CitySpring – SGX
Basslink acquisition to raise DPU by 16.7%
Long-term, predictable revenues from 25-year contract
Singapore, 20 September 2007 – Following the completion of its acquisition of 100% of Basslink on 31 August 2007, CitySpring Infrastructure Management Pte. Ltd. (“CSIM”), trustee-manager of CitySpring Infrastructure Trust (“CitySpring”), has announced that it expects the acquisition to raise distribution per unit (“DPU”) to 7 cents (on an annualised basis) for the period from the completion of equity fund raising (referred to below) until 31 March 20091. This is a 16.7% increase from the projected DPU of 6 cents for the current financial year ending 31 March 2008.
Basslink is an electricity interconnector between the island of Tasmania and mainland Australia. A high-quality and unique asset, it is expected to provide long term, regular and predictable revenues derived from a 25-year contract with Hydro Tasmania, the electricity generating company wholly owned by the State of Tasmania.
Revenue from Basslink is largely based on availability of the interconnector and other guaranteed payments and is not dependent on the utilisation rate. Since commercial operations began in April 2006, Basslink has achieved an average availability of 99.5%.
Mr Fai Au Yeung, CEO of CSIM, said: “We are pleased with the progress we have made with this acquisition. This is a significantly yield accretive transaction and perfectly fits our investment mandate of acquiring projects with long term predictable cashflows. Part of Basslink’s revenues are indexed to increase with inflation. In addition, there is upside from possible telecommunications revenue associated with the commercialisation of the fibre optic cable incorporated in Basslink as well as from an enhancement of the asset life through additional capex. We intend to explore these opportunities to extract fully the value of this asset.”
Funding for the Basslink acquisition has been obtained through the issue of bonds and bridge financing. The Australian-dollar non-recourse bonds, guaranteed by MBIA Insurance Corporation, are rated AAA and Aaa by Standard & Poor’s and Moody’s respectively. An equity bridge facility for S$370 million has been also been obtained as part of the financing package.
CitySpring intends to repay the bridge financing with funds raised from an equity issue. Temasek supports the transaction and intends to participate in the equity issue. An extraordinary general meeting will be called to seek unitholders’ approval to ratify the acquisition and the related equity fund raising as soon as practicable.
CitySpring has posted on the SGXNet (at www.sgx.com) its presentation to analysts in relation to the Basslink acquisition.
1 Based on a range of assumptions, including exchange rate, to be outlined in more detail in a circular to unitholders to convene the extraordinary general meeting referred to below.
Source : SGX
MapleTree – SGX
MAPLETREELOG EXPANDS JAPAN PORTFOLIO WITH ACQUISITION OF DISTRIBUTION CENTRE
Singapore, 20 September 2007 – Mapletree Logistics Trust Management Ltd. (“MLTM”), Manager of Mapletree Logistics Trust (“MapletreeLog”), is pleased to announce that MapletreeLog, through its wholly-owned subsidiary, has executed a conditional agreement to eventually acquire the beneficiary interest of a distribution centre currently under construction, when completed in Japan for a total consideration of about S$92 million1.
The property is located in the Kanto region. Completion of the acquisition is expected to be sometime in 2008.
The deal will be accretive to MapletreeLog’s distribution per unit (“DPU”) and the pro forma financial effect of the acquisition on the DPU for the financial year ended 31 December 2006 would be an additional 0.16 Singapore cents per unit2.
Benefits and rationale of the Acquisition
Mr. Chua Tiow Chye, Chief Executive Officer of MLTM, said, “We are very pleased with this acquisition, our 7th property in Japan. This property is located in one of the key logistics zones in the Kanto region and will be leased to a tenant from a leading Japanese manufacturing group. With a lease tenure of 20 years, this will bolster our core base of long leases with stable yield and recurrent rental income. This will complement the shorter term leases in our portfolio in higher growth markets such as China, Malaysia and Hong Kong. ”
In its “Asia Pacific Investment Market Review, 1H2007”, CB Richard Ellis highlights investors’ positive outlook on the Japanese real estate market, with demand for high-specification logistics space remaining strong in major regional cities. The Bank of Japan’s latest Tankan corporate surveys showed that corporate capital spending by major firms have stayed firm.
CBRE notes that substantial demand for industrial properties was observed from local investors, end-users and foreign funds, fuelled by robust re-export activities, optimism over the local economy and the sector’s higher yields relative to other real estate sectors. There is a shortage of quality industrial premises that meet the stringent investment criteria of institutional buyers, especially those of larger-scale.
Funding
Given the relative lower cost of borrowing in Japanese yen, the Manager intends to fund the acquisition wholly by debt.
General Description of the property
The property is a build-to-suit facility, with high specifications catering specifically to the tenant’s needs. Construction of the distribution centre is targeted to be completed sometime in 2008. It is located within one of the key logistics nodes in the Kanto region. The property is easily accessible via major roads and expressways.
1 Purchase consideration of JPY6.9bn, based on an exchange rate of S$1.00 to JPY 75.25
2 Assuming that MapletreeLog had purchased, held and operated the subject properties for the whole of the financial year ended 31 December 2006 (based on 41 properties) and that the acquisition is fully funded by debt
Source : SGX
AllCo – Phillip
Allco annouced 3 yield accretive acquisitions of an additional three properties in Japan, which will result in an exposure of 43% Singapore properties, 42% Australia properties and 16% Japan properties. The acquisitions are expected to be completed in late September.
About the properties. Allco will acquire the three properties for a total consideration of S$153.05 million, a discount of 1.6% to the appraised value, with a weighted initial yield of 4.68%. The acquisitions will be fully funded by debt which will bring gearing up to 33% post acquisitions. The leases are relatively short-term and management has indicated a possibility of 5-10% rental reversions upward upon renewal of leases.
Valuation and Recommendation. We adjusted our revenue estimates accordingly with the acquisitions. We retained our fair value estimate of $1.68, derived from our DCF model. Key assumptions include a WACC of 6.65, risk premium of 6.7%, beta of 0.9 and a terminal growth rate of 2%. We have a forecasted payout of 5.94 cents for FY07 and 7.42 cents for FY08, which translate to 5.76% and 7.2% yields respectively. The increased exposure in the world’s 2nd largest economy improves the diversification and reduces the reliance on any single market. We maintained our view that Allco is currently attractively priced, offering the highest yield of 5.76% among the office REIT, and is poised to benefit from the rising office rental trend.
ALLCO – ML