Cambridge – Announcement
Completion of Acquisition of Armorcoat International Building Located At 361 Ubi Road 3 Singapore 408664 for S$18.0 Million
2. RBC Dexia Trust Services Singapore Limited as trustee of CIT (the “Trustee”), has on 8 June 2007 exercised the call option under the put and call option agreement (the “Option Agreement”), entered into with Armorcoat International Pte Ltd (the Vendor) on 15 December 2006.
3. Pursuant to the Trustee’s exercise of the call option under the Option Agreement, the Trustee and Vendor have entered into the sales and purchase agreement for the Property and completed the sales and purchase today.
4. The purchase price and other acquisition costs of the Property are fully funded by debt.
5. Located along Ubi Road 3, the property comprises a five-storey industrial building with a basement carkpark level and a roof top swimming pool. It has a gross floor area of 8,931.0 sqm, and it is situated on land area of 4,563.7 sqm. The land is on leasehold title of 30 years with an option to renew for a further 30 years which expires on 31 January 2057. Armorcoat International Pte Ltd and Chartered World Academy Pte Ltd will jointly leaseback the Property for 10 years, with 7% rental escalations on the commencement of the fourth and seventh year.
6. CIT is a real estate investment trust constituted by the Trust Deed entered into on 31 March 2006 between the manager of CIT and RBC Dexia Trust Services Singapore Limited as the Trustee of CIT. Since its listing on the Singapore Exchange Securities Trading Limited (SGX-ST) on 25 July 2006 (the Listing Date), CIT has an asset portfolio comprising 30 properties worth S$640 million, all of which are currently located in Singapore. Cambridge Industrial Trust Management Limited, the Manager of CIT, is a joint venture
between Cambridge Real Estate Investment Management Pte Ltd (CREIM), CWT Limited (CWT), a Singapore incorporated company listed on the Main Board of the SGXST which is engaged in the business of cargo logistics and distribution, and Mitsui & Co., Ltd (Mitsui). Mitsui is one of Japans largest business conglomerates and they listed Japan Logistics Fund, Inc., the first REIT dedicated to investing in logistics facilities, in May 2005. 60% of the issued share capital of the Manager is held by CREIM, 20% is held by Mitsui, and the remaining 20% is held by CWT.
7. In relation to the initial public offering of CIT, the joint global co-ordinators and joint financial advisers were ABN AMRO Rothschild and CLSA Merchant Bankers Limited, and the joint lead underwriters and bookrunners were ABN AMRO Rothschild and CLSA Singapore Pte Ltd. The public offer co-ordinator and sub-placement agent was Philip Securities Pte Ltd.
MIREIT – Press Release
MACARTHURCOOK INDUSTRIAL REIT RATED Baa3 INVESTMENT GRADE BY MOODY’S
– A first time corporate rating by Moody’s
– Debt funding capacity increased to approximately S$220.8 million Singapore, 7 June 2007
Chris Calvert, Chief Executive Officer of the Manager, said, We are very pleased with Moody s corporate rating for MI-REIT, which is a positive reflection of MI-REIT s strategically located properties, quality tenant base, 100% occupancy rate long average lease expiry profile of 6.7 years. The rating is a testament MacarthurCook s proactive investment management style, disciplined property acquisition process and strong capital and risk management strategy.
With the credit rating, MI-REIT has increased gearing capability, with available capacity of approximately S$193 million to fund acquisitions. The higher leverage limit increases our operational flexibility and allows us to move quickly to acquire assets in line with our investment policy, added Mr Calvert.
Under the Property Fund Guidelines issued by the Monetary Authority of Singapore, as amended in October 2005, a REIT may increase its aggregate leverage maximum of 60% of the value of its deposited property, provided it obtains discloses to the public a credit rating from one of the major rating agencies, including Moody’s.
To maintain the appropriate risk profile of MI-REIT, the Manager expects to maintain a long-term target gearing ratio of between 40%-45%.
Mr Calvert continued, On occasion however, we may increase the leverage ratio above 45% in order to secure strategic industrial properties throughout Asia, which will enhance our capital growth and asset quality. We view debt in the current environment as an efficient mechanism to enable us to attain our target of growing MI-REIT by at least S$500 million in new acquisitions per annum.
The Manager has also successfully negotiated with its bank lending syndicate, which comprised of the National Australia Bank Limited and the Commonwealth Bank of Australia Limited, to increase its facility from S$128.8 million to S$220.8 million, which reflects MI-REIT s increased gearing capability.
In a separate press release issued by Moody s, the rating agency acknowledged that MI-REIT s properties are well located, with seasoned operating histories and stable and high occupancy rates. The agency also stated that it expects stable cash flow generation from the portfolio, supported by committed rental revenues, favourable industrial market conditions, low level of development risk exposure and ongoing financial discipline by the trusts management in pursuit of growth.
MIREIT – UBS
MACARTHURCOOK, ubs put new rating BUY with target price $2.07
- MacarthurCook Limited’s foothold in Asia . MacarthurCook Limited (MCK), a specialist fund manager in Australia, launched MacarthurCook Industrial REIT (MI-REIT) with an initial portfolio of 12 Singapore industrial assets valued at S$316m. MCK sees MI-REIT as the primary vehicle to expand its direct industrial real estate funds management business in Asia. MI-REIT aims to grow its portfolio in Asia by S$300-500m pa over the next three years.
- First right of refusal from MCK and UEL . The manager of MI-REIT is jointly owned by MCK (92.5%) and United Engineers (UEL, 7.2%). MI-REIT has been granted first right of refusal for five years for industrial assets offered to MCK in Asia. We believe UEL has also granted MIREIT first right of refusal to buy Print Media Hub in 2007, and is considering selling other assets in Singapore to MI-REIT.
- Debt capacity of over S$200m and potential 23% accretion . MI-REIT’s current portfolio provides 2% pa organic rental growth. In addition, MI-REIT’s current gearing is 8%. We expect MI-REIT to acquire more assets in Singapore and reach its gearing target of 45% within the next 18 months. We estimate this could increase DPU by 23% between now and end-FY09.
- Valuation initiate coverage with Buy 2, S$2.07/unit PT . Our DCF valuation is S$2.04/unit, with our 12-month forward DCF-based price target of S$2.07/unit. At the current price level, MI-REIT’s DPU yield for FY08 is 6.5%.
Singapore Reits – DMG
Japan firm plans to list Reit in S’pore
Re-plus wants to list a real estate investment trust (Reit) that would include two Chinese office buildings worth at least US$400 million. Situated in Beijing, the buildings are the only overseas assets in Re-plus’s portfolio, which is valued at about 270 billion yen (S$3.4 billion).
According to a banker, The portfolio has not been finalised yet. They are in talks with several banks now, but the trust could come to the market early next year. Re-plus, valued by the market at US$482 million, already manages Re-plus Residential investment, a Reit based on rents collected from its apartments in Tokyo.
Bankers said that Re-plus wants to list its Reit in Singapore because Japanese-listed property trusts are not allowed to own foreign assets. Singapore’s Reit market – the third-largest in the Asia-Pacific after Australia and Japan – has grown to more than US$18 billion, boosted by trusts containing assets ranging from Indonesian hospitals to Chinese shopping malls.
Singapore Reits – UBS
Global Equity Research PT adjustments following rise in spot risk free rate
We have moved the spot risk free in our DCF model to 2.9% for yr0-10, from 2.7% following recent interest movements. Our terminal rate (yr10+) is unchanged at 3.6%.
Impact – Downgrade CCT and SUN
Action – Overweight Industrial & Retail
Valuation