Saizen – BT
Saizen Reit eyes US$150m Singapore IPO
A HONG Kong-based private equity group is seeking to raise about US$150 million through a Singapore-listed property trust based on residential buildings in Japan, sources close to the deal told Reuters yesterday.
Credit Suisse and Morgan Stanley are arranging the public offer of Saizen Real Estate Investment Trust (Reit), which will be based on an initial portfolio of residential apartment buildings valued at around US$400 million.
The buildings are located in suburban areas out of the main Japanese cities such as Tokyo. — Reuters
CCT – CIMB
Fairly valued
• On track to reach target size. In July, CCT acquired Wilkie Edge, a 12-storey mixed office, retail and serviced apartment development from its parent CapitaLand for S$182.7m. We believe CCT is on track to meet its target asset size of S$5.5bn-6bn by 2009.
• Consolidation of Malaysian exposure. CCT has redeemed its junior bonds in Aragorn ABS Berhad, which owns Wisma Technip. Following this, it has limited its exposure in Malaysia to a 30% stake in Quill Capita Trust (QCT).
• Drivers of property income remain strong. An expected rise in office rentals over the next two years, asset enhancement initiatives, increased property-development potential and acquisitions should continue to drive CCT’s growth over FY07-09.
• Increasing exposure to retail sector. CCT has been growing the retail component of its portfolio. We view this positively as increased exposure to the retail sector could lend stability and sustainability to CCT’s growth in the longer term.
• Target price reduced to S$2.75 from S$3.00; downgrade to Neutral. We have lowered our DPU estimate for FY07 by 6% following adjustments to our rental escalation assumptions (our previous estimates were slightly aggressive). We have, however, raised FY08 DPU estimate by 2% on expected rental reversions in Raffles City. Our target price, still based on DDM, has been lowered from S$3.00 to S$2.75, as we now use a higher cost of equity of 5.3% (vs. 5% previously). Downgrade to Neutral from Outperform given the lack of near-term catalysts and limited upside.
Shipping Trusts – DBS
Offering yield plus growth
Story: We attended Marine Money’s session on Shipping Trusts yesterday that was held at the Grand Hyatt Hotel. Sitting on the panel were management from the three SGX-listed shipping trusts – Rickmers Maritime, Pacific Shipping Trust and First Ship Lease.
Point: Management reiterated that the structure of a shipping trust is to deliver yield and growth, and that its performance and cashflows is not tied to the shipping cycle. In addition, shipping trusts need to deliver growth that was promised at IPO. In some cases to take advantage of opportunistic acquisitions, a strong Sponsor is clearly advantageous.
Relevance: We hold the view that shipping trusts offer attractive yields, averaging 9.4% for FY08 and are lagging US peers which are trading at an average yield of 6.7%. Maintain Buy for Rickmers Maritime (Buy, TP S$1.80) and Pacific Shipping Trust (Buy, TP S$0.52). We have no rating for First Ship Lease.
Panel represented by management from the three SGX-listed shipping trusts. Rickmers Maritime (RMT) was represented by CEO Thomas Preben, Pacific Shipping Trust (PST) by CEO Capt Subhangshu Dutt and First Ship Lease (FSLT) by President and CEO Philip Clausius.
Significant yield compression seen for US peers. Peers in the US operate under a Master Limited Partnership, a structure that is quite similar to a Shipping Trust structure. Yields have been compressed to an average 6.4% compared to listing yields of c.8%. The main trigger, we believe, was that these MLPs demonstrated an ability to grow via acquisitions. For comparison, RMT is offering a yield of 8.2%, while PST is trading at 9.7% and FSLT at 10.3%.
Growth through acquisition post listing. In our opinion, RMT and FSLT have demonstrated the ability to grow via acquisitions only after a few months of listing. On the other hand, PST has taken about a year to put in place growth initiatives. To elaborate :
(a) RMT’s Sponsor, the Rickmers Group, granted a Right of First Offer (ROFO) to RMT at IPO. Under this, nine 4,250 TEU container vessels were identified for injection into RMT. So far, RMT has entered into an MOU to acquire four 4,250 TEU vessels for delivery between Feb and Dec 2009. Separately, RMT has also entered into an MOU to acquire four 13,100TEU vessels for delivery between Aug and Nov 2010. Thus, capacity will rise 170%, from 40,910 TEUs to 110,310 TEUs by end 2010.
(b) Under the Right of First Refusal granted at IPO, PST plans to acquire two new 4,250 TEU container vessels from PIL for charter to CSAV, raising its capacity by 61% from 13,864 TEUs to 22,364 TEUs by end 08.
(c) Since IPO, FSL has acquired three product tankers, adding to its IPO fleet of four product tankers, three chemical tankers, four container vessels and two bulk carriers.
All three are below IPO prices, short-term risk is the weak US$. Besides a new asset class, we think that another factor for its underperformance has been the weakening US$. All shipping trusts generate US$-based cashflows. In the case of RMT which is S$-listed, the yield for FY08 can drop from 8.2% to 7.8% in the event that the
US$ depreciates 5% from current levels.
Allco – SGX
Allco (Singapore) Limited (the “Manager”), the manager of Allco Commercial Real Estate Investment Trust (“Allco REIT”) (SGX:ALLC), refers to its announcement on 14 September 2007 in relation to the acquisition of additional three properties in Japan, described in the table below:
Property: Galleria Otemae Building
Location: Number 2, Tanimachi 2-chome, Chuo-ku, Osaka-shi, Osaka-fu
Property: ACO Azabu Aco Building
Location: Number 32-7, Higashi-Azabu 2 Chome, Minato-Ku, Tokyo
Property: Ebara Techno-Serve Headquarters Building
Location: Number 1-1, Haneda 5 Chome, Ota-ku, Tokyo
(collectively, the “Acquisitions”).
The Manager is pleased to announce that the Acquisitions were completed today.
Cambridge
CIT RECEIVES STRONG SUPPORT FROM UNITHOLDERS FOR ITS EQUITY FUND RAISING
Singapore, 25 September 2007 – Cambridge Industrial Trust Management Limited (“CITM”), the manager of Cambridge Industrial Trust (“CIT”), is pleased to announce that the unitholders of CIT (“Unitholders”) have approved the issue of new units (the “New Units”) in CIT to raise gross proceeds of approximately S$193.9 million (the “Equity Fund Raising”). Three other resolutions have been passed at CIT’s extraordinary general meeting held this morning, including the approval of an interested party/person transaction (under the Property Fund Guidelines and the SGX-ST Listing Manual respectively), being the proposed acquisition of 1 Tuas Avenue 3 from C&P Asia Warehousing Pte Ltd (“C&P”). C&P is an indirect wholly-owned subsidiary of CWT Limited.
CIT will soon undertake an international roadshow in connection with its Equity Fund Raising, which will include meeting institutional investors in the United States. CIT believes that it will be the first Singapore REIT to offer its units into the United States in reliance of Rule 144A of the U.S. Securities Act of 1933. The proceeds will be used for the acquisition of 1 Tuas Avenue 3 and five other properties in Singapore, namely, 9 Bukit Batok Street 22, 7 Ubi Close, 120 Pioneer Road, 48 Toh Guan Road East (Enterprise Hub) and 23 Woodlands Terrace.
Following the EFR, CITM expects an annualised yield of 7.0% for 2007 and a projected yield of 7.2% for 2008(1). Mr Wilson Ang, CEO of CITM, said “CITM is very pleased to have the backing of CIT’s unitholders for our acquisitions and financing plans. We will be commencing our roadshow shortly, with a view to completing our offering before the end of October 2007”.
(1) Based on an illustrative issue price for the New Units of S$0.80 per unit and various assumptions contained in CIT’s circular to Unitholders dated 6 September 2007 for the forecast period from 18 September 2007 and ending 31 December 2007 and for the projection year from 1 January 2008 and ending 31 December 2008.