AllCo – SGX
ALLCO REIT TO ACQUIRE KEYPOINT, SINGAPORE
Key Highlights
Sale and purchase agreement signed to acquire KeyPoint in Singapore for S$370.0 million
Exposure to an investment grade quality commercial asset located in the CBD fringe
Opportunity to capitalise on the tightening Singapore office supply
Acquisition is yield accretive to Unitholders and increases Asian presence of Allco REIT portfolio
Singapore, 5 Oct 2007 – Allco (Singapore) Limited (“Manager”), the manager of Allco Commercial Real Estate Investment Trust (“Allco REIT”) (SGX:ALLC) announced today that British and Malayan Trustees Limited, as trustee of Allco REIT, has entered into a sale and purchase agreement with Sable Resources Pte Ltd (“Vendor”) for the acquisition of KeyPoint, 371 Beach Road, Singapore (“KeyPoint” or the “Property”). The Property is being acquired for a total purchase price of S$370.0 million1 (“Purchase Consideration”).
KeyPoint is an integrated 25-storey commercial development located at the junction of Beach Road and Jalan Sultan, Singapore. With a total net lettable area (“NLA”) of 311,892 sq ft (28,976 sqm), the Property comprises a three-storey podium and a 22-storey office tower.
KeyPoint also has a four storey car park block consisting of 227 car bays. The Property is wellserved by both the Bugis and Lavender MRT stations, which are each located within 600 metres of the Property. Its accessibility will be further enhanced by the upcoming Nicoll Highway MRT station on the Circle Line, which will be approximately 200 metres from the Property and which is expected to be operational from 2010 onwards.
KeyPoint is being acquired on an assumed initial net property income yield of 4.65%2 for the first 12 months. The acquisition is yield accretive and will provide net uplift to Allco REIT’s rental income base, enhancing distributable income to Unitholders. The acquisition represents a total purchase price of S$1,186 per sq ft. Further details in relation to the Property are set out in the accompanying presentation and SGX-ST announcement.
The acquisition will be funded entirely by debt at a total cost of approximately 3.6%. Following the completion of the acquisition, Allco REIT’s leverage (calculated as gross borrowings plus deferred payments divided by total assets) will increase to approximately 46.5%, which is within the aggregate leverage limit as set out in the guidelines in Appendix 2 of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore (“Property Funds Guidelines”). Allco REIT has an investment grade credit rating from Moody’s Investor Services Inc. which, under the Property Funds Guidelines, permits gearing of up to 60.0%.
Upon completion of the KeyPoint acquisition, Allco REIT’s portfolio exposure to Asia will increase to approximately 67.2%, and the total portfolio base by asset value will grow to approximately S$1.83 billion. With a greater exposure to Singapore, Allco REIT intends to capitalise on the continuing strength of the commercial property market which is supported by the sound fundamentals of the Singapore economy.
Key portfolio benefits:
Reinforces Allco REIT’s pan-Asian investment strategy
Acquisition is expected to be yield accretive (refer today’s SGX-ST announcement)
Property to be acquired at a discount to independent valuation
Enhanced Asian presence
Reduction of Australian exposure to less than 33% of total NLA
Key property highlights:
95.9% occupancy
Passing gross rents significantly below market
Significant lease renewal in the next two years
Conveniently located, 5 minutes drive from the CBD, within walking distance to two MRT
stations and situated in the vicinity of major buildings
Close to Circle Line Nicoll Highway MRT station currently under construction
Asset includes high traffic retail area of 10.6% of total NLA
227 parking bays on-site
Potential asset enhancement in the medium term
Mr Nicholas McGrath, Chief Executive Officer and Managing Director of the Manager said, “The acquisition of KeyPoint reinforces Allco REIT’s pan-Asian investment strategy and reduces our Australian exposure to less than 33%.”
“Given the current office supply constraints and rising office rentals in the CBD, this is an opportunistic time to be adding a quality, investment grade commercial asset that is located in the Singapore CBD fringe. We are confident that properties in the CBD fringe will provide alternative leasing premises to the core CBD areas and that there is a strong likelihood of good rental growth from the Property in the near term. Over 50.0% of the NLA expires in KeyPoint in the coming year and management intends to capitalise on this through a strong asset management plan.”
“KeyPoint is well-positioned to leverage on the future growth and rejuvenation of the surrounding Beach Road precinct with the completion of the Sports Hub and the recently-awarded integrated commercial development at Beach Road. The Property will have enhanced accessibility via a covered pedestrian walkway to the upcoming Nicoll Highway MRT station, in addition to the close proximity to current MRT stations on the East-West line”, Mr McGrath said.
1 All references to Purchase Consideration in this release exclude expenses associated with the acquisition.
2 Inclusive of income support of up to S$10.5 million, to be provided by the Vendor for a period of two years from completion of the acquisition.
Source : SGX
MI-REIT – Phillip
MI-REIT announces its third acquisition since IPO, bringing its total value of announced acquisitions to $126.1 million.
MI-REIT completed the acquisition of 541 Yishun Industrial Park A on 4th Oct 2007. The property will be leased back to the tenant for a 12 year lease term with a built-in rental escalation structure. With an acquisition target of $500 million annually, we believe there will be more annoucements coming up.
About the properties. The latest acquisition improves the lease expiry profile as well as the diversification of the property portfolio. WALE will improve from a pre-acquisition of 6.3 years to 7.06 years post-acquisitions. The acquisitions will be fully funded by debt. Gearing post-acquisitions of 7 Clementi Loop and 541 Yishun Industrial Park A will increase to 16%. With
a gearing limit of 60% and a further $159 million of corporate debt facility, MI-REIT still has much debt room for further acquisitions.
Valuation. We revise our revenue to factor in the contributions from the latest acquisition. Our forecasted DPU increases to 7.48 cents for FY08 and 7.96 cents for FY09, translating to a yield of 6.33% and 6.74%. Our fair value remains at $1.39, derived from our DCF model. Reiterate Buy.
MI-REIT : SGX
MACARTHURCOOK INDUSTRIAL REIT COMPLETES ACQUISITION OF WAREHOUSE PROPERTY FOR S$16.8 MILLION
– Increases portfolio value to S$472.9 million
– Yield-accretive acquisition
Singapore, 4 October 2007 – MacarthurCook Investment Managers (Asia) Limited (“MCKIM
Asia”), as Manager of MacarthurCook Industrial REIT ( “MI-REIT”), is pleased to announce that through HSBC Institutional Trust Services (Singapore) Limited ( the “Trustee”), MI-REIT has completed the acquisition of a property for a total consideration of S$16.8 million.
Following a simultaneous exchange and settlement of contracts, MI-REIT has completed the sale and purchase of 541 Yishun Industrial Park A (the “Completed Acquisition” or “541 Yishun”), in connection with the conditional sale and purchase agreement1 entered into between the Trustee and King Plastic Pte Ltd ( “King Plastic” or “the Vendor” ) on 3 October 2007.
King Plastic, a leading manufacturer and distributor of synthetic products will lease back the property for 12 years with an option to renew for another 6 years. With the completion of this acquisition and inclusion of the property, MI-REIT now comprises 15 assets with a total portfolio value of S$472.9 million2.
Mr Chris Calvert, CEO of the Manager, said: “The acquisition is in line with our aim to achieve distribution growth through the acquisition of properties that contribute to the long-term growth and income stability of the MI-REIT portfolio.”
Rationale for the acquisition
Yield Accretion
The acquisition of 541 Yishun Industrial Park A is expected to be accretive to MI-REIT’s distribution per unit (“DPU”), with the following pro forma financial effect: