AllCo – BT
Allco Reit says debt extension approved
Singapore-listed Allco Commercial Real Estate Investment Trust said on Thursday it has received in-principle approval for a 17-month extension of the maturity date for $550 million (US$396.5 million) of its debt.
The Reit’s manager ‘is currently reviewing the terms and conditions of the extension and will execute binding documentation as soon as practicable,’ it said in a statement, adding that the due date has been extended from July 31 this year to end-December 2009.
Allco Reit said that another $70 million of debt due to mature on 22 November this year will be repaid in full with the proceeds from its sale of the Allco Wholesale Property Fund.
Allco Reit, which owns malls and offices in Singapore and Australia, late on Wednesday announced the resignation of three directors appointed by parent Allco Finance Group so that the board will have a majority of independent directors.
Moody’s Tuesday downgraded Allco Reit’s rating to Ba2 from Ba1 and said the rating ‘remains on review for further possible downgrade’.
That followed a a failed legal attempt by the Reit to stop Moody’s from downgrading its shares as that would have complicated the trust’s fundraising efforts. — REUTERS
CRCT – BT
CapitaRetail China Trust eyes tripling assets to $3b by end-2009
It plans to cap borrowing at 35% of assets, raise equity
Singapore-listed CapitaRetail China Trust (CRCT) said yesterday that it expects to triple assets to $3 billion by end-2009 as investors remain enthusiastic about China’s retail sector.
CRCT, which owns eight China malls worth $1.1 billion, is confident it will be able to raise new equity when required and cap borrowings at 35 per cent of assets, chief executive officerLim Beng Chee said in an interview.
‘I’m lucky that China is a huge market … I can see a lot of growth in the market that I have, whereas in Singapore it is not easy to see the growth unless you have the scale,’ he said, when asked about failed equity raising efforts by other real estate investment trusts (Reits) because of weak market conditions.
Mr Lim said that CRCT, which was listed slightly over a year ago, wanted to be more conservative with its borrowing until it was certain of getting an investment-grade rating.
‘We will gear up when we have a more solid track record,’ he said, adding that the rating agencies are not familiar with China’s property market and legal system and have to date only assigned an investment-grade rating to one developer there.
Under Singapore law, Reits must cap their debt-to-equity ratio at 35 per cent unless they get a rating from international agencies such as Moody’s and Standard & Poor’s.
Singapore’s once booming Reit sector is expected to consolidate in the coming months as weaker players sell assets or merge with their stronger counterparts.
Several high-profile listings by India-based developers such as Indiabulls and DLF have been postponed or abandoned, while existing trusts such as Allco Commercial and MacarthurCook Industrial have dropped plans to raise funds for new acquisitions via secondary offerings.
CRCT, which is managed and part owned by CapitaLand , South-east Asia’s biggest developer, has first rights of refusal to malls owned by CapitaLand and its various investment funds.
Its pipeline of new properties include 16 existing malls as well as another 49 that will open in the next few years. Its current strategy involves acquiring and managing malls that cater to China’s growing middle and upper-middle class consumers. — Reuters
MI-REIT – BT
MacarthurCook Reit to fight any hostile bid
Trust now keen on buying two Asian properties, not 10
THE manager of Singapore-listed MacarthurCook Industrial Reit, a subject of takeover speculation, said yesterday that it will fight any hostile bid to acquire the trust.
‘I can guarantee you that it will be contested. We certainly won’t let somebody just walk in the door and take over management,’ Craig Dunstan, managing director of Australia’s MacarthurCook Ltd, told Reuters in an interview.
He said the Australian property manager now controls 13.2 per cent of MacarthurCook Industrial, raising its stake from an initial 2.3 per cent when the trust was listed last April.
Singapore’s real estate investment trust (Reit) sector is expected to consolidate in the short term, and brokerages such as Goldman Sachs have cited MacarthurCook Industrial as a potential takeover target due to its diffuse shareholding structure.
The absence of a large controlling shareholder makes it easier for predators to buy a majority stake.
MacarthurCook Industrial’s share price fell 2.9 per cent yesterday, while the broader Singapore market was flat.
MacarthurCook Industrial and other Singapore Reits controlled by Australian firms have suffered the most in the current weak market due to concerns over their ability to raise debt or equity.
Allco Commercial Reit, which is planning to sell its Australia properties as embattled manager Allco Finance Group struggles to repay its debts, fell 8.1 per cent after Moody’s downgraded its credit rating further on Tuesday.
Mr Dunstan said MacarthurCook Industrial, which owns about $620 million worth of factories and warehouses, mainly in Singapore, will not meet its annual asset growth target of $500 million for the fiscal year to end-March 2009.
‘We’re not going to raise equity in today’s market at today’s prices, because that’s not the right thing to do for our current investors,’ he said.
MacarthurCook Industrial currently trades at around a 24 per cent discount to its net asset value of $1.30 a share.
The property trust dropped a $200 million equity fundraising exercise in January citing poor market conditions, and is now looking to buy two properties in Asia instead of the 10 it was considering initially, Mr Dunstan said.
‘Our responsibility is to generate good risk-adjusted returns for our current investors. They will continue to get a good return whether we buy another asset in the next 12 months or not,’ said Mr Dunstan, a former lawyer who founded MacarthurCook in 2002. — Reuters
Rickmers – BT
Rickmers inks US$1.35b deal
Purchase of 13 new container ships will triple contracted fleet capacity
RICKMERS Maritime has moved a step closer to acquiring 13 new vessels that are expected to treble its contracted fleet capacity when fully delivered.
The company, which owns and operates container ships, has inked a memorandum of agreement (MOA) to buy the 13 new container ships from Polaris Ship Management Company for US$1.35 billion.
This follows the preliminary agreements that were signed between the two companies last year. The ships, slated for delivery between 2008 and 2010, will take the firm’s fleet size to 23 and increase its contracted fleet capacity by over 220 per cent.
Five 4,250 TEU (twenty-foot equivalent unit) vessels from this acquisition will be chartered to Mitsui OSK Lines, while four others of similar capacity will be contracted to South Korea’s Hanjin Shipping. Four 13,100 TEU vessels, among the largest in the world, will be chartered to AP Moller-Maersk. The tenure of these fixed-rate charters range from seven to 10 years.
‘I am confident that our investors will share our excitement with this 222 per cent growth pipeline, which includes four of the largest container ships ever built,’ said Thomas Hansen, CEO of Rickers Trust Management (RTM), which manages Rickmers Maritime. ‘The MOA signifies our commitment in growing the trust and we will continue to keep a lookout for other viable acquisitions that fit our investment mandate and allow us to deliver positive returns to our unit holders.’
The ships are set to boost Rickmers’ distributable cash flow once they are delivered and in operation. ‘They are expected to increase Rickmers Maritime’s aggregate contracted revenue in excess of US$2.1 billion for the years up to 2010,’ said Quah Ban Huat, Rickmers Maritime chief financial officer.
The purchase of the vessels is still subject to the approval of unit-holders.
CCT – UOBKH
Leveraging on positive rental reversion
CapitaCommercial Trust (CCT) invests in income producing real estate used for commercial purposes. It owns nine properties in Singapore with 2.3m sf of office space, which accounted for 7% of private office stock within Downtown Core. CCT has a 30% stake in Quill Capita Trust (QCT), a commercial REIT listed on Bursa Malaysia. It has a 7.4% stake in Malaysia Commercial Development Fund (MCDF), which is the largest private real estate fund in Malaysia focusing on investments in Kuala Lumpur and the Klang Valley. CCT was assigned corporate rating of A3 with stable outlook by Moody’s Investors Services.
Huge room for rental reversions. Rentals for prime office space within Raffles Place and Marina Bay area has shoot up from S$8.60 in 1Q07 to S$15.00psf pm in 4Q07, a result of supply crunch coupled with strong demand from financial institutions and oil & gas companies. Rentals for Grade A office space is even higher at S$17.15psf pm in 4Q07. According to CB Richard Ellis, rentals for Grade A office space could average S$18.50psf pm by end-2008, a further increase of 7.9%. CCT is well positioned to benefit from positive rental reversion as 56.9% of its leases for office space are up for renewal in 2008 and 2009, when supply coming on stream is fairly limited.
54% of office space at 6 Battery Road is up for renewal in 2008 and 2009. We understand that Standard Chartered has renewed leases for 130,000sf at average rate of S$14.95psf pm for three years in Jan 08 compared to previous rate of S$7.00psf pm. 53% of office space is up for renewal in 2008 at Robinson Point with existing rent at only S$4.00psf pm. 53% of office space is up for renewal in 2009 at Raffles City Tower with existing rent at only S$3.40psf pm. Positive rental reversion from these prime office buildings provides revenue growth of 14.8% in FY08 and 12.4% FY09.
Redevelopment for Market Street Car Park. CCT has secured Outline Planning Permission for the redevelopment of Market Street Car Park into a premium Grade A office tower with estimated net lettable area (NLA) of 680,000sf. Management estimated that the site cost between S$1b to S$1.5b to be redeveloped, depending on the amount of development premium imposed. Construction is likely to commence in late-08/early-09 and completion by 1H2012. The project is likely to be undertaken by a JV with option for CCT to repurchase at a later stage when rentals have stabilised. Sponsor CapitaLand is the most likely JV partner. We believe a 50:50 JV is possible, particularly if the project is developed in phases.
No risk from refinancing. CCT’s current gearing is low at 24% in Dec 07. The company issued S$150m 3-year medium term note with attractive fixed interest rate of 3.05% in Mar 08. This has largely satisfied its funding requirements for refinancing short-term borrowings and the acquisition of Wilkie Edge, a mixed development project at Selegie Road.
CCT plans to expand asset size from current S$5.3b to S$6b by 2009. Potential pipeline of acquisitions from sponsor CapitaLand includes One George Street with NLA of 448,000sf. There is also latent potential to redevelop Golden Shoe Car Park. CCT provides FY08 distribution yield of 5.12%, a healthy spread of 3.04% over 10-year Singapore government bond yield at 2.08%.