AREIT – UOBKH
Secures new development projects
Two new development projects. A-REIT has committed to two development projects worth S$277m:
• two suburban business park facilities, including an amenity centre, at Plot 8 Changi Business Park to be completed in three phases; and
• an industrial facility at Pioneer Walk.
The built-to-suit portion at Changi Business Park of about 42,000sm is already pre-committed to a leading international financial institution.
Occupancy rate edges higher. A-REIT has renewed and signed new leases (including expansions) amounting to total net lettable area of 71,433sm for the September quarter. These leases represent 10.4% of the net lettable area for AREIT’s multi-tenanted buildings and generate annualised rental income of S$16.9m. A-REIT overall occupancy rate has increased to a high of 98.3% at Sep 07 compared to 97.2% last year. Occupancy rate for multi-tenanted buildings has also increased to 96.2% compared to 95.0% last year.
BUY
Current Price: S$2.42
Target Price: S$2.73
CMT – SGX
CMT Achieves Higher Distribution per Unit of Over 19.3%1 for Third Quarter2 2007
Singapore, 19 October 2007 – CapitaMall Trust Management Limited (“CMTML”), the manager of CapitaMall Trust (“CMT”), is pleased to announce a distributable income of S$53.2 million to unitholders of CMT (“Unitholders”) for Third Quarter2 2007. The distributable income for Third Quarter2 2007 is based on 100.0% of CMT’s taxable income available for distribution to Unitholders for the same period. The distribution for Third Quarter2 2007 also includes a capital distribution of S$1.5 million received from CMT’s 20% investment in CapitaRetail China Trust (“CRCT”). CMT received a total capital distribution of S$3.1 million3 from CRCT, of which S$1.6 million has been retained for distribution in Fourth Quarter4 2007.
Distribution Per Unit in CMT (“DPU”) for Third Quarter2 2007 is 3.40 cents, including 0.09 cents capital distribution from its investment in CRCT, (13.49 cents on an annualised basis), which is 17.2% higher than the forecast5 DPU of 2.90 cents for Third Quarter2 2007 (11.51 cents on an annualised basis). When compared against the Third Quarter6 in 2006, the DPU registered an increase of 19.3% from 11.31 cents (on an annualised basis) to 13.49 cents (on an annualised basis). The Books Closure and Distribution Payment Date will be announced shortly.
CMT Group’s7 gross revenue for Third Quarter2 2007 was S$114.5 million. This is an increase of S$19.6 million or 20.7% over the forecast5 gross revenue for Third Quarter2 2007. Of the S$19.6 million increase in gross revenue, approximately 25.5% or S$5.0 million was due to top line revenue growth at malls within the CMT Portfolio8. The remaining S$14.6 million was due to the consolidation of CapitaRetail Singapore Limited9 (“CRS”) results.
CMT Group’s7 Net Property Income (“NPI”) for Third Quarter2 2007 also exceeded the forecast5 NPI for Third Quarter2 2007 by 21.7% or S$13.7 million. On the same store10 basis, CMT Group’s7 NPI for Third Quarter2 2007 outperformed NPI for Third Quarter6 2006 by 11.9% or S$5.9 million, while its NPI for First Three Quarters11 2007 was better than NPI for First Three Quarters12 2006 by 8.5% or S$12.7 million. Rental renewal rates for the First Three Quarters11 2007 saw robust growth, registering 12.1% over preceding rental rates, and 5.5% over forecast rental rates13.
1 Annualised Distribution per Unit for the period from 1 July 2007 to 30 September 2007 versus the annualised Distribution per Unit for the period from 1 July 2006 to 30 September 2006.
2 For the period from 1 July 2007 to 30 September 2007.
3 For the period from 23 October 2006 to 30 June 2007.
4 For the period from 1 October 2007 to 31 December 2007.
5 Based on the forecast and projection, together with the accompanying assumptions, in the CMT Offer Information Statement dated 29 August 2006.
6 For the period from 1 July 2006 to 30 September 2006.
7 Includes proportionate consolidation of the 40.0% interest in Raffles City, 100.0% interest in CRS (with effect from 1 June 2007) and CMT MTN Pte. Ltd. (with effect from 13 April 2007) and equity accounting of its associate.
8 Comprising Tampines Mall, Funan DigitaLife Mall, Junction 8, IMM Building, Plaza Singapura, Bugis Junction, Sembawang Shopping Centre, Hougang Plaza, Jurong Entertainment Centre and 40% stake in Raffles City.
9 Comprising Lot One Shoppers’ Mall, Bukit Panjang Plaza and Rivervale Mall.
10 Excluding 40.0% interest in Raffles City, Bukit Panjang Plaza, Lot One Shoppers’ Mall and Rivervale Mall.
11 For the period from 1 January 2007 to 30 September 2007.
12 For the period from 1 January 2006 to 30 September 2006.
13 Forecast rental rates for the period 1 July 2007
Source : SGX
CRCT – SGX
CRCT to acquire Xizhimen Mall in Beijing
Proposed yield-accretive acquisition enlarges CRCT’s portfolio asset size to more than S$1.1 billion and strengthens CRCT’s retail foothold in Beijing Singapore, 18 October 2007 – CapitaRetail China Trust Management Limited (“CRCTML” or the “Manager”), the manager of CapitaRetail China Trust (“CRCT”), is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”), as trustee of CRCT, has today entered into a conditional sale and purchase agreement with CapitaLand Retail Trustee Pte. Ltd., as trustee of CapitaRetail China Incubator Fund (“CRCIF”), for CRCT to acquire Xizhimen Mall, with a Gross Rentable Area (“GRA”) of 73,857 Square Metres (“sq m”), at an agreed property price of S$336.0 million. This transaction would mark CRCT’s first acquisition since its listing on Singapore Exchange Securities Trading Limited on 8 December 2006.
Based on the agreed property price of S$336.0 million and an average occupancy rate of 88.7%, Xizhimen Mall is expected to achieve a net property income yield (“NPI yield”) of 5.7% in Forecast Year 2008, The committed occupancy rate, which registered 87.1% as at 11 October 2007, is expected to reach close to 100% within the next few months.
The mall is expected to attain a NPI yield of 6.4% in 2009, assuming 100% committed occupancy rate. The proposed acquisition is thus yield accretive to CRCT unitholders when compared to CRCT’s implied property yield of approximately 3.3%, based on CRCT’s closing unit price of S$2.78 as at 17 October 20071 .
The proposed acquisition also comprises an agreement to purchase, when completed, the planned extension of the current Basement 1 of the mall (“Phase 2”) with a GRA of approximately 11,539 sq m from the original developer of Xihuan Plaza, Beijing Finance Street Construction Development Co., Ltd., subject to certain conditions being fulfilled. The extension would increase the GRA of Xizhimen Mall by 15.6%.
Phase 2 would provide direct pedestrian connectivity to the underground Mass Rapid Transit (“MRT”) station for Line 2 and the future Line 4, and to the National Railway Beijing North station situated next to the mall. The completion of this extension is expected to increase overall shopper traffic and enhance shopper flow within the mall, hence providing further upside to the mall’s overall rentals. With the strong leasing performance at the existing Basement 12, and the favourable price to be paid for Phase 2, we are confident that the acquisition of Phase 2 would provide growth to CRCT unitholders.
Two independent property valuers, Colliers International (Hong Kong) Limited (“Colliers”) and Knight Frank Petty Limited (“Knight Frank”), were commissioned by the Manager and Trustee respectively to value Xizhimen Mall. Colliers and Knight Frank have valued the property at S$338.4 million3 (RMB1,692.0 million) and S$340.0 million3 (RMB1,700.0 million) respectively, as at 30 September 2007.
Mr Hsuan Owyang, Chairman of CRCTML, said, “The yield-accretive acquisition of the prime Xizhimen Mall will grow CRCT’s portfolio asset size from its current S$763.7 million4 to S$1.16 billion5. With the secured and proprietary pipeline of quality assets from CapitaLand-sponsored private China retail property funds, as well as from potential direct acquisitions from the market, CRCT is on track to achieve its target portfolio size of S$3.0 billion by 2009. On the back of rising consumerism and growing retail sales in the Chinese retail market, we remain committed to deliver stable and growing distributions with sustainable total returns, through leveraging on our multi-pronged strategy, to our unitholders.”
Mr Lim Beng Chee, CEO of CRCTML, said, “Sitting atop one of Beijing’s only two key transportation hubs with an average commuter flow of 300,000 on weekdays and 600,000 on weekends, Xizhimen Mall is well-positioned to capture the tremendous daily pedestrian traffic to the mall. The commuter traffic will be further strengthened with Xizhimen Mall’s Phase 2 extension plan, which would provide direct pedestrian connectivity to the MRT station and the adjacent railway station from the Basement Level. The acquisition of Xizhimen Mall will also extend CRCT’s market presence to the western part of Beijing, allowing it to benefit from the large pool of middle-class shoppers and tenancy demand in areas such as Beijing Finance Street and Zhongguancun District.
Together with Anzhen, Jiulong and Wangjing Malls in other locations in Beijing, Xizhimen Mall will position CRCT favourably to capture the city’s strong retail growth opportunity which has averaged approximately 12% annually in the last decade.”
1 The “implied property yield” is calculated as the net property income of CRCT’s existing portfolio in Forecast Year 2008 over the value imputed to the portfolio by investors in CRCT, as reflected by the price at which CRCT Units are currently trading on Singapore Exchange Securities Trading Limited.
2 Committed occupancy rate for Basement 1 is 84.5% as at 11 October 2007
3 The valuers have assumed the exchange rate of S$1 = RMB5.00
4 Based on CRCT’s existing portfolio of seven properties as at 30 June 2007
5 After taking into account the proposed acquisition
Source : SGX
Cambridge – SGX
ISSUE OF 276,973,000 NEW UNITS IN CAMBRIDGE INDUSTRIAL TRUST
Issue of 276,973,000 New Units
Further to its announcement on 2 October 2007 in relation to the launch of the Global Offering, Cambridge Industrial Trust Management Limited, as manager (the “Manager”) of Cambridge Industrial Trust (“CIT”), wishes to announce that it has today issued 276,973,000 new Units (the “New Units”) in CIT. With this issue of 276,973,000 New Units, the total number of units in CIT in issue is 792,278,653(1). The New Units will commence trading on the Main Board of the Singapore Exchange Securities Trading Limited at 2.00 p.m. on 18 October 2007.
Status of the New Units
The New Units will, upon issue, rank pari passu in all respects with the units in issue on 17 October 2007, being the day immediately prior to the date on which the New Units are issued, including the right to any distributions which may be paid for the period from 18 October 2007 to 31 December 2007 as well as all distributions thereafter.
(1) This includes the 801,493 new Units which were issued to the Manager on 12 October 2007 as settlement of 97% of the base fee element of the management fee payable to the Manager in respect of the initial portfolio of CIT comprising 27 properties from 1 July 2007 to 30 September 2007.
Source : SGX
Altitude Aircraft Leasing Trust – BT
Don’t dismiss aircraft trust
WITH GE’s Altitude Aircraft Leasing Trust looking to a listing on the Singapore Exchange, investors will have another asset class to look at. But how do aircraft match up against the other asset types, such as real estate or ships?
On gut feel, one might imagine the global aviation industry is facing more challenges than it can handle. Exogenous shocks from terrorist attacks and contagious diseases like Sars have surely hurt passenger traffic, and within the industry, legacy carriers and national airlines face stiff competition from low-cost carriers. Major US carriers floundered in bankruptcy as recently as 2005.
But the sector has recovered. Bankruptcy regulations allowed North American operators to renegotiate labour contracts and to cut costs. With economic growth, their operating profits rose to US$7.4 billion in 2006, against operating losses of US$300 million in 2005, according to the International Air Transport Association. Delta and Northwest were the last two American carriers to emerge from bankruptcy this year.
Further, it is wrong to think global air travel fell significantly, even following the worst of 9/11 and Sars. Figures from aviation consulting firm Simat Helliesen & Eichner (SH&E) show that global passenger and freight traffic – key determinants of demand for aircraft – have been rising steadily over the last 30 years.
Since 1991, air traffic dipped in only two years: 1991, prior to the first Gulf War, and 2001, following 9/11. And unlike the average stock market tumble that wipes out a fifth of an exchange’s market value, these were genuinely dips, not plunges, in traffic.
Sars certainly hit Asian air traffic hard. On the other side of the Pacific, Air Canada was the exception that proved the rule – with the largest domestic Asian population of any country in the world outside of Asia, Canada saw plummeting air traffic, nearly plunging its national carrier into bankruptcy. But other visitors to Asia are holiday-makers from Europe, who simply decided to fly somewhere else around the sunnily unaffected Mediterranean for their vacation. So European air traffic rose, offsetting the Asian decline on a global level.
This is significant because, as a senior aviation banker puts it, aircraft are ‘about as mobile as assets can get’. During Sars, he says, aircraft were redeployed from Asia to the US and Europe, while subsequently, as US airlines face troubles, aircraft have been transferred and put to use in Asia.
Thanks to growing wealth levels, Asia is where the growth is. According to SH&E and Boeing estimates, Asia’s passenger traffic growth is expected to rise by 7.1 per cent per year till 2026, compared to 4.1 per cent in North America and 5.6 per cent in Europe. Freight traffic is projected to grow faster.
Demand for new aircraft
The upshot is that many new aircraft will be needed. Consider that in China, there are only 1.3 passenger aircraft, including backlog orders, per million people, compared to 3.7 in the rest of the Asia-Pacific, and 30.4 in North America.
Airlines will also need to renew their fleets. US carriers tightened their belts during the lean years of 2000-2005 and have ageing fleets. Further, high fuel costs – jet fuel prices more than doubled between December 2003 and April 2007 – and concerns over global warming mean that the aviation industry will need new, efficient aircraft and engines.
None of this would matter to trust investors if not for the fact that about 30 per cent of the world’s aircraft in operation today are on operating leases, or about US$150 billion worth. By historical trends, this is expected to rise to 40 per cent over the next 10 years. If, as one banker believes, about US$50 billion to US$60 billion worth of aircraft will be delivered per year in the coming years, even established airlines, let alone start-up LCCs, will need financing support. The banker thinks between half to two-thirds of the value of annual deliveries will need third-party financing.
Competition for assets exists, from RBS and Macquarie, from Boeing, and from listed trusts like Ireland-based Aircastle Aviation. But AALT has the advantage of counting GE Commercial Aviation Services, the world’s single largest jet operating lessor with a fleet of over 1,700 aircraft, as sponsor. With the world’s second largest player, International Lease Finance Corp, which has nearly 1,000 aircraft, GECAS accounts for over half of the world’s aircraft.
So, while details on AALT’s initial public offering have yet to emerge, if you’re a yield investor, don’t be turned off just because it deals in aircraft.
Reference : Preliminary Prospectus