MI-REIT – BT
MI-Reit to expand into offices and technology parks
THE fourth listed industrial real estate investment trust (Reit) – MacarthurCook Industrial Reit – is extending its investments into offices and technology parks. MI-Reit yesterday announced that it has agreed to buy Plot 4A, International Business Park from Eurochem Corporation (a member of Tolaram Group), for $91 million. This is a 13-storey office park building with a basement car park located in Jurong East’s International Business Park.
MI-Reit’s first investment in offices or technology parks brings it a 20 per cent exposure to the sector.
According to Jones Lang LaSalle Research’s Asia-Pacific Property Digest for Q2 2007, business park rents grew 30 per cent in the quarter while capital values grew 8 per cent.
‘The strongest rental growth of all industrial sub-sectors will be in this sub-category, principally as a result of the tight office supply situation causing a spillover effect as Central Business District tenants relocate to suburban office parks such as the International Business Park,’ said Chris Calvert, CEO of MacarthurCook Investment Managers (Asia), which manages the Reit.
Under this sale and leaseback arrangement, Eurochem – a Singapore- based company in the petrochemical sector – will sign a head lease over the entire facility for 10 years, with an option to extend for another five years.
This will start from the date of completion, scheduled for December 2009.
Mr Calvert added that the acquisition will increase the size of the portfolio from the initial value of $316.2 million at the time of listing in April, to $407.2 million upon completion of the acquisition.
MI-Reit said the purchase will extend its average weighted lease expiry duration from 6.3 years to seven.
To be funded wholly by debt, other alternative funding sources will also be considered, said the manager. MI-Reit’s gearing level will increase from its current 8.6 per cent to 29.1 per cent, assuming 100 per cent debt financing and that there are no other acquisitions between now and settlement of the property.
MI-Reit’s initial portfolio comprised 12 industrial assets across Singapore, the largest of which is UE Technology Park, which was acquired for $115 million.
At the date of listing, the initial properties in MI-Reit had a combined value of $316.2 million.
The 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 – 2.9 per cent higher than the forecast $3.8 million. Distribution per unit (DPU) also beat expectations, coming to 1.52 cents, which was 3 per cent higher than the forecast DPU of 1.47 cents.
MapleTree – BT
Mapletree Logistics Trust buys 4 warehouses
MAPLETREE Logistics Trust is acquiring four warehouse properties in Singapore from listed Union Steel Holdings for $36.8 million. Mapletree, through its trustee, HSBC Institutional Trust Services (Singapore), has signed a put and call option for the properties, it said in a statement yesterday. The four properties are located at Pioneer Road North, Neythal Road, Tuas Avenue 8 and Tuas View Square.
Union Steel Pte Ltd will lease back the Pioneer Road North and Neythal Road warehouses, while YLS Steel Pte Ltd will lease the two Tuas warehouses. Both the lessees are wholly-owned subsidiaries of Union Steel Holdings.
The lease tenure for all the properties is six years, with an option to extend for a further six years.
Mapletree said the acquisitions will be accretive to its distribution per unit (DPU). The proforma financial effect of the acquisitions on the DPU for the financial year ended December 2006 would be an additional 0.1 Singapore cent per unit.
‘The good location of the properties, which are in established industrial estates, will underpin capital values and provide good upward reversion potential,’ said Chua Tiow Chye, chief executive officer of Mapletree Logistics Trust Management, the manager of the trust. ‘These accretive assets will contribute positively to the stability of the returns for our unit holders.’
The acquisition is expected to be completed by the fourth quarter of 2007. Mapletree said it will have sufficient debt capacity to fund the acquisition wholly by debt, although it could also explore alternative means of funding should the need arise.
REITs – UOBKH
Mixed Performances In Turbulent Times
Growth was 1H07 theme. For the most part of this year, growth has been the main theme of the real estate investment trust (REIT) sector. The best-performing REITs for 1H07 were high-growth REITs such as CapitaRetail China Trust (CRCT), Capital Mall Trust (CMT) and CDL Hospitality Trust which saw returns in excess of 40%. As the market has turned cautious with the bottoming out of interest rates in April and May, most REITs have fallen from their highs in May and June. The recent correction has resulted in the decline of most REITs.
Boring REITs offer capital protection. In turbulent times, the market’s appetite for risk falls sharply and risk premiums shoot up. The focus then shifts from growth to capital protection and income preservation. Investors should consider boring REITs. Though less exciting, they have the lowest growth premiums built into their stock prices. We look for REITs with low price-to-book values for capital protection and high-yield REITs for income preservation. In addition, we prefer REITs with a greater focus on the Singapore economy given the latter’s safe haven status. ParkwayLife REIT (Parkway) and Macquarie MEAG Prime REIT (MMP) stand out in terms of yields and price-to-book ratios.
Avoiding logistic REITs for the time being. With slower asset appreciation and rental reversion, REITs focusing on the logistics segment rely on acquisitions to drive growth. As risk premiums go up, the increase in cost of capital makes it more expensive to fund new acquisitions on yield-enhancing terms.
Buying opportunities for the brave. The current market turbulence may represent an opportunity to pick up some high-quality REITs at depressed prices. For the bottom-fishing investor, we recommend CapitaCommercial Trust (CCT), K-REIT Asia (K-REIT), CRCT and CMT for their ability to grow organically and via acquisitions. As the market recovers, these higher-quality REITs are likely to be the first to stage a rebound. As seen in the market rebound this week, these REITs had the bigger price appreciation.
MI-REIT – SGX
MACARTHURCOOK INDUSTRIAL REIT EMBARKS ON GROWTH WITH S$91.0 MILLION ACQUISITION OF OFFICE PARK PROPERTY
Singapore, 27 August 2007 – MacarthurCook Investment Managers (Asia) Limited
(“MCKIM Asia”), the Manager of SGX-ST listed MacarthurCook Industrial REIT ( “MIREIT”), is pleased to announce that through HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”), MI-REIT has signed a conditional put and call agreement ( the “Agreement”) to acquire Plot 4A, International Business Park ( “Plot 4A IBP”) from Eurochem Corporation, a member of Tolaram Group ( “Eurochem” or the “Vendor”), for a total consideration of S$91.0 million in a sale and leaseback arrangement.
Under the Agreement, Eurochem will sign a head lease over the entire facility for 10 years with an option to extend for another five years, commencing from the date of completion, which is scheduled for December 2009. Eurochem is a Singapore-based company that operates within the petrochemical sector.
The acquisition of the Property will be accretive to MI-REIT’s distribution per unit (“DPU”) following completion.
Source : SGX
MapleTree – CNA
MapletreeLog acquires 4 Singapore properties for S$36.8m
By Asha Popatlal, Channel NewsAsia | Posted: 26 August 2007 1926 hrs
SINGAPORE: Mapletree Logistics Trust Management Ltd., also known as MapletreeLog, has signed a ‘put and call option’ agreement to acquire four warehouse properties for S$36.8 million.
The properties in Pioneer Road, Neythal Road and Tuas will be leased by two subsidiaries of Union Steel Holdings Limited, a public listed company.
Lease tenure for all the properties is six years, with an option to extend for another six years.
Rents and capital values of industrial property in Singapore have been on the rise, according to CB Richard Ellis’ report of figures for the first quarter of this year.
The average monthly rent for warehouses increased for the first time since 2003.
The acquisition, expected to be funded wholly by debt, is likely to be completed by the fourth quarter of this year.
However, in a statement, MapletreeLog says this does not preclude it from exploring alternative means of funding should the need arise.