MapleTree – DBS
Acquisitions to drive growth
Comment on Results
MLT reported 2Q07 results in line with our expectations. Gross revenue increased 83% y-o-y to S$34.1m, mainly due to the 30 new properties acquired during the year. Cost efficiencies and economies of scale have also resulted in higher net property income margin. Net distributable income grew 84% y-o-y to S$17.7m.
DPU increased by 33.6% y-o-y to 1.59 cents.
Outlook
To date, MLT has a portfolio of 67 properties with a total value of S$2.2bn(including properties pending completion). Moving forward, MLT is expecting to see more growth coming from outside Singapore. With a ready development pipeline from the sponsor in Vietnam, China and Malaysia, MLT is set to expand its footprint in Asia. In the medium to long term, MLT would also be exploring emerging markets such as South Korea, India, Thailand and Taiwan.
Recommendation
With nine announced acquisitions pending completion (worth around S$166m), there is still an acquisition target balance of around S$200m to S$300m. MLT is on track to achieve its target acquisition pipeline of S$1 bn to reach S$2.4bn by year-end.
Maintain Buy recommendation and target price of S$1.46 (based on DCF Valuation).
MapleTree, MMP – BT
Mapletree Log, Macquarie MEAG Reit post better income
ANOTHER two real estate investment trusts have reported better performances.
For Mapletree Logistics Trust (MLT), gross revenue for Q2 2007 was $34.1 million, up 82.6 per cent year-on-year.
MLT said that this was mainly due to contributions from 30 new properties acquired during the year.
Compared to a book value of $1 billion a year ago, its portfolio of properties has since doubled to reach $2.1 billion as at 30 June.
Net property income for the quarter was $30 million, up 85.9 per cent, while distributable income attributable to unitholders was $17.7 million, up 83.6 per cent.
Distribution per unit (DPU) for the quarter of 1.59 cents was 33.6 per cent higher year-on-year and 7.4 per cent higher than the previous quarter.
Reiterating MLT’s ‘growth by acquisitions’ strategy, Chua Tiow Chye, CEO of Reit manager Mapletree Logistics Trust Management Ltd (MLTML) said: ‘For the current year-to-date, we have completed $654 million of acquisitions and have another $166 million of acquisitions that have been announced but are pending completion. This means we have achieved 82 per cent of our $1 billion target for 2007.’
Mr Chua also said the MLT’s funding structure will continue to be optimised.
As at June 30, MLT’s leverage ratio was 54 per cent compared to 39 per cent as at March 31, 2007.
At the end of Q2 2007, 55 per cent of MLT’s total borrowings of $1.182 billion were hedged, he added.
In January, MLT raised $349 million through a fund-raising exercise, offering 296.8 million new units. MLTML deputy CEO and CFO Richard Lai said it was ‘exploring various options of going to the markets for fund raising’ for future acquisitions. MLT expects to have a portfolio worth $5 billion by 2010.
About 20 per cent of its future pipeline will come from sponsor Mapletree Investments which is developing projects in Vietnam, China and Malaysia.
MLT’s share price closed at $1.33 per unit, down 3 cents from the previous day.
Separately, Macquarie MEAG Prime Real Estate Investment Trust (MMP Reit) reported yesterday that gross revenue for Q2 2007 increased 5.5 per cent year-on-year to $23.6 million, due mainly to higher-than-expected rents achieved for retail space in the basement of Wisma Atria, as well as for office space.
Contributions from six newly acquired properties in Tokyo were also booked for the first time.
Net property income was up 3.5 per cent at $17.9 million while distributable income was $14.3 million, up 4.7.
The DPU of 1.50 cents for the quarter was 4.2 per cent higher compared to the 1.44 cents achieved for the previous corresponding period.
MMP Reit share price ended the trading day at $1.25 unchanged.
MI-REIT – SGX
MACARTHURCOOK INDUSTRIAL REIT’s maiden quarter DPU in line with forecast
Financial Highlights
– 1QFY2008 distribution per unit (“DPU”) of 1.52 cents for first quarter
– Annualised DPU of 7.58 cents is 3.0% higher than forecast
– Net income of S$3.2 million is 3.9% above forecast
Singapore, 26 July 2007 – The Board of Directors of MacarthurCook Investment Managers (Asia) Limited (“the Manager”), the Manager of MacarthurCook Industrial REIT (“MI-REIT”), are pleased to announce a DPU of 1.52 cents per unit for the period from the listing date of 19 April 2007 to 30 June 2007 (“1QFY2008”). The annualised DPU of 7.58 cents is 3.0% above the 7.41 cents forecast1 for FY2008, as stated in the MI-REIT prospectus dated 12 April 2007.
The total income available for distribution to unitholders of S$3.9 million exceeded the forecast by S$0.11 million or 2.9%, after the inclusion of S$7.12 million in non-tax deductible and non-taxable items2. A key reason for the positive variance in distributable income against forecast was the S$0.12 million higher than forecast net income of S$3.2 million, due to:
- Property expenses of S$0.91 million being 48.6% lower than forecast, offsetting the one time, non-recurring variance in gross revenue of S$0.92 million3, and resulting in net property income (“NPI”) of S$4.70 million. The variation of 14.1% and 48.6% for gross revenue and property expenses respectively, is due to a number of tenants paying their expenses directly during the quarter whilst our payment procedures are being formalised.
- Non-property expenses of S$1.49 being 10.9% lower than forecast, due mainly to a smaller loss on re-measurement of financial derivatives and lower borrowing costs. Borrowing costs were 6.5% lower than forecast due primarily to actual interest rates
being lower than those used in the calculation of forecasts.
Mr Chris Calvert, Chief Executive Officer of the Manager said: “We are pleased that MIREIT’s distributable income is in line with our forecasts and attains our goal of providing unitholders with a stable, growing income stream. Income stability and growth is supported by strong fundamentals, such as our quality industrial assets, quality tenants and long lease maturity profile.”
Disciplined Acquisition Growth Strategy
The Manager will also continue to drive the growth of MI-REIT via its acquisition growth strategy of acquiring yield-accretive and high-quality industrial properties.
Mr Calvert said: “Acquisition growth is an integral driver of our business that will provide both growth and diversification benefits to our portfolio. We have a target to acquire up to S$500 million in property assets over the next 12 months and are working extremely hard to achieve this goal.
Our strategic alliance with United Engineers Development Pte Ltd (“UEL”) and our strong relationships with agents across Asia have created numerous potential investment opportunities. We also expect our regional footprint to grow as existing tenants in Singapore expand their operations throughout the region.”
Mr Calvert added: “Our disciplined investment approach to asset selection and requirement for all acquisitions to undergo a thorough due diligence process ensures that we will acquire only quality income-producing assets that strengthen the portfolio and provide growth and diversification benefits.”
The Manager expects that the majority of acquisitions over the next 12-18 months will be made in Singapore. With its Pan-Asian mandate however, MI-REIT will also look to acquire industrial property in selected countries throughout Asia, such as Japan, Hong Kong and Malaysia.
Increased Financial Flexibility to support growth
MI-REIT recently obtained a corporate Baa3 ‘stable’ rating outlook by Moody’s Investors Service (“Moodys”). The credit rating enables MI-REIT to increase its gearing capability to up to a maximum of 60% from its current aggregate gearing level of 8.6%. With available debt capacity of approximately S$200 million to fund acquisitions, MI-REIT has greater operational flexibility to execute its acquisition growth strategy. The Manager expects to maintain a long term target gearing ratio of between 40%-45% to maintain the appropriate risk profile of MI-REIT. The Manager also successfully negotiated with its bank lending syndicate to increase its facility from S$128.8 million to S$220.8 million.
Outlook for FY2007/08
As a result of the continued strong economic growth underpinned by strong growth in the construction and manufacturing sectors, the Urban Redevelopment Authority recorded the highest quarter to quarter increase for the industrial property market since the up-trend in early 2004. Prices of overall industrial space rose 4.0% and rents increased by 4.5% in the first quarter of the year.
Growth in the knowledge-based industries and the tight office supply situation has also contributed to the climb in rentals of high tech industrial space, which are expected to rise to as much as 10% for 2007. The demand for industrial space in the countries in which MIREIT may invest is also expected to expand on the back of firm GDP growth.
Given the positive outlook and barring any unforeseen circumstances, the Manager expects to deliver an annualised distribution per unit of 7.58 cents for the current financial year that is in line with forecasts.
1 No comparisons against a corresponding period in the previous year can be made as no pro forma financials are available. SGX-ST had granted MI-REIT a waiver from the requirement to prepare historical pro forma statements of total return, cash flow statements and balance sheets for the purpose of its initial public offering.
2 These include the net change in fair value of investment properties and other non-tax deductible and nontaxable items which will not affect the DPU as MI-REIT’s distributions are based on taxable income.
3 This variance was mainly due to monies being held back for a period from settlement on one of the properties, resulting in subsequent reduction in rent. Pro-rated monies were held back whilst the vendor awaited receipt of a Certificate of Statutory Completion on construction of a new building.
Source : SGX
MMP – SGX
MMP REIT REPORTS DPU OF 1.50 CENTS FOR 2Q 2007
HIGHLIGHTS
• 2Q 2007 DPU of 1.50 cents exceeds 2Q 2006 DPU of 1.44 cents by 4.2%
• Significant NAV uplift of 9.8% from revaluation of Singapore properties
• Affirmed Moody’s corporate rating of Baa1 reflects high quality of assets and provides operational and acquisition funding flexibility
SINGAPORE, 26 July 2007 – Macquarie Pacific Star, the Manager of MMP REIT – the S-Reit with the biggest presence in Orchard Road – today announced MMP REIT’s second quarter (2Q 2007) Distribution Per Unit (DPU) of 1.50 cents. Meanwhile, a revaluation of its prime Orchard Road properties raised Net Asset Value (NAV) by 9.8%.
The DPU of 1.50 cents for the period 1 April to 30 June 2007 is 4.2% higher compared to the 1.44 cents achieved for the previous corresponding period. It also beats MMP REIT’s previous record of 1.47 cents achieved for the past two consecutive quarters of 4Q 2006 and 1Q 2007. On an annualised basis, the latest distribution represents a yield of 4.81%.1
Compared to 2Q 2006, gross revenue rose 5.5% to S$23.6 million, due mainly to higher-than-expected rents achieved for retail space in the basement of Wisma Atria, as well as for office space. Contributions from six newly acquired properties in Tokyo, Japan, were also booked for the first time. Net property income was higher at S$17.9 million, despitehigher year-on-year expenses mainly attributed to higher commission paid for new and renewal leases, increased tenancy costs arising from re-positioning of tenant mix, and continued depreciation charges on the escalators that were installed at Wisma Atria’s basement in end 2006.
NAV per unit was S$1.27 as at 30 June 2007, an increase of 9.5% from NAV per unit of S$1.16 as at 31 March 2007. The valuation of MMP REIT’s two prime Orchard Road properties increased by 7.3% from S$1.498 billion in December 2006 to S$1.608 billion as at 30 June 2007, resulting in a revaluation surplus of S$110 million.
Mr Franklin Heng, Chief Executive Officer of Macquarie Pacific Star, said, “Since listing in September 2005, MMP REIT has consistently outperformed IPO projections. For each of the past two quarters, we have paid out record DPU of 1.47 cents. We are pleased to continue to deliver increased returns to unitholders in 2Q 2007 with the DPU of 1.50 cents, a 4.2% increase from DPU of 1.44 cents in 2Q 2006. Total returns for unitholders who have held MMP REIT units since its listing stand at 38.1%.
“In the second quarter of 2007 occupancy for both our retail and office portfolio in Singapore remained high with higher turnover rent contributions from retail tenants during the start of the Great Singapore Sale. In addition, 58,100 sq ft of office renewals and new leases, contracted at an average 60% increase over previous rents, came into effect during the first half of 2007. Asset enhancement at Level 2 in Wisma Atria is now complete, offering shoppers better circulation and an enhanced shopping experience. On an annualised basis, we will achieve a 43% increase in gross revenue from the reconfigured space.”
Portfolio growth strategies
Commenting on organic growth prospects for MMP REIT’s Singapore portfolio, Mr Heng said, “We have started pre-marketing of some 16,781 sq ft of retail space at Level 5 of Ngee Ann City, which will be vacated by the National Library in end February 2008. The average monthly rent of this lease is below prevailing market rates. The space will be reconfigured with a compelling retail concept embracing fashion, beauty and wellness, complementing the existing offering at Ngee Ann City. We are very encouraged by the response from retailers thus far.
“Contributions from the six newly acquired properties in Tokyo commenced in the beginning of June. We expect to deliver greater value to unitholders when income from these properties is fully recognised in the subsequent months.
“Moody’s Investor Service’s affirmation of the Baa1 rating for MMP REIT in May 2007 reiterates the high quality of MMP REIT’s portfolio, which we are building up with acquisitions in the region. The positive rating endorses our proactive asset management and multipronged investment strategy.”
Mr Heng added, “Going forward, we will continue to actively source for more assets in our key target markets, with a view to further diversify MMP REIT’s asset base and earnings stream geographically.”
1 Based on last traded unit price of S$1.25 on 26 July 2007
Source : SGX