CCT – UOBKH
3Q07 DPU +19% yoy due to strong rental growth and accretion from Raffles City acquisition
Good set of results for 3Q07. CapitaCommerical Trust (CCT) 3Q07 results were in line with our expectation and ahead of its own forecast. Buoyed by strong rental growth and accretion from the acquisition of Raffles City, CCT achieved a 19% yoy growth in distribution per unit (DPU). At the end of Sep 07, the CCT achieved a committed occupancy of 99.9%.
Positive outlook from rental reversion and asset enhancement initiatives (AEI). We expect office rental to continue its up-trend as office supply remains tight and demand continues to be strong. With more than 50% of the office leases expiring in the next 2 years, CCT is poised to benefit the upward rental reversion. Following the completion of Phase 1 of the AEI by end of 4Q07, Raffles City could have an additional 40,307 sqf of retail space with S$10m of revenue per annum. While CCT is on track to meet our FY07 DPU estimates, CCT would need to some yield enhancing acquisitions to achieve our FY08 DPU forecast as we have factored in some acquisitions in our model.
One George Street could be a potential acquisition target. In 2007, most of the acquisitions for office properties were made by private property funds. In the active secondary market, capital values have risen ahead of rental rates, resulting in yield compression. With the current low passing rental, yield accretive deals are hard to come by for the reits. Looking at Capitaland portfolio of office assets, we reckon that One George Street (OGS) could be a potential target for CCT. Capitaland recently acquired the balance 50% stake in OGS for S$600m or S$2700 psf. While passing yield at OGS may be too low for a direct injection into CCT, with income support or similar financial arrangements, OGS could be structured into a yield accretive acquisition.
Maintain BUY with TP of S$3.04 as CCT’s diversified portfolio of prime office assets offer a good upside to the booming office sector in Singapore. Downside risks include unexpected downturn in the Singapore office market, failure to conclude any yield enhancing acquisition and higher than expected cost of funds.
ART – SGX
ART UNITHOLDERS’ DISTRIBUTION 84% ABOVE 3Q 2006
Boosted by strong performance from Philippine and Singapore properties Singapore, 24 Oct 2007 – Ascott Residence Trust (ART) achieved a unitholders’ distribution1 of S$12.0 million for the period 1 July 2007 to 30 September 2007, a 84% increase over the same period last year, underpinned by strong operating performance and accretive acquisitions. Distribution per unit (DPU) for the same period is 1.99 cents, an increase of 39% over 3Q 2006. This is also 9% higher than the forecast2 of 1.82 cents.
Mr Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “ART has achieved a geographically-diversified portfolio across stable and emerging markets, with properties spanning Australia, China, Indonesia, Japan, The Philippines, Singapore and Vietnam. The portfolio, which has expanded from the initial 12 properties to 18 properties, has delivered growing returns to unitholders. As part of the overall growth strategy, ART will continue to acquire quality serviced residences and rental housing properties to achieve a portfolio value of S$2 billion by end-2008.”
Mr Chong Kee Hiong, ARTML’s CEO, said: “ART has outperformed our forecast for the third quarter with overall revenue per available unit (RevPAU) registering 9% higher than forecast. In particular, RevPAU for our serviced residences in the Philippines and Singapore were 32% and 22% better than forecast. Demand for serviced residences is expected to remain strong and we are confident of delivering the forecast distribution per unit of 7.27 cents for the year.”
ART’s portfolio value now stands at S$1.2 billion. It comprises 2,952 serviced residence units in 18 properties in 10 cities across seven countries.
1 There is no distribution declared for the period 1 July to 30 September 2007. ART makes distributions to unitholders on a semi-annual basis, with the amount calculated as at 30 June and 31 December each year for the six-month period ending on each of the said dates.
2 The forecast is extracted from the Offer Information Statement dated 12 March 2007, pro-rated for 1 July 2007 to 30 September 2007 and is based on assumptions set out in the Offer Information Statement.
Source : SGX
CRCT – SGX
CRCT’s Third Quarter 2007 Distribution Exceeds Forecast(1) by 9.0%(2)
Achieved close to 100% occupancy rates at Wangjing Mall and Xinwu Mall
Distribution Per Unit in CRCT (“DPU”) for Third Quarter 2007(4) is 1.71 cents (6.80 cents on an annualised basis), which is 9.0%(2) higher than the forecast1 DPU of 1.57 cents (6.24 cents on an annualised basis) for the same period.
Mr Lim Beng Chee, Chief Executive Officer of CRCTML, said, “CRCT has outperformed our forecast to deliver 1.71 cents to unitholders(3) for Third Quarter 2007(4). Our continuous diligence in pro-actively managing our malls has been the driver for the robust growth in occupancy rates and increased shopper traffic across the portfolio. Going forward, we expect the overall net property income of the portfolio to improve significantly. CRCT’s portfolio size is also set to grow from S$805.7 million(5) to S$1.20 billion(6) with the recently announced proposed yield accretive acquisition of Xizhimen Mall in Beijing. The acquisition of this prime mall is expected to raise CRCT’s future DPU to above the current quarter’s annualised DPU of 6.80 cents, further driving long term growth prospects for unitholders. We look forward to unitholders’ support for the proposed acquisition of Xizhimen Mall at the forthcoming extraordinary general meeting.”
(1) Based on the forecast shown in CRCT Prospectus dated 29 November 2006 (“the Prospectus”)
(2) Actual annualised Distribution Per Unit for the period from 1 July 2007 to 30 September 2007 versus the forecast annualised Distribution Per Unit for the same period
(3) After the first distribution payment which was paid on 24 September 2007 and as disclosed in the Prospectus, subsequent distribution will be paid on a semi-annual basis for the six-month periods ending 30 June and 31 December of each year within 90 days after each of the said dates
(4) For the period from 1 July 2007 to 30 September 2007
(5) Based on CRCT’s existing portfolio of seven properties as at 30 September 2007
(6) After taking into account the proposed acquisition of Xizhimen Mall
CCT – SGX
Resilient portfolio to benefit from strong positive rental reversion
Singapore, 23 October 2007 – The Manager of CapitaCommercial Trust (CCT), CapitaCommercial Trust Management Limited (the Manager), is pleased to announce a distributable income of S$29.6 million to the unitholders of CCT for the financial period of 1 July 2007 to 30 September 2007 (3Q 2007). This is 52.4% higher than the S$19.4 million reported for the corresponding period in 2006 (3Q 2006).
The 3Q 2007 distribution per unit (DPU) of 2.14 cents or 8.49 cents (annualised) registers an increase of 18.9% compared to 3Q 2006 DPU of 1.80 cents or 7.14 cents (annualised). This is 12.6% higher than the forecast DPU of 1.90 cents or 7.52 cents (annualised), as stated in the CCT circular to unitholders dated 15 August 2006 (the Circular Forecast).
CCT’s DPU for the first nine months of 2007 is 6.37 cents or 8.52 cents (annualised) which translates to a distribution yield of 3.4% based on the closing price of S$2.47 per unit on 22 October 2007.
Mr Richard Hale, Chairman of the CapitaCommercial Trust Manager, said: “CapitaCommercial Trust has outperformed its forecasts consistently and continues to generate higher distribution to unitholders. This is due to our efforts in actively managing our portfolio in Singapore while looking for opportunities in Asia. CapitaCommercial Trust recently increased its investment exposure in Malaysia via Quill Capita Trust, which enlarged its portfolio size by 78% from RM276 million to RM491 million after the completion of two acquisitions in Kuala Lumpur in September 2007. In Singapore, the on-going asset enhancement work at Raffles City will generate positive returns when the works are completed by December this year. In addition, CapitaCommercial Trust’s acquisition of Wilkie Edge, if approved by unitholders at a forthcoming extraordinary general meeting, will bring the total asset size of the trust to close to S$4.8 billion. CapitaCommercial Trust will continue to actively source for more growth opportunities.”
Ms Lynette Leong, Chief Executive Officer of the Manager, added, “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. Strong leasing demand, underpinned by the robust economic performance in the Asian region continues to propel growth in the Singapore office property market. Rentals committed at our prime assets have surpassed Singapore’s highest rental rate of S$11.50 per sq ft per month during the peak of the office market in 1990. With more than 50% of our leases expiring in 2008 and 2009, we expect strong, positive rental reversion to be realised from our resilient portfolio. We will continue to drive asset quality enhancement as well as manage tenant relationships to ensure high tenant retention rates. We will also actively seek good acquisition opportunities to grow our portfolio to achieve our target asset size of S$5 to S$6 billion by 2009. These factors are expected to contribute significantly to CCT’s growth going forward.”
In the coming month, there will be an extraordinary general meeting to obtain unitholders’ approval for the acquisition of Wilkie Edge. The acquisition will offer further diversification to CCT’s portfolio given Wilkie Edge’s location in the Central Area within Singapore’s Arts, Culture, Learning and Entertainment hub.
For Raffles City, Phase I asset enhancement work is on track to complete by end of 2007 and it will add to the asset’s net property income next year. In addition, commitment for the space under asset enhancement is already close to 100%. The reconfiguration works on the ground level of Capital Tower have been completed and most of the retail outlets have started their businesses in the third quarter of 2007.
Source: SGX