MMP – OCBC
Defensive in uncertain market
Slight growth in 2Q07 results. Macquarie MEAG Prime REIT’s (MMP)recently reported its 2Q07 result that was broadly in line with our expectation. Revenue growths were tepid at 5.5% YoY and 1.1% QoQ to S$23.6m. Net property income (NPI) did better sequentially, improving 4.0% (+3.5% YoY). This was due to lower expenses related to leases renewal commission and depreciation. DPU for 2Q07 was 1.50 cents (+4.2% YoY and 2.0% QoQ). The key reason for the slightly better performance was better rentals and lower operating expenses.
Buys into China and Japan. MMP has recently been pretty active on the acquisition front, buying properties in Japan for about S$182m and in Chengdu for S$70m. The Chengdu property will have an attractive NPI yield of 7.5% and will be guaranteed for 2 years. Though these purchases are small in absolute terms and the bottom line growth impact is only about 5%, the impact on MMP’s asset size is more material at about 17% or by about S$250m to S$1.8bn. We expect these acquisitions to be fully debt funded and this is likely to push gearing to about 33% (from 26% in 1Q07), still well within the allowable limit. In terms of DPU growth from these acquisitions, we have already allowed for this in our FY08 DPU of 6.4 cents hence will maintain our forecast for now.
Organic growth to come from office. MMP’s office space is presently under-rented with rents at about S$5 psf/mth, whereas market rents are approaching the S$10-13 psf/mth mark. More importantly, with 182,000 sq ft (about 70% of office space) of leases due for renewal over the next two years, we see good potential for upward revisions in rental rates.
Maintain BUY. MMP remains one of the very few REITs with a low priceto-book ratio. This low valuation means that it is likely to be more resilient in market uncertainty. Since our last report (April 07), MMP’s share price has corrected by only about 2%. It is currently trading at just under 1.0x P/B and implies that the market has not factored in growth. With a DPU yield of about 5.0% and a capital value upside of about 8.0%, total return of over 13% is possible with little downside risk. We thus remain positive on MMP and see it as one of the lowest-risk REITs in the market. Maintain BUY with a fair value of S$1.32.
MI-REIT – BT
MacarthurCook Reit portfolio value up $30.6m on revaluation
MACARTHURCOOK Industrial Reit (MI-Reit) said independent revaluations of six of its properties have resulted in the total value of its initial portfolio of 12 properties standing now at $346.8 million, a rise of $30.6 million or 9.7 per cent.
MacarthurCook Investment Managers (Asia), the manager of MI-Reit, has a policy of revaluing properties in the portfolio on a rolling basis throughout the financial year and in accordance with the property fund guidelines.
The initial portfolio of the real estate investment trust, which was listed on April 19 this year, comprises 12 industrial assets across Singapore with a combined value of $316.2 million at the date of listing.
The largest rise in valuation came from UE Technology Park – MI-Reit’s largest property by value – which saw a revaluation gain of $23.9 million, or 21 per cent. The revaluations of all the six properties were conducted by CB Richard Ellis.
Just last month, Singapore’s fourth listed industrial Reit said it was extending its investments into offices and technology parks by agreeing to buy Plot 4A, International Business Park from Eurochem Corporation (a member of Tolaram Group), for $91 million.
MI-Reit invests primarily in industrial real estate assets in Singapore, Japan, Hong Kong, Malaysia and China.
Last month, the Reit reported a distributable income of $3.9 million for its first quarter ended June 30. Distribution per unit (DPU) was 1.52 cents, which, was 3 per cent higher than the forecast DPU of 1.47 cents.
Cambridge – SGX
APPROVAL IN-PRINCIPLE FOR THE LISTING OF NEW UNITS
Cambridge Industrial Trust Management Limited, as manager of Cambridge Industrial
Trust (“CIT”, and manager of CIT, the “Manager”), is pleased to announce that approval in-principle has been obtained from the Singapore Exchange Securities Trading Limited (the “SGX-ST”) on 4 September 2007 for the listing and quotation of up to 285,119,729 new units in CIT (the “New Units”) on the Main Board of the SGX-ST which are proposed to be issued under an equity fund raising which is proposed to be carried out by CIT (the “Equity Fund Raising”).
The purpose of the Equity Fund Raising is to raise gross proceeds of up to approximately S$193.9 million to finance the acquisition of six properties, namely, 1 Tuas Avenue 3, 7 Ubi Close, 9 Bukit Batok Street 22, 120 Pioneer Road, Enterprise Hub(1), 23 Woodlands Terrace (including costs associated with such acquisitions) and to potentially retire part of CIT’s existing debt obligations, with the balance of the proceeds to be utilised for general corporate and working capital purposes.
The SGX-ST’s approval in-principle is not an indication of the merits of the Equity Fund Raising, the New Units or CIT.
Details of the Equity Fund Raising will be set out in a circular (the “Unitholders Circular”) which will be dispatched to the unitholders of CIT shortly for the purpose of seeking their approval for the proposed acquisition and lease of 1 Tuas Avenue 3, the proposed issue of New Units under the Equity Fund Raising, the proposed placement of New Units to the directors of the Manager and the proposed general mandate for the issue of new Units.
Source : SGX
Parkway Life – SGX
STABILISING ACTION
UBS AG, acting through its business group, UBS Investment Bank, as stabilising manager designated in connection with the Offering, wishes to announce that it has purchased a total of,
- 2,458,000 Units at a price range of S$1.23 to S$1.24 per Unit on 03 September, 2007. Source : SGX
- 4,011,000 Units at a price of S$1.21 per Unit on 31 August, 2007. Source : SGX
- 1,000,000 Units at a price of S$1.20 per Unit on 30 August, 2007. Source : SGX
- 3,000,000 Units at a price range of S$1.18 to S$1.19 per Unit on 29 August, 2007. Source : SGX
- 1,731,000 Units at a price of S$1.19 per Unit on 28 August, 2007. Source : SGX
- 6,000,000 Units at a price range of S$1.18 to S$1.19 per Unit on 24 August, 2007. Source : SGX
- 13,032,000 Units at a price range of S$1.19 to S$1.27 per Unit on 23 August, 2007.
Source : SGX
Note : 43,329,000 Shares Available for Stabilising Action (for 1 mth)