CCT – BT
CCT Q1 distributable income at $35.9m
DPU of 2.59 cents is 12.1% above forecast
CAPITACOMMERCIAL Trust (CCT) has announced a first-quarter distributable income of $35.9 million, or 12 per cent higher than forecast. Distribution per unit (DPU) for the three months ended March 31 came to 2.59 cents, better than the 2.11 cents a year ago and 12.1 per cent above forecast.
Net property income totalled $49.6 million or 8.8 per cent above forecast. ‘CapitaCommercial Trust achieved higher rental income as Singapore experienced considerable rental growth in the office market over the past 12 months,’ said Richard Hale, chairman of CapitaCommercial Trust Management, which manages the trust. ‘This growth, together with our strategy of pro-active asset and prudent capital management, increased the first-quarter 2008 distribution per unit significantly by 22.7 per cent over the same quarter in 2007.’
Mr Hale said that if the acquisition of 1 George Street at a purchase price of $1.165 billion is approved and completed, CCT’s total asset size will grow to $6.5 billion, ahead of the target of $6 billion by next year.
‘Given Singapore’s still-strong economic fundamentals and continued healthy office leasing demand, we are confident of exceeding the forecast distribution per unit of 10.04 cents to unitholders in 2008,’ he said.
Lynette Leong, chief executive of the manager of the trust, said that there is continuing keen demand by banks and financial institutions for greater space in CCT’s quality buildings. CCT’s portfolio includes Capital Tower, 6 Battery Road, HSBC Building, Starhub Centre, Robinson Point, Bugis Village, Golden Shoe Car Park and Market Street Car Park.
Grade A and prime office rents averaged $18.65 per square foot (psf) per month and $16 psf per month respectively in Q1 2008, representing increases of 8.7 and 6.7 per cent from the preceding quarter.
‘Given the prime quality of CCT’s portfolio, we have signed leases above $20 psf per month in Q1 2008,’ Ms Leong said. ‘Our well-balanced lease expiry profile, together with our pro-active asset management, will enable us to benefit from the tight office market . . . and gain continued rental upside.’
MapleTree – DBS
Internal boost
Comment on Results
MLT reported strong 1Q08 results. Gross revenue grew 48% y-oy to S$42.6m, while NPI rose 45.5% to S$37.4m. Contributions from 23 properties acquired in the past year and positive rental reversions that were secured at c. 29% above preceding rents had lifted bottomline. Distributable income of S$21m (DPU: 1.9cts) was 6.7% higher y-o-y and c.10% above our and consensus estimates. The main swing factor was interest cost, which the REIT managed keep low at 2.9% due to declining interest rates.
Looking ahead, MLT expects to benefit from (i) optimizing yields through rental reversions for the remaining 124k sqm of NLA between 2Q08 – 4Q08, (ii) additional income from completion of another eight asset acquisitions throughout FY08F for a total consideration of S$291m. However, gearing is high at 54.7%, which leaves only S$329m of debt headroom before it reaches the regulatory limit.
Recommendation
We have raised our FY08F and FY09F DPU to 7.7cts and 7.9cts to reflect a lower effective interest cost, translating to FY08F and FY09F yields of 7.5%and 7.7%, respectively. Maintain BUY on MLT with DCF-backed target price of S$1.51 (previous S$1.42), a 47% upside from current trading levels. However, the stock is likely to be re-rated only when it de-gears its balance sheet.
CCT – DBS
Strong organic growth
Comment on Results
CCT posted a smaller 15.6% improvement in net property income to $49.6m on a 23% rise in revenue to S$71.2m as higher property taxes boosted expense ratio to 30.3%. Distributable income rose 23% to $35.9m translating to a DPU of 2.59cts. The better performance was due to strong organic growth from its office and retail assets as portfolio occupancy levels reached 99.6%.
During the quarter, new and renewal office and retail leases were transacted at 195% and 159% above preceeding levels. Highest average rents of $20.50psf were committed at 6 Battery Rd. Looking ahead, CCT is expected to continue benefiting from the positive rental reversion trend with a total 56% of rental income due to be reviewed over the remaining 2008 to 2010. The significant spread between renewal and average passing rents should translate to a strong uplift in income over the 2 years.
Furthermore, acquisition of One George St, scheduled to complete in 2H08, should provide a new accretive income source. In addition, progressive completion of asset enhancement activities at Raffles City Tower should lead to a further boost in bottomline.
Recommendation
We are maintaining Buy on CCT for its strong organic earnings growth. Projected FY08 and FY09 DPU of 10.7cts and 12.9cts translates to a yield of 5.1% and 6.1% respectively. Our price target of $2.93 offers a potential upside of 40%.
MapleTree – BT
MapletreeLog distributable income up 37% in Q1
yesterday reported distributable income of $21 million for the first quarter ended March 31, up 37 per cent from the corresponding period last year.
This comes on the back of a 48 per cent jump in gross revenue from the year-ago period to $42.6 million.
The increase in distributable income came as MapletreeLog acquired an additional 23 properties within the past one year. As at March 31, the trust has a portfolio of 72 properties. Eight acquisitions are pending completion, which will raise the trust’s portfolio to 80 properties spread across Singapore, Malaysia, Hong Kong, Japan, China and South Korea, with a book value of more than $2.7 billion.
Unitholders will receive distribution per unit (DPU) of 1.90 cents for Q1 2008, which is 28.4 per cent higher than in the year-ago period.
MapletreeLog’s website shows analysts’ DPU forecasts for 2008, made in January, ranged from 6.70 cents to 8.01 cents.
MapletreeLog also reported an improvement in borrowing costs. Due to a sharp drop in interest rates for major currencies during the quarter, the trust’s weighted average annualised interest rate fell from 3.3 per cent per annum in the Q4 2007 to 2.9 per cent in Q1 2008.
According to Mapletree Logistics Trust Management (MLTM) CEO Chua Tiow Chye, the trust has started the year with a strong performance.
‘We will continue with our yield plus growth strategy but in the current environment, we will remain focused on optimising yield from the existing portfolio while continuing to identify selective acquisition opportunities which we can undertake when the environment normalises,’ Mr Chua said.
MapletreeLog had announced a $500 million rights issue in December last year but deferred the plan in January when the capital market softened.
On this, Mr Chua said: ‘We will continue to monitor and review when it will be conducive to re-visit an equity fund raising.’
MapletreeLog also reported a higher leverage ratio of 54.7 per cent as at March 31, up 1.3 percentage points from Dec 31 last year. This was largely due to borrowings drawn down to fund the trust’s committed acquisitions in Q1 2008.
CRCT – BT
CRCT income for distribution 8.5% higher than forecast
CAPITARETAIL China Trust (CRCT) has announced income available for distribution to unit-holders of $6.3 million for the period Feb 5 to March 31 – $0.5 million or 8.5 per cent higher than its forecast of $5.8 million.
Available distribution per unit (DPU) for the period is 1.02 cents (6.66 cents on an annualised basis), which is 8.5 per cent higher than its forecast of 0.94 cents (6.14 cents on an annualised basis). This translates to 9 per cent year-on- year DPU growth.
Based on the unit price of $1.50 on April 23, the distribution yield works out to 4.44 per cent.
CRCT explained that the last distribution was scheduled to take place in respect of its semi-annual distributable income for the period July 1 to Dec 31, 2007. ‘In order to ensure fairness to unit-holders in issue on the day immediately prior to Feb 5, 2008, the day on which the new units are issued under the equity fund-raising for the acquisition of Xizhimen Mall, the manager has made a cumulative distribution of 4.04 cents for the period July 1, 2007 to Feb 4, 2008,’ it added.
Lim Beng Chee, CEO of CRCT manager CapitaRetail China Trust Management, said: ‘Following a year of proactive asset management of our portfolio, the malls have registered robust top-line growth, with Wangjing Mall and Qibao Mall delivering a year-on-year revenue increase of 18.8 per cent and 45.6 per cent respectively. Tenants have also enjoyed remarkable sales growth, with same-store sales at Wangjing Mall, Qibao Mall and Xinwu Mall growing 30.9 per cent, 27.4 per cent and 51.8 per cent respectively.’
Gross revenue for Q1 2008 was 116.3 million yuan(S$22.5 million), representing a y-o-y increase of 29.8 million yuan or 34.4 per cent. This was mainly attributed to revenue from Xizhimen Mall, which was acquired on Feb 5, as well as occupancy growth at Wangjing Mall and Qibao Mall. Excluding Xizhimen Mall, gross revenue for Q1 2008 was 95 million yuan, a y-o-y increase of 8.5 million yuan or 9.8 per cent.
Net property income (NPI) for the quarter was 72.7 million yuan, a y-o-y increase of 18.5 million yuan or 34.2 per cent. Excluding Xizhimen Mall, NPI for the quarter was 59.2 million yuan, a y-o-y increase of 5 million yuan or 9.2 per cent.
CRCT’s unit price closed 10 cents higher at $1.60 yesterday.