FSL – UOBKH
FY07: DPU in line with expectations
First Ship Lease Trust (FSLT) has announced its FY07 results. Earnings came in at US$6.3m, 17.9% below our calculations mainly due to differences in calculation of depreciation (unlike the other shipping trusts, FSLT has a depreciation policy based on cost vs estimated residual in the 20th year) and amortization of debt upfront fees. Overall distributions per unit (DPU) announced for the period came in at 6.95 US cents, 2.1% below our estimated DPU for the year but spot on with management’s guidance following their Nov 2007 acquisition of 2x 47,000DWT product tankers.
Quarterly DPU to be made on 22 Feb 2008
FSLT will be paying out a distribution of 2.42 US cents for 4Q07 which is in line with management’s guidance, following the acquisition of 2x 47,000DWT product tankers in Nov 2007 and 13.6% above the projected distribution at IPO. Investors are advised to take note of the following dates:
• 22 Jan 2008: Ex-distribution date
• 24 Jan 2008: Books closure date
• 11 Feb 2008: Deadline for unitholders to complete and return the Distribution Election Notice to CDP in order to receive distributions in US dollars
• 22 Feb 2008: Payment of distributions.
Appointment of US Investor Relations
FSLT has announced that it has retained the IGB Group as its US investor relations and financial communications agency in order to increase its visibility among US based investors and financial media. We view this as a positive for FSLT as US investors have a greater appreciation for shipping trusts. Seaspan and Danaos, the two shipping trusts in the US originally started out like the shipping trusts in Singapore, trading at a DPU yield of between 8.5-9.0% at listing. Continued accretive acquisitions lead to a re-rating of the sector resulting in yield compression to between 5.5-6.0%. Currently the US shipping trusts are trading at a DPU yield of between 7.5-7.9%, much lower than FSLT’s current 12.6%.
Stable and visible distributions: Maintain BUY
We continue to like FSLT for its stable and visible distributions which are supported by its long term timecharters of between five to eleven years. Among the three shipping trusts, FSLT currently also has the lowest debt to equity ratio of 0.34x. As FSLT has a target long-term debt-to-equity ratio of 1x, we expect future acquisitions to continue to be highly accretive as they can be funded by lower cost debt. We maintain our BUY recommendation on FSLT and maintain our target price of US$1.22 (S$1.76).
PST – BT
Pacific Shipping Trust sees 15% rise in fleet value
Independent broker values its portfolio of 8 ships at US$287m
PACIFIC Shipping Trust’s (PST) current portfolio of eight ships has been valued at US$287 million. This is 15 per cent higher than the book value and nearly 6 per cent higher than the total purchase price.
The valuation was done by Singapore-based independent broker Team Shipbrokers and was conducted on a charter-free basis. The eight vessels in Pacific’s current portfolio had a book value of US$249 million as at Dec 31, 2007, and their total purchase price was listed as US$271 million at the trust’s initial public offering in May 2006.
‘The rise in our asset values reflects the strong demand for quality container ships in 2007, when both new building and second-hand vessels were sold at record prices,’ said PST Management chief executive Subhangshu Dutt. ‘We hope this valuation dispels the concerns among some investors that ships only depreciate in value.
‘As trustee manager of PST, we are committed to maximising value for unitholders by providing a high, stable yield that comes from a diversified portfolio of quality, well maintained assets,’ he added.
PST will keep to its accounting policy of not revising the book values of its vessels.
PST also announced yesterday the launch of a new 1,800 TEU (twenty-foot equivalent) vessel. The US$43 million vessel is being built at China’s Dalian Shipbuilding Industry (Group) Co and is due for delivery at end-March.
The vessel will be Singapore-flagged and bareboat-chartered to PST sponsor Pacific International Lines (PIL) for eight years. In bareboat charters, the shipowner provides only the ship. The charterer has complete control over the management and operation of the vessel for an agreed leasing period and pays all operating costs including crew stores and bunker.
The Kota Nabil’s sister vessel, another 1,800 TEU container ship costing US$43 million, will be delivered to PST by end-May. These two ships are expected to raise the shipping trust’s total contracted revenue per annum by 15.7 per cent to about US$61.9 million.
Last September, PST announced the acquisition of two 4,250 TEU ships from PIL which it will time-charter to leading South American liner shipping company CSAV. With the latest two new vessels, PST’s portfolio will expand by half from eight to 12 vessels by the end of the year.
‘The early delivery of this vessel will mean that our unit-holders will realise the yield accretion promptly,’ said Mr Dutt. And he assured unit-holders that ‘we are continually on the lookout for more acquisitions which are yield accretive and which can diversify our charterer base’.
Cambridge – SGX
Cambridge Industrial Trust Management Limited (the “Manager”), the Manager of Cambridge Industrial Trust (“CIT”), is pleased to announce that CIT’s trustee, on behalf of CIT, has entered into a facility agreement with the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) for a revolving credit facility (the “Revolving Facility”) up to an aggregate of S$100 million. The Revolving Facility has a term of two years.
Interest payable on the Revolving Facility will be a margin above the Singapore Dollar Swap Offered Rate (“SOR”) with interest periods of one, two, three or six months at the option of CIT.
Mr Ang Poh Seong, Chief Executive Officer of the Manager, said “We are delighted to have concluded this debt transaction. This facility provides CIT with the capital to continue its track record of accretive acquisitions.
“The terms and pricing of this facility demonstrate the success of CIT’s prudent capital management strategy and the benefits of pursuing multiple sources of funding to mitigate the risk of capital market disruption”.
The facility is secured by the six properties in Singapore acquired by CIT in its successful October 2007 Equity Fund Raising, namely:
• 1 Tuas Avenue 3
• 7 Ubi Close
• 9 Bukit Batok Street 22
• 120 Pioneer Road
• 120 Strata Units in 48 Toh Guan Road East, Enterprise Hub
• 23 Woodlands Terrace
The facility will be used to fund the acquisition of future properties for CIT, including the two properties currently under option, namely 6 Tuas Bay Walk and 21B Senoko Loop , as well as for working capital purposes.
The facility is in addition to CIT’s existing debt facilities, which are a revolving term loan facility of S$390 million provided by Orchid Funding (Singapore) Limited and an overdraft facility of S$10 million provided by ABN AMRO Bank N.V., Singapore Branch. The Manager’s intention in the medium term is to refinance both the existing facilities and the Revolving Facility with a Commercial Mortgage Backed Securities program (“CMBS”) or other long term financing structure, subject to market conditions.
Standard and Poor’s Ratings Services affirmed CIT’s ‘BBB-‘ credit rating on 12 December 2007, and upgraded their outlook from “Neutral” to “Positive”.
MapleTree – BT
MapletreeLog buys warehouse in S Korea
MAPLETREE Logistics Trust (MapletreeLog) yesterday said it has agreed to acquire a warehouse in South Korea for 11.6 billion won (S$17.7 million), which will add 0.02 Singapore cents to its pro-forma distribution per unit.
The property is a two-storey warehouse/ distribution centre located in the established logistics cluster of Kyungki. It has a temperature-controlled section and a three-storey office building. Valued at 13.5 billion won, the property is located on freehold land, with a GFA of about 10,911 sq m.
The vendor of the property is Oakline Co, which will lease back the property for a period of four years. MapletreeLog intends to fund the acquisition wholly by debt, but does not rule out alternative means of funding as well.
‘We are very pleased with our first acquisition in South Korea as we continue to expand our footprint in Asia, diversifying our revenue streams across various countries,’ said Chua Tiow Chye, CEO of Mapletree Logistics Trust Management, which manages the trust. ‘This will be the sixth Asian market which MapletreeLog will have assets in.’ Mr Chua added that MapletreeLog will continue to grow its presence in the South Korean logistics real estate sector, seeing that it is a relatively well-developed market.
MMP – SGX
CLARIFICATION OF BLOOMBERG AND OTHER PRESS REPORTS DATED 8 JANUARY 2008
Macquarie Pacific Star Prime REIT Management Limited (the “Manager”), as Manager of Macquarie MEAG Prime Real Estate Investment Trust (“MMP REIT”), wishes to clarify statements made in reports published by Bloomberg, Business Times and various other press sources today (the “Reports”).
The Manager is always evaluating sources of funding and other means of effective capital management for MMP REIT. Reference should be made to the SGX-ST announcement released by the Manager on SGXNET today in respect of the medium term note programme (the “MTN Programme”) established for and on behalf of MMP REIT. Whilst the Manager is considering raising debt capital for MMP REIT in the near future (which may be by way of a bond issuance, in conjunction with the MTN Programme or otherwise), no definitive agreements or terms have yet been finalised, in the manner the Reports would suggest or otherwise.
In the event of any material developments in this respect, the Manager would issue the appropriate announcements in compliance with the listing rules of the SGX-ST.
Source : SGX