a-iTrust – DBS
Valuation remains attractive
Comment on Results
1HFY08 results in line with expectations. Total property revenue grew 54% to S$48.5m, as a result of the inclusion of CyberPearl and ITPC to the portfolio, higher rental rates and the leasing of Navigator Building at ITPB (completed in Jan 07). Distributable income of S$22.2m was 17% higher than forecast, with a reported DPU of 2.95 cents.
NAV. As at 30 Sep 07, A-iTrust has an NAV of S$869.6m and this translates to S$1.16 per unit. This is 10% higher than the pro forma NAV of S$1.05 per unit at listing.
Recommendation
Strategy. Moving forward, a-iTrust will continue to seek organic growth, develop its in-built development pipeline and grow via acquisitions. With debt headroom of at least S$150m, this provides a-iTrust the capacity to make third-party acquisitions or undertake further development projects.
Maintain Buy, target price of S$1.84. Based on DDM valuation, we have a raised target price of S$1.84 due to Vega, the completing 5th building at The V (Hyderabad), which added 408,000 sq ft SBA instead of the earlier disclosed 377,000 sq ft.
We have reduced our DPU forecast by 3% in FY08 due to the expected completion for The Crest being delayed from Aug 07 to Nov 07.
a-iTrust – BT
Ascendas India Reit beats forecast
Its H1 distributable income of $22.2m beats estimate by 17%
HELPED by higher rental rates from its assets, Ascendas India Trust (a-iTrust) achieved distributable income of $22.2 million for the half year ended Sept 30, beating its estimate by 17 per cent.
Its distribution per unit for the period was 2.95 cents, giving an annualised yield of 5 per cent based on its initial public offer price of $1.18 per unit.
Its net property income touched $28.7 million, 66 per cent higher than the year-ago period and 18 per cent better than forecast.
a-iTrust has a diversified portfolio of four IT parks in Bangalore, Chennai and Hyderabad.
Over the first half year, 700,000 square feet of space within the portfolio of operating buildings was renewed or leased, at higher average rental rates than before. The overall occupancy rate of a-iTrust’s portfolio was 99 per cent as at Sept 30.
Ascendas Property Fund Trustee, the trustee-manager of a-iTrust, said it expects the trust to deliver the forecast performance for the second half of the year, and hence is confident of at least meeting the DPU forecast of 5.6 cents for the full year.
‘We are pleased to report a strong set of results which has benefited from the vibrant Indian IT-ITES sector, resounding support from the user-clients and the trustee-manager’s proactive asset and portfolio management,’ said the chief executive officer of the trustee-manager, Jonathan Yap. ‘We remain focused to build on the momentum and deliver returns to unitholders.’
The two completing buildings in the a-iTrust’s portfolio – Crest and Vega – have received strong pre-commitment of 73 per cent and 72 per cent of space respectively and income contribution is expected to start in the second half of 2007.
Besides having a right of first refusal from Ascendas Land International to acquire income-accretive business space, the trustee-manager said it is also pursuing acquisition opportunities from the market.
FrasersCT – BT
Frasers Centrepoint Trust eyes expansion in China, Australia
FRASERS Centrepoint Trust, which owns three shopping malls in Singapore, may expand in China and Australia, seeking to tap rising consumer spending in the region.
‘We typically would like to go to a market where we’ve got some competitive advantage,’ Christopher Tang, chief executive officer of Frasers Centrepoint Asset Management Ltd, which manages the trust, said in an interview yesterday. ‘China is one of those, Australia is the other.’
Buying shopping malls in China would give Frasers access to a market where retail sales surged 16 per cent in the first nine months of this year, while Australia’s economy is benefiting from the lowest jobless rate in 33 years, which has stoked wage growth and fuelled consumer spending.
Mr Tang declined to specify acquisition targets, saying they were ‘opportunistic’. India is also on the trust’s ‘watch list’ for its expansion plans.
Frasers on June 5 bought a 27 per cent stake in Hektar Real Estate Investment Trust, which owns shopping malls in Malaysia, for RM104.5 million (S$45.4 million).
In Singapore, Frasers will add the Centrepoint shopping mall on Orchard Road to the trust, Mr Tang said, declining to specify a time frame. The Centrepoint mall is owned by Frasers’ parent, Fraser & Neave Ltd.
Frasers on Monday said it will distribute $10.3 million to its shareholders for the three months ended Sept 30, beating its forecast of $9.1 million as it raised rents at its properties.
Frasers fell 2 cents to close at 148 cents yesterday. — Bloomberg
CCT – BT
CCT’s Q3 distributable income rises to $29.6m
Better result due to Raffles City, higher office rental income
CAPITACOMMERCIAL Trust, one of Singapore’s biggest office landlords, has posted distributable income of $29.6 million for the third quarter ended Sept 30, 2007, which is 13.5 per cent higher than the trust manager’s forecast based on a circular dated August last year, and a 52.4 per cent improvement from the same period last year.
‘The better financial performance year-on-year is a result of the accretive acquisition of Raffles City last year and the higher rental income from our quality office portfolio,’ CapitaCommercial Trust Management Ltd’s CEO Lynette Leong said in a news release.
CCT owns Raffles City complex jointly with CapitaMall Trust (CMT). The two real estate investment trusts yesterday gave an update on the asset enhancement works and leasing programme of retail space in the property. New tenants committed include the first Singapore stores of Spanish brands Cortefiel and Pedro del Hierro being introduced here by Ossia.
The stores will be on level one of Raffles City Mall, which will also feature flagship stores for Springfield and Kate Spade.
Ms Leong also highlighted that more than 50 per cent of CCT’s office leases (by gross rental income as at Sept 30 this year) expire in 2008 and 2009, positioning the trust for strong positive rental reversion to be realised from its office portfolio.
CCT’s Singapore properties include 6 Battery Road, Capital Tower, Robinson Point, HSBC Building, StarHub Centre and the Golden Shoe and Market Street car parks in addition to the 60 per cent stake in the Raffles City complex.
CCT’s Q3 gross revenue was $59.7 million, up 9.1 per cent from the forecast figure for the period and 60.1 per cent higher than that reported for the same year-ago period. Net property income was $42.5 million, which was 6.7 per cent higher than forecast and a 55.1 per cent year-on-year improvement.
CCT is not making any payout to unitholders for Q3 but its result for the quarter reflects a DPU of 2.14 cents. DPU for the first nine months of this year is 6.37 cents or an annualised figure of 8.52 cents, reflecting a distribution yield of 3.3 per cent based on CCT’s closing price yesterday of $2.57. The counter ended 10 cents higher yesterday.
CCT will be asking unitholders to approve its proposed acquisition of Wilkie Edge along Selegie Road at a coming extraordinary general meeting. The approval, if given, will boost the trust’s asset size to nearly $4.8 billion. The trust is targeting to grow this further to $5-6 billion by 2009.
CCTML says it expects the trust’s full-year 2007 performance to surpass the forecast DPU of 7.60 cents.
CCT – CIMB
Delayed earnings
• Slightly below. DPU grew 16.1% yoy to 2.1cts in 3Q07, driven mainly by strong rental reversions for office assets. However, YTD DPU of 6.5cts represents 72% of our forecast and 73% of consensus’s.
• Strong reversions, but NPI margins fell. Strong office rental reversions continued amid a supply crunch, driving up 3Q07 gross revenue by 57.2% yoy to S$60.7m. However, net property income margins dipped 2% pts qoq to 71.2%. This was attributed to the temporary loss of income during asset enhancement work and the repositioning of tenants in Raffles City, Golden Shoe Car Park and Starhub Centre, as well as increases in property tax for Capital Tower and higher utilities for Market Street Car Park. In view of rising property expenses, we expect net property income margins to stay at such levels for the rest of 2007.
• Expanding through asset enhancement and acquisitions. Phase 1 of CCT’s extensive asset enhancement and repositioning efforts at Raffles City is expected to end in time for Christmas. When completed, retail space is expected to increase by 40,000 sf, or 11.5% of the current retail NLA. Pre-commitments for the additional space stand at 99%. In addition, an EGM will be held next month to obtain unitholders’ approval to acquire Wilkie Edge, a mixed retail and office project at Selegie Road being developed by its parent, CapitaLand, for S$262m. Approval is very likely and the resulting income, expected from 2009, has been assumed in our valuation. We believe CCT is on target to achieve S$6bn of assets by 2009 via acquisitions from its parent.
• Maintain Neutral; DPU and target price adjustments. We are adjusting our DPU estimates to reflect increased earnings from asset enhancement in 2008, and continued strong office rental reversions in 2008-09 when more office leases expire. We have cut our DPU estimates by 11% to 8.5cts for 2007 and raised estimates by 2% to 10.7cts for 2008. Accordingly, we have raised our end-2008 DDM-derived target price from S$2.75 to S$2.80 (cost of equity 5.3%). As there is limited upside to our target price, maintain Neutral.