MMP – SGX
Macquarie Bank Ltd has increased it holding from 25.96 % To 26.30 %.
Date of change of Deemed Interest: 10-08-2007
AllCo – Phillip
1H07 Results. 1H07 revenue registered 153% increase from the same period a year ago mainly due to rental contribution from 55 Market Street that was acquired in Nov’06 and higher rental reversion from Central Park (Perth). The increased revenue also resulted from a higher distribution received from AWPF from its gain on sale of 222 Exhibition Street. 1H07 DPU almost doubled from 1.53c to 2.99c. With the current strong property market, property revaluations have resulted in an increase of S$155.4 million over the book value of Allco. NAV per unit has increased from $1.12 to $1.48. Current gearing stands at 24%, with a credit rating of Baa3 which allows maximum gearing to 60% according to the SGX property fund guidelines, Allco has approximately $450 million more in debt facility to fund its acquisitions.
Regional growth. Allco completed the acquisition of the Centrelink property located in Canberra, Australia for a consideration of $136.5 million, which is fully funded by equity through the issue of new units. The Centrelink property with a NLA of 430,556sqf, has a full 100% occupancy with an initial lease term of 18 years leased to the Australian federal government. Further to the Centrelink property, the latest addition to its property portfolio is the Cosmo Plaza located in Osaka, Japan. The acquisition cost of $82.4 million is fully funded by debt, which will bring the geariing level to 24%. Cosmo Plaza is a commercial property with a NLA of 224,482sqf.
Valuation. Using a WACC of 7.67%, our DCF model gives us a fair value of S$1.68 for Allco. This translates to a 3.72% yield and a price to net asset value of 1.16x for FY07F. With an improving outlook in the economies of Singapore, Australia and Japan, Allco is poised to benefit from the rising office rental trend. The current depression in share price presents a good entry opportunity. We recommend a Buy for Allco with an attractive 53% upside.
MI-REIT – SGX
UBS AG increases it holding in MI-REIT from From 18.84 % To 19.00 %.
Date of change of Interest: 08-08-2007
MapleTree – SGX
MAPLETREELOG ACQUIRES SINGAPORE PROPERTY FOR S$10.4 MILLION
The vendor of the property, located at 21 Tai Seng Drive, is Trivec Singapore Pte Ltd (“Trivec”), who will lease back the property for 5 years, with an option to extend for a further 5 years. The acquisition will be accretive to MapletreeLog’s distribution per unit (“DPU”). The pro forma financial effect of the acquisition on the DPU for the financial year ended 31 December 2006 is an additional 0.03 Singapore cents per unit1.
Rationale for the acquisition
Mr. Chua Tiow Chye, Chief Executive Officer of MLTM, said, “This acquisition marks the broadening relationship we have with Trivec. It is the second sale and leaseback transaction with Trivec, with thefirst one having been completed in September 2006. We are happy to partner Trivec in their expansion plans and to be able to provide them with a range of real-estate solutions.”
“We are very pleased with this acquisition, which is the Trust’s second property, in the established logistics and industrial zone in the Paya Lebar area. The estate is easily accessible via the Pan Island Expressway, the Central Expressway as well as the soon to be completed Circle Line,” Mr. Chua said.
“This accretive asset adds to the Trust’s stable core of Singapore properties, which will generate
long-term and stable returns for unitholders. Furthermore, given the tight supply situation for high quality logistics real-estate in good locations, rentals and capital values are expected to remain firm.”
Colliers International, in its May 2007 “Asia Pacific Industrial Market Overview”, highlighted the industry-friendly tax incentives as well as the strong demand coupled with tightening supply as the main factors that will generate and underpin demand for warehouse space in Singapore.
On 9August 2007, the Ministry of Trade and Industry raised its full year growth forecast for 2007 to between 7 and 8 percent. Unemployment has dropped to a 6-year low of 2.4%. Asia’s medium-term fundamentals remain strong and Singapore is well-positioned to harness the economic and trade growth of the region.
Funding
The acquisition is expected to be completed by 4Q 2007. T he Manager is confident that at its completion, MapletreeLog will have sufficient debt capacity to fund the acquisition wholly by debt.
However, this does not preclude the Manager from exploring alternative means of funding should the need arise.
General Description of the property
The property is a 5-storey warehouse in Paya Lebar, Singapore. The Paya Lebar area is an established industrial and commercial area. The property has easy access to major transportation infrastructure including MRT stations (existing Eunos MRT station and the soon to be completed Tai Seng MRT station on the Circle Line) and expressways (Pan Island Expressway and Central Expressway). It has a GFA of approximately 6,223 sqm and is located on leasehold land measuring about 3,054 sqm. The property has been valued at S$10.6 million by CKS Property Consultants Pte Ltd, dated 15th July 2007.
1 Assuming MapletreeLog has purchased, held and operated the property for the financial year ended 31 December 2006 (based on 41 properties) and that the acquisition is 100% debt-funded.
Parkway Life – BT
Parkway Life Reit aims to double asset size
It aims to expand its portfolio size to $1.6b by end-2009
PARKWAY Life Real Estate Investment Trust (Parkway Life Reit), which launched its initial share offering yesterday, hopes to double its asset portfolio size in two years’ time, the Reit’s manager told BT yesterday. Right now, the Reit’s portfolio comprises three private hospitals and medical offices in Singapore worth $774.6 million in total. Justine Wingrove, chief executive of the Reit’s manager, aims to double the portfolio size to about $1.6 billion by end-2009.
A new acquisition could be expected in the next six months, Ms Wingrove said.
‘We have four key markets that we are focusing on – Singapore, Malaysia, India and China,’ she said. ‘There are more immediate opportunities in Singapore, but we are also looking at opportunities elsewhere.’
The trust, she said, can easily draw from sponsor Parkway Holdings’ asset base. Parkway, which is Asia’s largest listed healthcare operator, has some 17 hospitals and medical centres across Asia under its umbrella, including the three being divested into the Reit.
Also, the trust is looking to buy from third-party vendors, Ms Wingrove said.
For the initial share offer, the trust is offering 288.9 million units at $1.28 apiece – raising about $369.8 million.
Some 253.6 million units will be placed out to institutional and other investors, of which 14.6 million units are reserved for subscription by the directors, management, employees and business associates of Parkway Holdings.
Another 5.9 million units are being offered to the public. In addition, 29.4 million units will be allocated to the Singapore registered shareholders of Parkway Holdings on the basis of one unit of the Reit for every 20 shares in Parkway.
There is also an over-allotment option for up to another 43.3 million units.
Assuming the option is exercised, Parkway will hold some 30.1 per cent of the Reit, while the free float will account for another 55.9 per cent.
The rest of the trust (14.0 per cent) will be held by ‘cornerstone investor’ TPG Capital, which also holds a substantial stake in Parkway.
The trust forecasts an annualised yield of 4.7 per cent for the 2007 financial year. This is expected to increase to 4.9 per cent in 2008 and 5.0 per cent in 2009.
Ms Wingrove said that despite the recent downturn in market sentiment, the Reit has seen strong demand from institutional investors. The placement tranche is about 13 to 14 times oversubscribed, she said.
Parkway shares closed four cents up at $3.72 yesterday.