions.
• AEI and acquisition updates. AEI initiatives for Northpoint were on track with full completion by Jun 09, management said. Pre-commitments are high at about 90%. Projected average monthly rents after the AEI is S$13.20psf, up 20% from S$11.00psf before. However, due to the current credit crunch and the fact that physical asset yields are presently lower than FCT’s trading yields and are thus not likely to be DPU-accretive, planned injections of Northpoint 2, Yew Tee Mall and Bedok Mall into FCT will be delayed.
• Healthy finances. Balance sheet was defensive with no significant debt due for refinancing until 2011. Current asset leverage is low at 28.1%.
• Changes to assumptions. We remove our earlier forecast of acquisitions for Northpoint 2, Yew Tee Mall and Bedok Mall, while maintaining our forecast of near full occupancy for FCT as there is no known upcoming supply in the vicinity of FCT’s major malls, Causeway Point and Northpoint. Separately, we increase our associate contributions on strong FY08 performances.
• Maintain Outperform; lower target price of S$1.13 (from S$1.49). Following our adjustments, our DPU estimates for FY09-10 decrease by 4-6%. Accordingly, our DDM-derived target price (new discount rate of 9.7% from 8.5%) drops to S$1.13 from S$1.49. We also introduce FY11 estimates. We remain confident that FCT’s rents will stay resilient in an economic downturn, backed by limited supply and tenants catering to non-discretionary spending.