It is setting its sights on growth markets of Singapore, China and Malaysia: CEO
CAPITAMALLS Asia (CMA) has a potential war chest of some $2.5-3 billion for developing and buying malls, and it will be targeting its firepower at Singapore, China and Malaysia.
The retail property group's shares may have been hovering below the initial public offering price, but they should perform better in the longer term.
CMA chief executive Lim Beng Chee shared these views in an interview with the press yesterday. The group is sitting on around $1 billion of cash, which includes proceeds from the listing of CapitaMalls Malaysia Trust (CMMT) and the sale of Clarke Quay to CapitaMall Trust.
With that, the group can borrow another $1.5-2 billion for investments. This situation presents a 'very good opportunity' for acquisitions, he said.
In Singapore, the market has improved from a year ago, Mr Lim said. The economy has picked up, retail sales have grown, and tourist arrivals have increased.
CMA is eyeing state land for mall developments, and it is particularly keen on areas where it already has a presence. These would include the Jurong district, where IMM and the upcoming JCube are.
The group had bid for a mixed-use site in the Jurong Lake district in June, but lost out to Australian developer Lend Lease. 'It's ok, there are always sites two and three' in that area, Mr Lim said.
Another plot of interest is the one at Stamford Road/North Bridge Road, where Capitol Theatre is. The tender for the site will close next month and the winning developer can build an underground link to City Hall MRT station. Raffles City Singapore, which CMA has a stake in, is right next to the station.
Asked if CMA will be bidding for that land parcel, Mr Lim said: 'We'll consider any site.'
There have been concerns about an oversupply of retail space in Singapore but Mr Lim believes in just the opposite. 'My problem is, I've got no space.'
According to him, many global retail brands such as Abercrombie & Fitch are not here because they have a problem finding space for large flagship stores.
Besides Singapore, China remains a key growth market for CMA. The Chinese government is trying to boost domestic consumption for economic growth and CMA can benefit from that trend, Mr Lim said.
In Malaysia, CMA is also looking to acquire or develop malls. It is setting up a RM1 billion (S$428 million) fund for this.
Despite the many growth plans, investors appear unexcited. CMA's shares have been trading below their listing price of $2.12 in the last one month. The counter closed unchanged at $2.05 yesterday.
'I think a lot of shareholders don't understand this business,' Mr Lim said, explaining that CMA runs longer term operations of building and managing malls.
On the gap between the share price and the listing price he said: 'My sense is, we can actually overcome this very easily.
'It's a question of us making a few acquisitions over time that could actually correct the share price... I have no doubt that over time it will correct.'
Source: Business Times, 29 Jul 2010
Showing posts with label REITs. Show all posts
Showing posts with label REITs. Show all posts
Thursday, July 29, 2010
Wednesday, July 28, 2010
Is CCT saving cash hoard for Market Street Car Park?
CAPITACOMMERCIAL Trust (CCT) reiterated last week that it will not distribute a special payout to unit-holders when it completes its $380 million sale of StarHub Centre in September. Likewise, it did not return proceeds to shareholders when it completed the sale of Robinson Point in April.
The trust has said it is setting aside the net cash proceeds from these two divestments - totalling about $577.5 million - for future acquisitions and to reduce debt.
On the debt front, CCT can choose to refinance debt when it falls due, given its current gearing ratio is relatively low at about 33 per cent.
As for acquisitions, the trust has thus far found it difficult to buy office blocks. In fact, it has been selling office blocks which it believes have reached the optimal stage of their life cycle as office assets - such as Robinson Point and StarHub Centre.
CCT's manager says it is keen to increase its exposure to the Singapore Grade A office sector. But buying such assets in today's market is not easy for a Reit, as owners of Grade A office buildings are pricing the recovery in rents into their asking prices. As a result, the yields on these properties are not high enough to generate accretion for a Reit if it were to buy such expensive assets.
Given this challenge, some analysts think that instead of keeping its cash for future acquisitions, CCT could be saving it for something else - perhaps to re-visit plans to redevelop Market Street Car Park into a Grade A office project.
It was in January 2008 that CCT first disclosed it had obtained outline planning permission (OPP) from the Urban Redevelopment Authority to redevelop Singapore's first multi-storey car park into a new office tower with gross floor area of about 850,000 sq ft and a maximum plot ratio of 14.49. It estimated the total cost then at $1-1.5 billion.
But the global financial crisis struck - and Singapore office rents started to slide. In January 2009, CCT's manager announced its decision to abort the redevelopment plan, citing the uncertain market outlook and tight credit conditions, as well as high development cost and significant project size.
Quizzed about the possibility of re-visiting the Market Street plan at CCT's second-quarter results briefing last week, CapitaCommercial Trust Management chief executive Lynette Leong said the OPP had lapsed, but added that the group continually reviews its assets. She also said that the Market Street property is generating an attractive net yield of more than 8 per cent based on its $47 million valuation as at June 30, 2010, thanks to a shortage of CBD parking lots. The yield surpasses that for office space.
However, some analysts think that the time could be right for CCT to make a fresh planning application to redevelop Market Street Car Park into offices. And approval from authorities should again be forthcoming. For one, there is concern among property consultants about a potential shortage of new prime Grade A office space post-2012. The redevelopment of Market Street Car Park into offices could help alleviate this to some extent.
Redeveloping the property will mean the loss of 704 CBD parking lots that provide season and hourly parking. But of course, the authorities could always require CCT to reinstate this supply in its new project. And some relief will come soon from 250 public parking lots - for hourly parking - that will be ready by October this year underneath the Lawn @ Marina Bay, which is part of the Marina Bay Financial Centre project.
Standard Chartered Equity Research estimates the cost of redeveloping Market Street Car Park has fallen from 2008, probably to $1 billion to $1.1 billion today, given lower construction costs and development charges now. 'If the Grade A office building (about 850,000 sq ft) conversion is completed by 2015 and rented for $10-14 per sq ft a month, the yield on cost would be about 6-8 per cent and development profit would be 6-25 cents per unit,' it said.
Given CCT's $6 billion asset size and the rule that development properties must make up no more than 10 per cent of a Reit's asset size, CCT will no doubt have to seek the appropriate structure to undertake the development, perhaps jointly with parent CapitaLand.
A cash hoard will come in handy for such a venture.
Source: Business Times, 28 Jul 2010
The trust has said it is setting aside the net cash proceeds from these two divestments - totalling about $577.5 million - for future acquisitions and to reduce debt.
On the debt front, CCT can choose to refinance debt when it falls due, given its current gearing ratio is relatively low at about 33 per cent.
As for acquisitions, the trust has thus far found it difficult to buy office blocks. In fact, it has been selling office blocks which it believes have reached the optimal stage of their life cycle as office assets - such as Robinson Point and StarHub Centre.
CCT's manager says it is keen to increase its exposure to the Singapore Grade A office sector. But buying such assets in today's market is not easy for a Reit, as owners of Grade A office buildings are pricing the recovery in rents into their asking prices. As a result, the yields on these properties are not high enough to generate accretion for a Reit if it were to buy such expensive assets.
Given this challenge, some analysts think that instead of keeping its cash for future acquisitions, CCT could be saving it for something else - perhaps to re-visit plans to redevelop Market Street Car Park into a Grade A office project.
It was in January 2008 that CCT first disclosed it had obtained outline planning permission (OPP) from the Urban Redevelopment Authority to redevelop Singapore's first multi-storey car park into a new office tower with gross floor area of about 850,000 sq ft and a maximum plot ratio of 14.49. It estimated the total cost then at $1-1.5 billion.
But the global financial crisis struck - and Singapore office rents started to slide. In January 2009, CCT's manager announced its decision to abort the redevelopment plan, citing the uncertain market outlook and tight credit conditions, as well as high development cost and significant project size.
Quizzed about the possibility of re-visiting the Market Street plan at CCT's second-quarter results briefing last week, CapitaCommercial Trust Management chief executive Lynette Leong said the OPP had lapsed, but added that the group continually reviews its assets. She also said that the Market Street property is generating an attractive net yield of more than 8 per cent based on its $47 million valuation as at June 30, 2010, thanks to a shortage of CBD parking lots. The yield surpasses that for office space.
However, some analysts think that the time could be right for CCT to make a fresh planning application to redevelop Market Street Car Park into offices. And approval from authorities should again be forthcoming. For one, there is concern among property consultants about a potential shortage of new prime Grade A office space post-2012. The redevelopment of Market Street Car Park into offices could help alleviate this to some extent.
Redeveloping the property will mean the loss of 704 CBD parking lots that provide season and hourly parking. But of course, the authorities could always require CCT to reinstate this supply in its new project. And some relief will come soon from 250 public parking lots - for hourly parking - that will be ready by October this year underneath the Lawn @ Marina Bay, which is part of the Marina Bay Financial Centre project.
Standard Chartered Equity Research estimates the cost of redeveloping Market Street Car Park has fallen from 2008, probably to $1 billion to $1.1 billion today, given lower construction costs and development charges now. 'If the Grade A office building (about 850,000 sq ft) conversion is completed by 2015 and rented for $10-14 per sq ft a month, the yield on cost would be about 6-8 per cent and development profit would be 6-25 cents per unit,' it said.
Given CCT's $6 billion asset size and the rule that development properties must make up no more than 10 per cent of a Reit's asset size, CCT will no doubt have to seek the appropriate structure to undertake the development, perhaps jointly with parent CapitaLand.
A cash hoard will come in handy for such a venture.
Source: Business Times, 28 Jul 2010
Saturday, July 24, 2010
CapitaRetail China's net property income up 8.8%
SHOPPERS in China kept up their pace of spending and helped CapitaRetail China Trust (CRCT) deliver robust results in the second quarter.
The property trust saw net property income rise 8.8 per cent year-on-year to 97.2 million yuan (S$19.7 million) as revenue increased at its busy malls and property expenses decreased.
Distribution per unit was up 6.7 per cent at 2.07 cents from 1.94 cents a year ago, while distributable income rose 7.3 per cent to $12.9 million. Payouts will be distributed on Sept 24.
Gross revenue rose 3.7 per cent to 145.1 million yuan year-on-year, but fell 2.8 per cent in Singapore dollars because of the local currency's rise against the yuan in the three months to June 30 compared with a year ago.
Mr Victor Liew, chairman of CapitaRetail China Trust Management, said resilient domestic consumption is still driving growth in China, whose economy is expected to grow 10.5 per cent this year.
'We continue to benefit from the Chinese government's stimulus measures to boost domestic consumption and maintain stable and sustainable economic growth,' he said.
CRCT said tenant sales grew 28.8 per cent while shopper traffic was up 14.4 per cent over levels last year. Occupancy rates are at 96.1 per cent.
The trust's portfolio consisted of eight retail mall properties in five cities worth 5.8 billion yuan as of June 30.
Net asset value per unit as of June 30 was $1.13. CRCT's units closed up one cent at $1.26 yesterday.
Separately, Ascott Residence Trust reported a 4 per cent rise in distribution per unit to 1.87 cents in the second quarter from 1.79 cents a year ago.
Distributable income was up 5 per cent at $11.6 million while revenue rose 3 per cent to $44.4 million. Payouts will be made on Aug 27.
Ascott Residence Trust Management's chief executive, Mr Chong Kee Hiong, said the rise in revenue was led mainly by a better performance in China and Singapore arising from higher occupancies and rental rates.
'The level of business activities in Singapore has increased in line with the strong economic growth, resulting in higher demand for serviced residences,' he said.
Ascott Reit's portfolio has a total asset value of $1.59 billion, comprising 38 properties with 3,644 units in 11 cities across seven countries.
Net asset value per unit as of June 30 was $1.38. Ascott Reit's units closed down one cent at $1.23 yesterday.
Source: Straits Times, 24 Jul 2010
The property trust saw net property income rise 8.8 per cent year-on-year to 97.2 million yuan (S$19.7 million) as revenue increased at its busy malls and property expenses decreased.
Distribution per unit was up 6.7 per cent at 2.07 cents from 1.94 cents a year ago, while distributable income rose 7.3 per cent to $12.9 million. Payouts will be distributed on Sept 24.
Gross revenue rose 3.7 per cent to 145.1 million yuan year-on-year, but fell 2.8 per cent in Singapore dollars because of the local currency's rise against the yuan in the three months to June 30 compared with a year ago.
Mr Victor Liew, chairman of CapitaRetail China Trust Management, said resilient domestic consumption is still driving growth in China, whose economy is expected to grow 10.5 per cent this year.
'We continue to benefit from the Chinese government's stimulus measures to boost domestic consumption and maintain stable and sustainable economic growth,' he said.
CRCT said tenant sales grew 28.8 per cent while shopper traffic was up 14.4 per cent over levels last year. Occupancy rates are at 96.1 per cent.
The trust's portfolio consisted of eight retail mall properties in five cities worth 5.8 billion yuan as of June 30.
Net asset value per unit as of June 30 was $1.13. CRCT's units closed up one cent at $1.26 yesterday.
Separately, Ascott Residence Trust reported a 4 per cent rise in distribution per unit to 1.87 cents in the second quarter from 1.79 cents a year ago.
Distributable income was up 5 per cent at $11.6 million while revenue rose 3 per cent to $44.4 million. Payouts will be made on Aug 27.
Ascott Residence Trust Management's chief executive, Mr Chong Kee Hiong, said the rise in revenue was led mainly by a better performance in China and Singapore arising from higher occupancies and rental rates.
'The level of business activities in Singapore has increased in line with the strong economic growth, resulting in higher demand for serviced residences,' he said.
Ascott Reit's portfolio has a total asset value of $1.59 billion, comprising 38 properties with 3,644 units in 11 cities across seven countries.
Net asset value per unit as of June 30 was $1.38. Ascott Reit's units closed down one cent at $1.23 yesterday.
Source: Straits Times, 24 Jul 2010
Friday, July 23, 2010
CapitaMall Trust looking at mall development
CAPITAMALL Trust (CMT) is exploring the possibility of developing malls on top of managing them.
CapitaMall Trust Management (CMTML) chief executive Simon Ho said the trust can capitalise on its huge $8 billion asset size to 'selectively participate in greenfield development projects' that can add to its growth.
Real estate investment trusts (Reits) are allowed to use up to 10 per cent - or $800 million in the case of CMT - of their assets for development projects according to property fund guidelines, he said.
'In the past, we did not aggressively push this fourth engine. Going forward, I think that this is something we will want to explore further,' Mr Ho said at CMT's second-quarter financial results briefing at Capital Tower yesterday.
This will not only serve to provide a pipeline of new assets that can be added to its existing properties, but will also allow the Reit to achieve a higher yield on cost compared to a completed property, CMTML deputy CEO Jesline Goh added.
CMT, together with its sponsor CapitaMalls Asia, put in a joint bid of $728.8 million for a multi-purpose site in Jurong Gateway Road last month. Its bid, however, came in 3 per cent lower than that of Australia-based developer Lend Lease.
In its results, Singapore's largest Reit notched up a 7.5 per cent rise in distribution per unit (DPU) to 2.29 cents, from 2.13 cents a year earlier, driven mainly by higher rental rates for new and renewed leases and lower operating expenses.
Second-quarter distributable income also rose 7.5 per cent year-on-year to $73.1 million, while net property income gained 5.3 per cent to $98.8 million.
The trust's overall portfolio has seen strong rental reversions as the leasing market for retail space continues to show signs of strength, Mr Ho said.
'The retail sales index has been in positive territory seven months in a row if you strip away motor car sales... Consumer confidence is high and tourism is firing on all cylinders. Overall, these macro factors are good for retail,' he added.
CMT also expects higher returns on investments due to higher projected rental revenue and lower construction costs for its asset enhancement initiatives at Raffles City Singapore and JCube - the former Jurong Entertainment Centre.
However, its total portfolio valuation as of June 30 shrank by $92.7 million, owing mainly to a 17.8 per cent or $127 million devaluation of The Atrium @Orchard from $714 million as of Dec 31 last year to $587 million as of June 30.
Asset enhancement works are set for early next year, to be completed by the third quarter of 2012, to integrate The Atrium with its neighbouring mall Plaza Singapura - also part of CMT's portfolio - to create a 'seamless shopping experience'.
CMT also completed a $268 million acquisition of Clarke Quay on July 1, bringing the asset size of its 15 properties to about $8 billion as valued on June 30.
Unit holders can expect to get their second-quarter DPU on Aug 27. CMT's units remained unchanged yesterday at $1.98.
Separately, ARA Trust Management - manager of Suntec Reit - said its DPU for the second quarter fell 15.1 per cent from 2.98 cents to 2.53 cents year-on-year.
Net property income fell 2.8 per cent to $47.4 million, while distribution income dipped 3.7 per cent to $45.9 million. Gross revenue was 3.3 per cent lower at $62.4 million. Suntec Reit's units were up one cent to $1.44 yesterday.
Source: Straits Times, 23 Jul 2010
CapitaMall Trust Management (CMTML) chief executive Simon Ho said the trust can capitalise on its huge $8 billion asset size to 'selectively participate in greenfield development projects' that can add to its growth.
Real estate investment trusts (Reits) are allowed to use up to 10 per cent - or $800 million in the case of CMT - of their assets for development projects according to property fund guidelines, he said.
'In the past, we did not aggressively push this fourth engine. Going forward, I think that this is something we will want to explore further,' Mr Ho said at CMT's second-quarter financial results briefing at Capital Tower yesterday.
This will not only serve to provide a pipeline of new assets that can be added to its existing properties, but will also allow the Reit to achieve a higher yield on cost compared to a completed property, CMTML deputy CEO Jesline Goh added.
CMT, together with its sponsor CapitaMalls Asia, put in a joint bid of $728.8 million for a multi-purpose site in Jurong Gateway Road last month. Its bid, however, came in 3 per cent lower than that of Australia-based developer Lend Lease.
In its results, Singapore's largest Reit notched up a 7.5 per cent rise in distribution per unit (DPU) to 2.29 cents, from 2.13 cents a year earlier, driven mainly by higher rental rates for new and renewed leases and lower operating expenses.
Second-quarter distributable income also rose 7.5 per cent year-on-year to $73.1 million, while net property income gained 5.3 per cent to $98.8 million.
The trust's overall portfolio has seen strong rental reversions as the leasing market for retail space continues to show signs of strength, Mr Ho said.
'The retail sales index has been in positive territory seven months in a row if you strip away motor car sales... Consumer confidence is high and tourism is firing on all cylinders. Overall, these macro factors are good for retail,' he added.
CMT also expects higher returns on investments due to higher projected rental revenue and lower construction costs for its asset enhancement initiatives at Raffles City Singapore and JCube - the former Jurong Entertainment Centre.
However, its total portfolio valuation as of June 30 shrank by $92.7 million, owing mainly to a 17.8 per cent or $127 million devaluation of The Atrium @Orchard from $714 million as of Dec 31 last year to $587 million as of June 30.
Asset enhancement works are set for early next year, to be completed by the third quarter of 2012, to integrate The Atrium with its neighbouring mall Plaza Singapura - also part of CMT's portfolio - to create a 'seamless shopping experience'.
CMT also completed a $268 million acquisition of Clarke Quay on July 1, bringing the asset size of its 15 properties to about $8 billion as valued on June 30.
Unit holders can expect to get their second-quarter DPU on Aug 27. CMT's units remained unchanged yesterday at $1.98.
Separately, ARA Trust Management - manager of Suntec Reit - said its DPU for the second quarter fell 15.1 per cent from 2.98 cents to 2.53 cents year-on-year.
Net property income fell 2.8 per cent to $47.4 million, while distribution income dipped 3.7 per cent to $45.9 million. Gross revenue was 3.3 per cent lower at $62.4 million. Suntec Reit's units were up one cent to $1.44 yesterday.
Source: Straits Times, 23 Jul 2010
Tuesday, July 20, 2010
K-Reit net property income up 49% in Q2, but DPU falls 38%
It buys office, retail space in Sydney building for A$120 million
K-REIT Asia has acquired office and retail space at 77 King Street in Sydney, Australia, for A$120 million (S$145 million).
The trust announced the move yesterday - as well as improved results for the second quarter ended June 30. Boosted by recent acquisitions, net property income (NPI) jumped 49 per cent from a year back to $18.4 million. This raised distributable income to unit-holders 26 per cent to $22 million.
Distribution per unit (DPU) was 1.64 cents, falling 38 per cent from 2.64 cents a year ago as the unit base expanded due to a $620 million rights issue last November.
Adjusting for the rights issue, DPU in Q2 last year would have been 1.32 cents. Based on this, DPU would have risen 24 per cent year-on-year.
K-Reit's latest purchase at 77 King Street comes hot on the heels of two other deals. It bought a 50 per cent stake in 275 George Street in Brisbane early this year, and an additional 29 per cent interest in Singapore's Prudential Tower late last year.
77 King Street is in Sydney's central business district and is owned by Kingvest Pty. K-Reit bought an 18-storey office block with 130,394 sq ft of space, and part of a retail component with 16,856 sq ft of space.
Rents at the property are around A$570 per sq metre a year - at the lower end of market rates - but the seller will provide K-Reit with an NPI guarantee of up to A$4 million for six years. The leases also come with fixed annual rental escalations.
The space will be fully leased by the time the acquisition is complete in Q4. Key tenants include CapGemini Australia and Fitch Australia.
K-Reit will fund the purchase with equity from its rights issue and debt. Its aggregate leverage at June 30 was 15.2 per cent, and is expected to rise to 20.4 per cent after the Sydney deal is done.
For the first half ended June 30, K-Reit's NPI surged 40 per cent year on year to $32.3 million. Distributable income to unit-holders rose 20 per cent to $39.8 million.
DPU was 2.97 cents, down 41 per cent from five cents a year ago - also because of the rights issue. Adjusting for that, DPU last year would have been 2.49 cents, reflecting a 19 per cent year-on-year rise.
For the period Jan 1 to June 30, unit-holders will receive a distribution of 2.97 cents on Aug 26.
The chief executive of K-Reit's manager, Ng Hsueh Ling, is upbeat. The Singapore office market is likely to have 'passed the trough' and the Reit has seen more sign-ons, she said at a briefing yesterday.
As at June 30, K-Reit's portfolio occupancy rate was 97.9 per cent, up from 96 per cent a quarter earlier.
But the portfolio's average gross monthly rent dipped slightly to $8.19 psf from $8.30 psf. According to Ms Ng, this was the result of a lease restructuring. K-Reit had negotiated for the extension of some leases and offered slightly lower rents in return, so lease expiries would be spread out better.
Source: Business Times, 20 Jul 2010
K-REIT Asia has acquired office and retail space at 77 King Street in Sydney, Australia, for A$120 million (S$145 million).
The trust announced the move yesterday - as well as improved results for the second quarter ended June 30. Boosted by recent acquisitions, net property income (NPI) jumped 49 per cent from a year back to $18.4 million. This raised distributable income to unit-holders 26 per cent to $22 million.
Distribution per unit (DPU) was 1.64 cents, falling 38 per cent from 2.64 cents a year ago as the unit base expanded due to a $620 million rights issue last November.
Adjusting for the rights issue, DPU in Q2 last year would have been 1.32 cents. Based on this, DPU would have risen 24 per cent year-on-year.
K-Reit's latest purchase at 77 King Street comes hot on the heels of two other deals. It bought a 50 per cent stake in 275 George Street in Brisbane early this year, and an additional 29 per cent interest in Singapore's Prudential Tower late last year.
77 King Street is in Sydney's central business district and is owned by Kingvest Pty. K-Reit bought an 18-storey office block with 130,394 sq ft of space, and part of a retail component with 16,856 sq ft of space.
Rents at the property are around A$570 per sq metre a year - at the lower end of market rates - but the seller will provide K-Reit with an NPI guarantee of up to A$4 million for six years. The leases also come with fixed annual rental escalations.
The space will be fully leased by the time the acquisition is complete in Q4. Key tenants include CapGemini Australia and Fitch Australia.
K-Reit will fund the purchase with equity from its rights issue and debt. Its aggregate leverage at June 30 was 15.2 per cent, and is expected to rise to 20.4 per cent after the Sydney deal is done.
For the first half ended June 30, K-Reit's NPI surged 40 per cent year on year to $32.3 million. Distributable income to unit-holders rose 20 per cent to $39.8 million.
DPU was 2.97 cents, down 41 per cent from five cents a year ago - also because of the rights issue. Adjusting for that, DPU last year would have been 2.49 cents, reflecting a 19 per cent year-on-year rise.
For the period Jan 1 to June 30, unit-holders will receive a distribution of 2.97 cents on Aug 26.
The chief executive of K-Reit's manager, Ng Hsueh Ling, is upbeat. The Singapore office market is likely to have 'passed the trough' and the Reit has seen more sign-ons, she said at a briefing yesterday.
As at June 30, K-Reit's portfolio occupancy rate was 97.9 per cent, up from 96 per cent a quarter earlier.
But the portfolio's average gross monthly rent dipped slightly to $8.19 psf from $8.30 psf. According to Ms Ng, this was the result of a lease restructuring. K-Reit had negotiated for the extension of some leases and offered slightly lower rents in return, so lease expiries would be spread out better.
Source: Business Times, 20 Jul 2010
Monday, July 19, 2010
K-REIT Asia Q2 distribution per unit jumps 24.2%
K-REIT Asia says its second quarter distribution per unit rose 24.2 per cent to 1.64 Singapore cents compared to a restated DPU of 1.32 cents recorded in the same period last year.
Distributable income for the three months ended June, rose 25.5 per cent to about S$22 million due mainly to higher net property income and lower interest expense.
For the first half, K-REIT announced a DPU of 2.97 cents, a 19.3 per cent increase on year.
Distributable income for the first half came in at S$39.8 million, a 20 per cent jump compared to a year ago.
Meanwhile, net property income for the group in the first half increased 39.5 per cent year on year to S$32.3 million.
This was mainly due to contributions from its additional six floors of Prudential Towers and its George Street property in Brisbane, Australia.
The Keppel Land sponsored REIT says it is well-positioned to benefit from the strong economic growth in Singapore, positive office sector and increased pace of white collared employment going forward.
K-REIT Asia had a portfolio size of S$2.3 billion as at June 30 this year.
Source: Channel News Asia, 19 Jul 2010
Distributable income for the three months ended June, rose 25.5 per cent to about S$22 million due mainly to higher net property income and lower interest expense.
For the first half, K-REIT announced a DPU of 2.97 cents, a 19.3 per cent increase on year.
Distributable income for the first half came in at S$39.8 million, a 20 per cent jump compared to a year ago.
Meanwhile, net property income for the group in the first half increased 39.5 per cent year on year to S$32.3 million.
This was mainly due to contributions from its additional six floors of Prudential Towers and its George Street property in Brisbane, Australia.
The Keppel Land sponsored REIT says it is well-positioned to benefit from the strong economic growth in Singapore, positive office sector and increased pace of white collared employment going forward.
K-REIT Asia had a portfolio size of S$2.3 billion as at June 30 this year.
Source: Channel News Asia, 19 Jul 2010
Saturday, July 17, 2010
A-Reit posts 3.5% rise in Q1 distributable income
ASCENDAS Real Estate Investment Trust (A-Reit) has posted a 3.5 per cent rise in distributable income to $63.1 million for its first quarter ended June 30, up from $61 million a year earlier.
The period saw net property income climb 8.2 per cent year-on- year to $87.3 million and gross revenue up 10.9 per cent at $113.6 million.
But distribution per unit (DPU) for Q1 - which had a bigger unit base - fell 6.9 per cent to 3.37 cents, from 3.62 cents a year ago. The Q1 DPU was up 3.4 per cent compared with a proforma DPU of 3.26 cents a year ago, which included new units issued in the August 2009 placement, in lieu of base management fee in December 2009 and June 2010 and for payment of acquisition fee in June 2010.
Net property income growth could have been higher if not for higher operating expenses attributed to the enlarged portfolio, higher utilities expenses, and the end of land rent rebates given by the government in 2009.
'We are pleased to commence the financial year with a 10.9 per cent growth in gross revenue contributed mainly by the larger portfolio base from a year ago,' said Tan Ser Ping, chief executive officer of A-Reit's manager, Ascendas Funds Management (S) Limited.
Occupancy rate for the portfolio in Q1 has remained stable at 95.6 per cent.
Also, rental reversion on lease renewal continued to be positive for the Business & Science Parks and Hi-Tech Industrial properties in the first quarter.
Jonathan Ng from DMG & Partners Research said: 'We maintain our FY11 DPU forecast of 13.7 cents as dividends are well supported by the long-term leases.'
A-Reit is currently developing a partial built-to-suit business park facility in Changi Business Park for Citibank.
As at June 30, 2010, A-Reit's portfolio consists of 92 properties and a total asset value of about $4.9 billion.
A-Reit's manager aims to at least maintain the previous financial year's level of net income for FY2010/11.
The counter closed two cents higher yesterday at $2 per share.
Source: Business Times, 17 Jul 2010
The period saw net property income climb 8.2 per cent year-on- year to $87.3 million and gross revenue up 10.9 per cent at $113.6 million.
But distribution per unit (DPU) for Q1 - which had a bigger unit base - fell 6.9 per cent to 3.37 cents, from 3.62 cents a year ago. The Q1 DPU was up 3.4 per cent compared with a proforma DPU of 3.26 cents a year ago, which included new units issued in the August 2009 placement, in lieu of base management fee in December 2009 and June 2010 and for payment of acquisition fee in June 2010.
Net property income growth could have been higher if not for higher operating expenses attributed to the enlarged portfolio, higher utilities expenses, and the end of land rent rebates given by the government in 2009.
'We are pleased to commence the financial year with a 10.9 per cent growth in gross revenue contributed mainly by the larger portfolio base from a year ago,' said Tan Ser Ping, chief executive officer of A-Reit's manager, Ascendas Funds Management (S) Limited.
Occupancy rate for the portfolio in Q1 has remained stable at 95.6 per cent.
Also, rental reversion on lease renewal continued to be positive for the Business & Science Parks and Hi-Tech Industrial properties in the first quarter.
Jonathan Ng from DMG & Partners Research said: 'We maintain our FY11 DPU forecast of 13.7 cents as dividends are well supported by the long-term leases.'
A-Reit is currently developing a partial built-to-suit business park facility in Changi Business Park for Citibank.
As at June 30, 2010, A-Reit's portfolio consists of 92 properties and a total asset value of about $4.9 billion.
A-Reit's manager aims to at least maintain the previous financial year's level of net income for FY2010/11.
The counter closed two cents higher yesterday at $2 per share.
Source: Business Times, 17 Jul 2010
Friday, July 16, 2010
CapitaCommercial Trust sells StarHub Centre to Frasers Centrepoint
CapitaCommercial Trust (CCT) is selling the StarHub Centre to Frasers Centrepoint for S$380 million in cash.
StarHub Centre is a 10-storey non-Grade A office building with retail space next to FCL’s Centrepoint mall.
It currently has a committed occupancy of 68.2 per cent and some 280,000 square feet of lettable space.
The current lease for the site expires in January 2095.
CCT disclosed that it has received in-principle approval from the Singapore Land Authority to top up the lease to 99 years, subject to the payment of a differential premium.
Earlier this year, the Urban Redevelopment Authority gave its approval for the building to be converted into a residential block.
But 20 per cent to 40 per cent of the gross floor area must be retained for commercial use.
CCT expects to make approximately S$375.8 million from the deal after transaction costs.
StarHub Centre was last valued at S$266.7 million by CB Richard Ellis in June this year.
Frasers Centrepoint CEO Lim Ee Seng said that with its strategic location in the heart of Orchard Road, the StarHub Centre has great redevelopment potential for a high-end mixed residential and retail development.
Source: Channel News Asia, 16 Jul 2010
StarHub Centre is a 10-storey non-Grade A office building with retail space next to FCL’s Centrepoint mall.
It currently has a committed occupancy of 68.2 per cent and some 280,000 square feet of lettable space.
The current lease for the site expires in January 2095.
CCT disclosed that it has received in-principle approval from the Singapore Land Authority to top up the lease to 99 years, subject to the payment of a differential premium.
Earlier this year, the Urban Redevelopment Authority gave its approval for the building to be converted into a residential block.
But 20 per cent to 40 per cent of the gross floor area must be retained for commercial use.
CCT expects to make approximately S$375.8 million from the deal after transaction costs.
StarHub Centre was last valued at S$266.7 million by CB Richard Ellis in June this year.
Frasers Centrepoint CEO Lim Ee Seng said that with its strategic location in the heart of Orchard Road, the StarHub Centre has great redevelopment potential for a high-end mixed residential and retail development.
Source: Channel News Asia, 16 Jul 2010
Tuesday, July 13, 2010
PLife REIT buys 5 new nursing home properties in Japan for S$46.8m
Mainboard-listed healthcare trust Parkway Life REIT (PLife REIT) has acquired five new nursing home properties in Japan for some S$46.8 million.
The properties will be bought from Yugen Kaisha, which is a subsidiary of Kenedix, a real estate asset manager in Japan.
PLife REIT had previously acquired 15 nursing home properties from Kenedix.
It said it is buying the properties because they are well-equipped, in good physical condition and strategically situated in dense residential districts.
PLife REIT added that each of the properties has a long term lease agreement with the operators, with a weighted average lease term to expiry of 17.45 years
It also said the stability of the overall portfolio will be further enhanced with backup operator agreements to be secured for the properties.
Furthermore, PLife REIT said Yugen Kaisha will provide a rental income guarantee in respect of the properties for a period of seven years capped at 5 percent of the purchase price.
Such a move will offer protection to PLife REIT and provides certainty for PLife REIT’s future distributions to its unitholders.
The acquisition is expected to be fully funded via a five-year committed unsecured revolving credit facility of up to S$48.5 million.
PLife REIT is expected to enter into an interest rate swap to hedge the interest rate for five years.
Source: Channel News Asia, 13 Jul 2010
The properties will be bought from Yugen Kaisha, which is a subsidiary of Kenedix, a real estate asset manager in Japan.
PLife REIT had previously acquired 15 nursing home properties from Kenedix.
It said it is buying the properties because they are well-equipped, in good physical condition and strategically situated in dense residential districts.
PLife REIT added that each of the properties has a long term lease agreement with the operators, with a weighted average lease term to expiry of 17.45 years
It also said the stability of the overall portfolio will be further enhanced with backup operator agreements to be secured for the properties.
Furthermore, PLife REIT said Yugen Kaisha will provide a rental income guarantee in respect of the properties for a period of seven years capped at 5 percent of the purchase price.
Such a move will offer protection to PLife REIT and provides certainty for PLife REIT’s future distributions to its unitholders.
The acquisition is expected to be fully funded via a five-year committed unsecured revolving credit facility of up to S$48.5 million.
PLife REIT is expected to enter into an interest rate swap to hedge the interest rate for five years.
Source: Channel News Asia, 13 Jul 2010
Tuesday, July 6, 2010
CMA buys Metro's Gurney Plaza Extension for RM215m
CMA to grant CMMT right of first refusal to acquire Gurney Plaza Extension
METRO Holdings has announced that it exercised its put option to require CapitaRetail Gurney to acquire its interest in the 134,549-sq-ft retail property Gurney Plaza Extension in Penang for RM215 million ($92.9 million).
In 2007, CapitaLand acquired the 700,000-sq-ft Gurney Plaza for $336.8 million. At the time, it said it would form the seed assets for its proposed Malaysian retail real estate investment trust (Reit).
Metro Holdings said the consideration for the disposal of Gurney Plaza Extension was arrived at by negotiations on a willing seller, willing buyer basis and is to be wholly satisfied in cash.
Metro Holdings said that net proceeds of the divestment will be added to the working capital of the group and used to build on the group's presence and investment in the region.
Gurney Plaza Extension is a nine-storey retail block located along Gurney Drive in Penang. It is part of the Gurney Park development.
Separately, CapitaMalls Asia (CMA) said yesterday that it will be granting CapitaMalls Malaysia Trust (CMMT) a right of first refusal to acquire Gurney Plaza Extension after the finalisation of all the terms and conditions of the acquisition.
CMA announced in June that it would make an RM848 million initial public offering (IPO) for Malaysia's largest 'pure-play' shopping mall Reit.
CMA said that CMMT is still in the midst of its IPO and is likely to make a decision on whether to acquire Gurney Plaza Extension only after its listing on Bursa Malaysia Securities Berhad, the securities exchange of Malaysia.
The units for CMMT are tentatively priced at RM1.08 each, although the final price could change as it will be determined only after a book-building exercise undertaken by the listing's joint global coordinators, CIMB and JPMorgan.
CMMT's prospectus expects the trust to be the largest Reit on the Kuala Lumpur stock exchange with a market capitalisation of RM1.46 billion on an asset base of RM2.13 billion. It will also be the most liquid with a free float of up to 67 per cent.
Metro Holdings said that the divestment is not expected to have any significant impact on the consolidated net tangible asset per share and the consolidated earnings per share of the Metro Group for the year ending March 31, 2011.
Source: Business Times, 6 Jul 2010
METRO Holdings has announced that it exercised its put option to require CapitaRetail Gurney to acquire its interest in the 134,549-sq-ft retail property Gurney Plaza Extension in Penang for RM215 million ($92.9 million).
In 2007, CapitaLand acquired the 700,000-sq-ft Gurney Plaza for $336.8 million. At the time, it said it would form the seed assets for its proposed Malaysian retail real estate investment trust (Reit).
Metro Holdings said the consideration for the disposal of Gurney Plaza Extension was arrived at by negotiations on a willing seller, willing buyer basis and is to be wholly satisfied in cash.
Metro Holdings said that net proceeds of the divestment will be added to the working capital of the group and used to build on the group's presence and investment in the region.
Gurney Plaza Extension is a nine-storey retail block located along Gurney Drive in Penang. It is part of the Gurney Park development.
Separately, CapitaMalls Asia (CMA) said yesterday that it will be granting CapitaMalls Malaysia Trust (CMMT) a right of first refusal to acquire Gurney Plaza Extension after the finalisation of all the terms and conditions of the acquisition.
CMA announced in June that it would make an RM848 million initial public offering (IPO) for Malaysia's largest 'pure-play' shopping mall Reit.
CMA said that CMMT is still in the midst of its IPO and is likely to make a decision on whether to acquire Gurney Plaza Extension only after its listing on Bursa Malaysia Securities Berhad, the securities exchange of Malaysia.
The units for CMMT are tentatively priced at RM1.08 each, although the final price could change as it will be determined only after a book-building exercise undertaken by the listing's joint global coordinators, CIMB and JPMorgan.
CMMT's prospectus expects the trust to be the largest Reit on the Kuala Lumpur stock exchange with a market capitalisation of RM1.46 billion on an asset base of RM2.13 billion. It will also be the most liquid with a free float of up to 67 per cent.
Metro Holdings said that the divestment is not expected to have any significant impact on the consolidated net tangible asset per share and the consolidated earnings per share of the Metro Group for the year ending March 31, 2011.
Source: Business Times, 6 Jul 2010
Monday, July 5, 2010
Proposed divestment of Gurney Plaza Extension to CapitaMalls Asia
CapitaMalls Asia (CMA) is buying a Malaysian mall from an associate firm of Metro for S$91.5 million after the Metro unit exercised a put option.
The move by Metro’s Gurney Plaza requires CMA’s CapitaRetail Gurney to buy the property called Gurney Plaza Extension.
Located in Penang, Gurney Plaza Extension is a nine storey retail block.
It is part of the Gurney Park development and has about 12,500 square metres of net lettable area.
As at March 31, the mall enjoyed some 98.7 per cent occupancy.
Metro said it is divesting the property as Gurney Plaza Extension has since matured and now has a stable rental income.
Metro said net proceeds of the divestment will be added to the working capital of the group.
It will also be used to build on the Metro Group’s presence and investment in the region.
Under the terms of the deal, CMA is required to complete the acquisition by 15 April 2011.
CMA said it has designated CapitaMalls Malaysia Trust or CMMT as its listed vehicle to hold its stabilised Malaysian retail assets.
It will be granting CMMT a right of first refusal to acquire Gurney Plaza Extension after the finalisation of all the terms and conditions of the acquisition.
Source: Channel News Asia, 5 Jul 2010
The move by Metro’s Gurney Plaza requires CMA’s CapitaRetail Gurney to buy the property called Gurney Plaza Extension.
Located in Penang, Gurney Plaza Extension is a nine storey retail block.
It is part of the Gurney Park development and has about 12,500 square metres of net lettable area.
As at March 31, the mall enjoyed some 98.7 per cent occupancy.
Metro said it is divesting the property as Gurney Plaza Extension has since matured and now has a stable rental income.
Metro said net proceeds of the divestment will be added to the working capital of the group.
It will also be used to build on the Metro Group’s presence and investment in the region.
Under the terms of the deal, CMA is required to complete the acquisition by 15 April 2011.
CMA said it has designated CapitaMalls Malaysia Trust or CMMT as its listed vehicle to hold its stabilised Malaysian retail assets.
It will be granting CMMT a right of first refusal to acquire Gurney Plaza Extension after the finalisation of all the terms and conditions of the acquisition.
Source: Channel News Asia, 5 Jul 2010
Tuesday, June 29, 2010
CapitaMalls Malaysia Trust launches IPO
CapitaMalls Asia could raise RM864m from spin-off's retail offering
CAPITAMALLS Malaysia Trust (CMMT) launched its retail offering yesterday as part of its listing on Malaysia's main share market.
The real estate investment trust (Reit) has been spun off from CapitaMalls Asia and will contain the parent company's three Malaysian malls.
It is offering 786.5 million units to institutional investors in Malaysia and overseas as well as Malaysian retail investors. The units will not be available to retail investors here.
About 719 million of the units will be offered to institutions, and the indicative price is RM1.10 (47 Singapore cents). There are 67.5 million units earmarked for Malaysian retail investors at a maximum price of RM1.08.
The price levels suggest CapitaMalls Asia could raise as much as RM863.8 million from the initial public offering (IPO).
The retail offering opened at 10am yesterday and will close at 5pm next Monday.
The institutional offering opened last Friday and will close next Wednesday.
CapitaMalls Malaysia Trust is expected to list on July 16.
CapitaMalls Malaysia Reit Management (CMRM) chairman Kee Teck Koon said in a statement that the listing of CapitaMalls Malaysia Trust will provide access to capital markets and accelerate the growth of its shopping mall business in Malaysia.
CMRM is the manager of CapitaMalls Malaysia Trust.
CMRM chief executive Sharon Lim said: 'Going forward, the fragmented ownership of shopping malls in Malaysia presents opportunities for growth through acquisition.'
CapitaMalls Asia will retain a stake of 41.74 per cent in CMMT, but if an over-allotment option of up to 117.98 million units is exercised, its stake could go down to 33 per cent.
The Employees Provident Fund Board of Malaysia and Great Eastern Life Assurance (Malaysia) have signed up as cornerstone investors in the IPO. They will subscribe to an aggregate of 90 million units, or 11.4 per cent of the 786.5 million units being offered in total.
They have agreed to pay RM1.10 per unit or the institutional price, whichever is lower.
Bloomberg said the CMMT offering is set to become Malaysia's second-biggest IPO this year while the Trust says it will become the largest 'pure-play' shopping mall Reit in Malaysia.
AmTrustee, which is the CMMT trustee, values the shopping mall portfolio at RM2.13 billion.
The assets are Gurney Plaza in Penang, The Mines in Selangor, as well as an interest in Sungei Wang Plaza in Kuala Lumpur. The portfolio has a total net lettable area of approximately 1.88 million sq ft.
At the indicative price of RM1.08, the retail offer will provide a forecast distribution yield of 6.9 per cent for 2011, said CMMT.
CMMT's market capitalisation is expected to be about RM1.4 billion, it added.
The CMMT statement said that CapitaMalls Asia plans to have a Malaysia retail property fund to acquire and develop property, especially malls in the country.
CapitaMalls Asia lost two cents to $2.14 yesterday.
Source: Straits Times, 29 Jun 2010
CAPITAMALLS Malaysia Trust (CMMT) launched its retail offering yesterday as part of its listing on Malaysia's main share market.
The real estate investment trust (Reit) has been spun off from CapitaMalls Asia and will contain the parent company's three Malaysian malls.
It is offering 786.5 million units to institutional investors in Malaysia and overseas as well as Malaysian retail investors. The units will not be available to retail investors here.
About 719 million of the units will be offered to institutions, and the indicative price is RM1.10 (47 Singapore cents). There are 67.5 million units earmarked for Malaysian retail investors at a maximum price of RM1.08.
The price levels suggest CapitaMalls Asia could raise as much as RM863.8 million from the initial public offering (IPO).
The retail offering opened at 10am yesterday and will close at 5pm next Monday.
The institutional offering opened last Friday and will close next Wednesday.
CapitaMalls Malaysia Trust is expected to list on July 16.
CapitaMalls Malaysia Reit Management (CMRM) chairman Kee Teck Koon said in a statement that the listing of CapitaMalls Malaysia Trust will provide access to capital markets and accelerate the growth of its shopping mall business in Malaysia.
CMRM is the manager of CapitaMalls Malaysia Trust.
CMRM chief executive Sharon Lim said: 'Going forward, the fragmented ownership of shopping malls in Malaysia presents opportunities for growth through acquisition.'
CapitaMalls Asia will retain a stake of 41.74 per cent in CMMT, but if an over-allotment option of up to 117.98 million units is exercised, its stake could go down to 33 per cent.
The Employees Provident Fund Board of Malaysia and Great Eastern Life Assurance (Malaysia) have signed up as cornerstone investors in the IPO. They will subscribe to an aggregate of 90 million units, or 11.4 per cent of the 786.5 million units being offered in total.
They have agreed to pay RM1.10 per unit or the institutional price, whichever is lower.
Bloomberg said the CMMT offering is set to become Malaysia's second-biggest IPO this year while the Trust says it will become the largest 'pure-play' shopping mall Reit in Malaysia.
AmTrustee, which is the CMMT trustee, values the shopping mall portfolio at RM2.13 billion.
The assets are Gurney Plaza in Penang, The Mines in Selangor, as well as an interest in Sungei Wang Plaza in Kuala Lumpur. The portfolio has a total net lettable area of approximately 1.88 million sq ft.
At the indicative price of RM1.08, the retail offer will provide a forecast distribution yield of 6.9 per cent for 2011, said CMMT.
CMMT's market capitalisation is expected to be about RM1.4 billion, it added.
The CMMT statement said that CapitaMalls Asia plans to have a Malaysia retail property fund to acquire and develop property, especially malls in the country.
CapitaMalls Asia lost two cents to $2.14 yesterday.
Source: Straits Times, 29 Jun 2010
Friday, June 25, 2010
CCT evaluating all options for StarHub Centre
Part of this process is a non-legally binding expression of interest exercise
THE manager of CapitaCommercial Trust (CCT) is evaluating all options relating to its asset plan for StarHub Centre, including the possibility of retaining the property as an office building, and has not made a decision yet.
'As part of the evaluation process, we conducted a non-legally binding expression of interest exercise to ascertain interest for the sale of the property.
As there is no certainty of any deal materialising, unitholders are advised to exercise caution in trading the units of CCT,' CCT said in a statutory filing to Singapore Exchange (SGX) yesterday.
Its announcement was in response to a BT article yesterday which, citing sources, said that the trust could be close to selling the 10-storey commercial building.
BT reported that StarHub Centre's transaction price was expected to be above the Dec 31, 2009, valuation of $268 million.
In its statement yesterday, CCT said that its manager had in January 2010 announced that, as part of its portfolio reconstitution plan for the trust, it had obtained outline planning permission from Urban Redevelopment Authority (URA) to convert StarHub Centre from pure commercial use to up to 80 per cent residential and 20 per cent commercial use.
BT reported yesterday that the expression of interest exercise for StarHub Centre closed last month and that parties had been shortlisted to do due diligence.
The outline permission granted by URA for a mostly residential project is capped at the current 4.9 plot ratio that the existing property is already built up to.
Based on this and the 80 per cent residential limit, a redevelopment scheme can yield about 266,230 sq ft of residential space, sufficient for 212 apartments of an average size of 1,200 sq ft, the BT report estimated.
StarHub Centre received Temporary Occupation Permit in 1998 and stands on a site with 99-year leasehold tenure starting Feb 1, 1996.
On the stock market yesterday, CCT ended one cent lower at $1.17 amid an overall weaker market.
Source: Business Times, 25 Jun 2010
THE manager of CapitaCommercial Trust (CCT) is evaluating all options relating to its asset plan for StarHub Centre, including the possibility of retaining the property as an office building, and has not made a decision yet.
'As part of the evaluation process, we conducted a non-legally binding expression of interest exercise to ascertain interest for the sale of the property.
As there is no certainty of any deal materialising, unitholders are advised to exercise caution in trading the units of CCT,' CCT said in a statutory filing to Singapore Exchange (SGX) yesterday.
Its announcement was in response to a BT article yesterday which, citing sources, said that the trust could be close to selling the 10-storey commercial building.
BT reported that StarHub Centre's transaction price was expected to be above the Dec 31, 2009, valuation of $268 million.
In its statement yesterday, CCT said that its manager had in January 2010 announced that, as part of its portfolio reconstitution plan for the trust, it had obtained outline planning permission from Urban Redevelopment Authority (URA) to convert StarHub Centre from pure commercial use to up to 80 per cent residential and 20 per cent commercial use.
BT reported yesterday that the expression of interest exercise for StarHub Centre closed last month and that parties had been shortlisted to do due diligence.
The outline permission granted by URA for a mostly residential project is capped at the current 4.9 plot ratio that the existing property is already built up to.
Based on this and the 80 per cent residential limit, a redevelopment scheme can yield about 266,230 sq ft of residential space, sufficient for 212 apartments of an average size of 1,200 sq ft, the BT report estimated.
StarHub Centre received Temporary Occupation Permit in 1998 and stands on a site with 99-year leasehold tenure starting Feb 1, 1996.
On the stock market yesterday, CCT ended one cent lower at $1.17 amid an overall weaker market.
Source: Business Times, 25 Jun 2010
Thursday, June 24, 2010
Outlook for Asia-Pac Reits better
Survey: more expect existing Reits to expand and new ones to be launched
THE outlook for Asia-Pacific real estate investment trusts (Reits) has improved significantly this year, going by a poll of property market players.
More respondents expect existing Reits to expand and new ones to come on stream. Many also see Singapore offering the most potential for Reits to develop.
Corporate trustee The Trust Company and law firm Baker & McKenzie conducted the 2010 Asia-Pacific Reit Survey from January to March, polling 140 people including property owners and fund managers.
Asked to predict what the Reit industries in 13 Asia-Pacific markets such as Singapore, Australia and Japan will look like in the next one to two years, 47 per cent of respondents said that existing Reits will grow in size. Another 20 per cent expect to see companies launch additional Reits.
The proportion of optimists this year is far larger than that last year. When the survey was conducted during the economic downturn, just 20 per cent of respondents thought existing Reits would expand, and a mere 3 per cent felt that there would be new ones.
'Although the short term outlook has not recovered to pre-global financial crisis levels, positive sentiment is improving,' the survey owners said in a report.
Respondents also rated the 13 markets on their potential for Reits, and Singapore retained pole position from last year with the highest median score of 62 out of 100.
Australia was a close second with 61 points, and China came in third with a score of 56. Hong Kong was in fourth place and Japan ranked ninth.
Participants assessed real estate growth prospects, opportunities and regulatory support in the 13 markets to arrive at the scores. Singapore came out tops in offering regulatory support, but seemed less attractive than China, India and Australia in terms of how much its property sector could grow.
There is 'strong opportunity in China but it will take a while before things happen as China's legal and tax framework needs to be developed a lot more to make a Reit successful', the survey owners said.
Meanwhile, respondents see 'adverse taxation developments' as the biggest threat to Reits. What they feared most last year were the 'effects of financial engineering'.
Source: Business Times, 24 Jun 2010
THE outlook for Asia-Pacific real estate investment trusts (Reits) has improved significantly this year, going by a poll of property market players.
More respondents expect existing Reits to expand and new ones to come on stream. Many also see Singapore offering the most potential for Reits to develop.
Corporate trustee The Trust Company and law firm Baker & McKenzie conducted the 2010 Asia-Pacific Reit Survey from January to March, polling 140 people including property owners and fund managers.
Asked to predict what the Reit industries in 13 Asia-Pacific markets such as Singapore, Australia and Japan will look like in the next one to two years, 47 per cent of respondents said that existing Reits will grow in size. Another 20 per cent expect to see companies launch additional Reits.
The proportion of optimists this year is far larger than that last year. When the survey was conducted during the economic downturn, just 20 per cent of respondents thought existing Reits would expand, and a mere 3 per cent felt that there would be new ones.
'Although the short term outlook has not recovered to pre-global financial crisis levels, positive sentiment is improving,' the survey owners said in a report.
Respondents also rated the 13 markets on their potential for Reits, and Singapore retained pole position from last year with the highest median score of 62 out of 100.
Australia was a close second with 61 points, and China came in third with a score of 56. Hong Kong was in fourth place and Japan ranked ninth.
Participants assessed real estate growth prospects, opportunities and regulatory support in the 13 markets to arrive at the scores. Singapore came out tops in offering regulatory support, but seemed less attractive than China, India and Australia in terms of how much its property sector could grow.
There is 'strong opportunity in China but it will take a while before things happen as China's legal and tax framework needs to be developed a lot more to make a Reit successful', the survey owners said.
Meanwhile, respondents see 'adverse taxation developments' as the biggest threat to Reits. What they feared most last year were the 'effects of financial engineering'.
Source: Business Times, 24 Jun 2010
Wednesday, June 23, 2010
Harder for Reits to find good property
THE global recovery is making it easier to raise money for real estate investment trusts (Reits) but harder to find good properties to buy, according to industry experts.
They said the credit crunch affected many Reits over the past two years but the market is starting to recover as money flows back to rapidly growing Asia.
The difficulty now is locating attractive properties to buy. There is 'a lot of money but few big assets' in Asia, said Ascendas Funds Management chief executive Tan Ser Ping.
Reits invest in a variety of properties from industrial factories and warehouses to office buildings and shopping malls.
But office buildings are expensive to build while rents in Singapore and Shanghai are experiencing a slow recovery, said Mr Ng Beng Tiong, the chief executive of ARA Managers (Asia Dragon), which manages the ARA Asia Dragon Fund. Industrial spaces are more attractive, he added.
Mr Ng said he expects China to have 'high growth rates for many years' with investment in retail space poised to surge as domestic spending rises. He and Mr Tan were speaking at the 2010 Asian Real Estate School & Symposium, organised by the Sim Kee Boon Institute for Financial Economics and held at the Singapore Management University on Monday.
Singapore is Asia's third largest Reit market after Japan and Australia, with more than 20 listed Reits.
Source: Straits Times, 23 Jun 2010
They said the credit crunch affected many Reits over the past two years but the market is starting to recover as money flows back to rapidly growing Asia.
The difficulty now is locating attractive properties to buy. There is 'a lot of money but few big assets' in Asia, said Ascendas Funds Management chief executive Tan Ser Ping.
Reits invest in a variety of properties from industrial factories and warehouses to office buildings and shopping malls.
But office buildings are expensive to build while rents in Singapore and Shanghai are experiencing a slow recovery, said Mr Ng Beng Tiong, the chief executive of ARA Managers (Asia Dragon), which manages the ARA Asia Dragon Fund. Industrial spaces are more attractive, he added.
Mr Ng said he expects China to have 'high growth rates for many years' with investment in retail space poised to surge as domestic spending rises. He and Mr Tan were speaking at the 2010 Asian Real Estate School & Symposium, organised by the Sim Kee Boon Institute for Financial Economics and held at the Singapore Management University on Monday.
Singapore is Asia's third largest Reit market after Japan and Australia, with more than 20 listed Reits.
Source: Straits Times, 23 Jun 2010
Tuesday, June 22, 2010
New listing focuses on China's real estate
A TRUST focusing exclusively on China's commercial real estate market began trading on the Singapore Exchange yesterday.
Treasury China Trust (TCT) owns three income-yielding properties in Shanghai, with another two projects - in Shanghai and Beijing - due to be completed over the next two years.
The trust is sponsored and managed by Dublin-based property group Treasury Holdings.
The properties and developments used to be held by Creo, a London-based member of the Treasury Holdings group.
TCT acquired Creo and so gained indirect control over the Chinese properties. Creo subsequently delisted from AIM, London's secondary board.
Mr Richard Barrett, chairman of Treasury Holdings Real Estate, told a briefing yesterday: 'We've decided to move the company closer to its natural investor base.
'One of the difficulties that arose with AIM was that the investors were almost wholly European.
'It's just easier for Asia-based investors to understand the dynamics of the property market in China.'
Treasury Holdings Real Estate will manage TCT.
TCT has projected a tax-free annualised distribution yield of 5.8 per cent for the financial period ending Dec 31.
It has proposed a dividend of five cents per unit for the final six months of this year.
Treasury Holdings Real Estate chief executive Richard David said a minimum of 80 per cent of net rental income will be distributed to unit holders for the first three years of TCT's listing.
The percentage will then be reduced to 50 per cent because of the expected increase in net rent and the allocation of profits to new investments.
Mr David said a maximum of 30 per cent of total assets can be under development at any one time. This is higher than the percentage for real estate investment trusts, he added, and allows TCT to capitalise on China's high growth.
The trust had a market capitalisation of $430 million as of June 14 with a portfolio valued at 9.19 billion yuan (S$1.8 billion) as of the end of last year.
Mr David said that as its Chinese properties are denominated in yuan, TCT will likely benefit from the Chinese government's announcement over the weekend that it will allow the gradual appreciation of the currency.
Trading in the mainboard-listed TCT kicked off at 2pm yesterday but no trades were completed. At the close of trade, the 'bid' price was $1.70 and the 'ask' price was $1.85.
Source: Straits Times, 22 Jun 2010
Treasury China Trust (TCT) owns three income-yielding properties in Shanghai, with another two projects - in Shanghai and Beijing - due to be completed over the next two years.
The trust is sponsored and managed by Dublin-based property group Treasury Holdings.
The properties and developments used to be held by Creo, a London-based member of the Treasury Holdings group.
TCT acquired Creo and so gained indirect control over the Chinese properties. Creo subsequently delisted from AIM, London's secondary board.
Mr Richard Barrett, chairman of Treasury Holdings Real Estate, told a briefing yesterday: 'We've decided to move the company closer to its natural investor base.
'One of the difficulties that arose with AIM was that the investors were almost wholly European.
'It's just easier for Asia-based investors to understand the dynamics of the property market in China.'
Treasury Holdings Real Estate will manage TCT.
TCT has projected a tax-free annualised distribution yield of 5.8 per cent for the financial period ending Dec 31.
It has proposed a dividend of five cents per unit for the final six months of this year.
Treasury Holdings Real Estate chief executive Richard David said a minimum of 80 per cent of net rental income will be distributed to unit holders for the first three years of TCT's listing.
The percentage will then be reduced to 50 per cent because of the expected increase in net rent and the allocation of profits to new investments.
Mr David said a maximum of 30 per cent of total assets can be under development at any one time. This is higher than the percentage for real estate investment trusts, he added, and allows TCT to capitalise on China's high growth.
The trust had a market capitalisation of $430 million as of June 14 with a portfolio valued at 9.19 billion yuan (S$1.8 billion) as of the end of last year.
Mr David said that as its Chinese properties are denominated in yuan, TCT will likely benefit from the Chinese government's announcement over the weekend that it will allow the gradual appreciation of the currency.
Trading in the mainboard-listed TCT kicked off at 2pm yesterday but no trades were completed. At the close of trade, the 'bid' price was $1.70 and the 'ask' price was $1.85.
Source: Straits Times, 22 Jun 2010
Thursday, June 17, 2010
More debt deals for A-Reits expected
(SYDNEY) Equity deals will take a back seat to debt issuance for Australia's property trusts this year, as they seek to diversify funding sources, a UBS UBS.VX UBS.N executive said on Wednesday.
Initial public offerings (IPO) for office properties may have to wait till 2011, when office property trusts could start trading at or above their net tangible asset (NTA) prices, Tim Church, managing director, head of real estate Australia for UBS, told the Reuters Global Real Esate and Infrastructure Summit.
'We would expect to see a whole lot of bond issuances,' he said. 'For the moment, we're done with broad-based equity issuance. The recapitalisation has largely occured.' One of the popular instruments will be convertible bonds, a type of bond that the holder can convert into shares.
'We have started to see the CMBS (commercial mortgage-backed securities) market start to open again. And we expect hybrid and convertibles to be more frequently used as well. It's proven to be a very cost effective form of equity,' Mr Church said.
'I think it will be a combination of replacing debt and, I think, some of them will be for new acquisitions or developments,' he added.
There have been reports in local media that Brookfield Multiplex, a subsidiary of Canada's Brookfield Asset Management, and private property developer Grocon may list their office assets.
Mr Church said these offerings may face headwinds as existing office trusts were trading on average at about a 25 per cent discount to net tangible assets (NTA), making it tough for newcomers to get their IPOs off the ground.
'It makes it very difficult for managers to get an IPO up unless they are willing to sacrifice the value of the portfolio substantially to make it attractive for investors to commit,' he said.
He added these IPOs may wait until share prices recover to reasonable levels. 'I would expect that during 2011 is a period that we start to see them trading back at or above NTA,' he added.
Morgan Stanley's Australian real estate unit, Investa Property Group, scrapped its IPO plan last November as the offer price did not meet investors' expectations.
Australian REIT (real estate investment trust) shares were hammered during the global credit crisis with the A-REIT index .AXPJ tumbling more than 70 per cent. But after raising nearly A$20 billion (S$24 billion) of capital in 2008 and 2009, many trusts have managed to put their houses in order. So far this year, the A-REIT index has outperformed the benchmark S&P/ASX 200 index .AXJO.
Mr Church said a lot of short-term holders participated in the capital raisings, making share prices volatile, but that is changing.
'I think we are moving to a much more stabilised period of ownership amongst some longer-term holders,' he said. -- Reuters
Source: Business Times, 17 Jun 2010
Initial public offerings (IPO) for office properties may have to wait till 2011, when office property trusts could start trading at or above their net tangible asset (NTA) prices, Tim Church, managing director, head of real estate Australia for UBS, told the Reuters Global Real Esate and Infrastructure Summit.
'We would expect to see a whole lot of bond issuances,' he said. 'For the moment, we're done with broad-based equity issuance. The recapitalisation has largely occured.' One of the popular instruments will be convertible bonds, a type of bond that the holder can convert into shares.
'We have started to see the CMBS (commercial mortgage-backed securities) market start to open again. And we expect hybrid and convertibles to be more frequently used as well. It's proven to be a very cost effective form of equity,' Mr Church said.
'I think it will be a combination of replacing debt and, I think, some of them will be for new acquisitions or developments,' he added.
There have been reports in local media that Brookfield Multiplex, a subsidiary of Canada's Brookfield Asset Management, and private property developer Grocon may list their office assets.
Mr Church said these offerings may face headwinds as existing office trusts were trading on average at about a 25 per cent discount to net tangible assets (NTA), making it tough for newcomers to get their IPOs off the ground.
'It makes it very difficult for managers to get an IPO up unless they are willing to sacrifice the value of the portfolio substantially to make it attractive for investors to commit,' he said.
He added these IPOs may wait until share prices recover to reasonable levels. 'I would expect that during 2011 is a period that we start to see them trading back at or above NTA,' he added.
Morgan Stanley's Australian real estate unit, Investa Property Group, scrapped its IPO plan last November as the offer price did not meet investors' expectations.
Australian REIT (real estate investment trust) shares were hammered during the global credit crisis with the A-REIT index .AXPJ tumbling more than 70 per cent. But after raising nearly A$20 billion (S$24 billion) of capital in 2008 and 2009, many trusts have managed to put their houses in order. So far this year, the A-REIT index has outperformed the benchmark S&P/ASX 200 index .AXJO.
Mr Church said a lot of short-term holders participated in the capital raisings, making share prices volatile, but that is changing.
'I think we are moving to a much more stabilised period of ownership amongst some longer-term holders,' he said. -- Reuters
Source: Business Times, 17 Jun 2010
Tuesday, June 15, 2010
Sunway to be M'sia's biggest Reit IPO
(SINGAPORE) Sunway Real Estate Investment Trust (Reit) plans to sell shares for 90-98 sen (S$0.38-0.42) each in an initial public offering in Malaysia, according to a sale document obtained by Bloomberg News.
The company, controlled by property and hotel group Sunway City Bhd, began offering the shares yesterday as it seeks to raise as much as US$515 million in what would be Malaysia's biggest Reit IPO, according to the document. The sale is being managed by a group of banks led by Credit Suisse Group AG and RHB Capital Bhd.
The Malaysian property trust, which includes hotels and malls valued at RM3.7 billion, is set to be the biggest in the South-east Asian nation as it taps a resurgence in investor appetite for real-estate stocks amid an economic rebound from last year's recession. The funds will be used for acquisition of properties, according to the term sheet. Sunway Reit will determine the final price of the shares on June 25, and the company will begin trading in Malaysia on July 8, according to the document. -- Bloomberg
Source: Business Times, 15 Jun 2010
The company, controlled by property and hotel group Sunway City Bhd, began offering the shares yesterday as it seeks to raise as much as US$515 million in what would be Malaysia's biggest Reit IPO, according to the document. The sale is being managed by a group of banks led by Credit Suisse Group AG and RHB Capital Bhd.
The Malaysian property trust, which includes hotels and malls valued at RM3.7 billion, is set to be the biggest in the South-east Asian nation as it taps a resurgence in investor appetite for real-estate stocks amid an economic rebound from last year's recession. The funds will be used for acquisition of properties, according to the term sheet. Sunway Reit will determine the final price of the shares on June 25, and the company will begin trading in Malaysia on July 8, according to the document. -- Bloomberg
Source: Business Times, 15 Jun 2010
Saturday, June 12, 2010
CapitaMalls to list Malaysian centres
They will be listed in a property trust on Bursa Malaysia
CAPITAMALLS Asia plans to list its three Malaysian malls, worth nearly $1 billion, in a property trust on Malaysia's main bourse - raising as much as RM995 million (S$426 million) in the process.
In a statement yesterday, it said that it has received approval from the Securities Commission of Malaysia to list CapitaMalls Malaysia Trust (CMMT).
The newly spun-off company will be listed on the main market of Bursa Malaysia.
CMMT will be Malaysia's largest listed 'pure-play' shopping mall real estate investment trust (Reit) by market and property value if the listing goes ahead.
CapitaMalls Asia will offer 786.52 million units, and retain a stake of 41.74 per cent in CMMT.
If an over-allotment option of up to 15 per cent of the proposed offering - or 117.98 million units - is exercised, it will retain a stake of 33 per cent.
CapitaMalls Asia will hold 70 per cent of the Reit manager post-listing.
CapitaMalls Asia said the Employees Provident Fund Board of Malaysia and Great Eastern Life Assurance (Malaysia) have signed up as cornerstone investors to buy 90 million units at RM1.10 a unit or the institutional price, whichever is lower. At this price, the estimated distribution yield is 6.5 per cent for the eight-month period ending December this year and 6.8 per cent for next year.
The company said its decision to proceed with the listing depends on a number of factors. It has yet to price the offering.
Still, the listing could raise as much as RM995 million based on the cornerstone investors' price.
The trust will hold the firm's Malaysian malls: Gurney Plaza in Penang, Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor. This initial portfolio has a total net lettable area of about 1.88 million sq ft and is valued at about RM2.13 billion.
Some Malaysians have written off The Mines as a viable mall. But CapitaMalls Asia said it has introduced many changes and created an extra net lettable area of some 80,000 sq ft in the mall, with higher average rents and occupancy as a result.
Malaysia is a 'key growth market' apart from Singapore and China, said CapitaMalls Asia chief executive Lim Beng Chee.
He said there will be good opportunities for growth as the retail market there is fragmented.
Most of its rivals are owners of single malls.
CapitaMalls will be able to 'recycle' cash of some $200 million from the listing to acquire assets, Mr Lim said.
CMMT will be given a right of first refusal over retail properties in Malaysia that CapitaMalls Asia targets for acquisition.
This includes the Gurney Plaza Extension which would bump up its asset size by 11 per cent to 12 per cent.
CapitaMalls Asia plans to have a Malaysian retail property fund to acquire and/or develop retail property, primarily malls in Malaysia.
Yesterday, CapitaMalls Asia closed unchanged at $2.10.
Source: Straits Times, 12 Jun 2010
CAPITAMALLS Asia plans to list its three Malaysian malls, worth nearly $1 billion, in a property trust on Malaysia's main bourse - raising as much as RM995 million (S$426 million) in the process.
In a statement yesterday, it said that it has received approval from the Securities Commission of Malaysia to list CapitaMalls Malaysia Trust (CMMT).
The newly spun-off company will be listed on the main market of Bursa Malaysia.
CMMT will be Malaysia's largest listed 'pure-play' shopping mall real estate investment trust (Reit) by market and property value if the listing goes ahead.
CapitaMalls Asia will offer 786.52 million units, and retain a stake of 41.74 per cent in CMMT.
If an over-allotment option of up to 15 per cent of the proposed offering - or 117.98 million units - is exercised, it will retain a stake of 33 per cent.
CapitaMalls Asia will hold 70 per cent of the Reit manager post-listing.
CapitaMalls Asia said the Employees Provident Fund Board of Malaysia and Great Eastern Life Assurance (Malaysia) have signed up as cornerstone investors to buy 90 million units at RM1.10 a unit or the institutional price, whichever is lower. At this price, the estimated distribution yield is 6.5 per cent for the eight-month period ending December this year and 6.8 per cent for next year.
The company said its decision to proceed with the listing depends on a number of factors. It has yet to price the offering.
Still, the listing could raise as much as RM995 million based on the cornerstone investors' price.
The trust will hold the firm's Malaysian malls: Gurney Plaza in Penang, Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor. This initial portfolio has a total net lettable area of about 1.88 million sq ft and is valued at about RM2.13 billion.
Some Malaysians have written off The Mines as a viable mall. But CapitaMalls Asia said it has introduced many changes and created an extra net lettable area of some 80,000 sq ft in the mall, with higher average rents and occupancy as a result.
Malaysia is a 'key growth market' apart from Singapore and China, said CapitaMalls Asia chief executive Lim Beng Chee.
He said there will be good opportunities for growth as the retail market there is fragmented.
Most of its rivals are owners of single malls.
CapitaMalls will be able to 'recycle' cash of some $200 million from the listing to acquire assets, Mr Lim said.
CMMT will be given a right of first refusal over retail properties in Malaysia that CapitaMalls Asia targets for acquisition.
This includes the Gurney Plaza Extension which would bump up its asset size by 11 per cent to 12 per cent.
CapitaMalls Asia plans to have a Malaysian retail property fund to acquire and/or develop retail property, primarily malls in Malaysia.
Yesterday, CapitaMalls Asia closed unchanged at $2.10.
Source: Straits Times, 12 Jun 2010
Thursday, June 10, 2010
PLife Reit expands in Japan
It acquires 6 new properties for 3.9b yen
PARKWAY Life Reit (PLife Reit) has strengthened its foothold in Japan.
The healthcare trust, whose $1.15 billion portfolio includes private hospitals in Singapore, announced yesterday the acquisition of six new nursing home and care facility properties in Japan for 3.9 billion yen (S$60.5 million).
The two companies that sold these properties are Kabushiki Kaisha Sawayaka Club and Kabushiki Kaisha Bonheure.
They are subsidiaries of Kabushiki Kaisha Uchiyama Holdings, a Japan-based company in the nursing homes, family karaoke and F&B businesses.
Black Hills Investment, a private real estate asset management firm, will be appointed as the asset manager of the properties.
'With an 8.08 per cent net property yield, this acquisition is yield-accretive to our unitholders,' said Yong Yean Chau, chief executive officer of the Reit's manager Parkway Trust Management Ltd.
The expected net property yield from these properties compares favourably to the current property yield of 6.97 per cent for PLife Reit's existing Japan portfolio.
The six new properties are valued at 4.04 billion yen, using the discounted cashflow method. The purchase price is 2.8 per cent below the valuation.
Each of these properties will have a fresh 20-year master lease/operating lease agreement with Sawayaka, currently the largest private nursing home operator in Kyushu Island.
PLife Reit said the long lease term will improve the total portfolio weighted average lease term to expiry (by gross revenue), which stands at 13.2 years as at March 31, thus boosting the resilience of its portfolio.
To mitigate the risk of any potential rental defaults, Uchiyama and Bonheure will provide rental income guarantees for the properties for the entire lease period.
Uchiyama and its subsidiaries have also entered into a memorandum of understanding to give a right of first refusal to PLife Reit over future sales of nursing homes owned by them.
PLife Reit noted that this arrangement will enhance its growth potential in Japan. It is now adopting a clustering acquisition and partnership approach to achieve critical mass and reap economies of scale in its core markets, starting from Japan.
Mr Yong said the Reit manager will also continue to explore future acquisition or collaboration opportunities with Uchiyama, such as having them as backup operators or replacement operators for the other nursing homes in PLife Reit's portfolio.
The acquisition is expected to be fully funded via a five-year unsecured term loan facility of 4.2 billion yen from CIMB Bank Berhad, one of the Reit's key partner banks.
This loan is at an all-in funding cost of about 2 per cent per annum, better than the recent similar financing PLife Reit obtained in November 2009 at 3.22 per cent per annum.
With this funding, PLife Reit's gearing will rise to 32.2 per cent from 28.5 per cent as at March 31.
Source: Business Times, 10 Jun 2010
PARKWAY Life Reit (PLife Reit) has strengthened its foothold in Japan.
The healthcare trust, whose $1.15 billion portfolio includes private hospitals in Singapore, announced yesterday the acquisition of six new nursing home and care facility properties in Japan for 3.9 billion yen (S$60.5 million).
The two companies that sold these properties are Kabushiki Kaisha Sawayaka Club and Kabushiki Kaisha Bonheure.
They are subsidiaries of Kabushiki Kaisha Uchiyama Holdings, a Japan-based company in the nursing homes, family karaoke and F&B businesses.
Black Hills Investment, a private real estate asset management firm, will be appointed as the asset manager of the properties.
'With an 8.08 per cent net property yield, this acquisition is yield-accretive to our unitholders,' said Yong Yean Chau, chief executive officer of the Reit's manager Parkway Trust Management Ltd.
The expected net property yield from these properties compares favourably to the current property yield of 6.97 per cent for PLife Reit's existing Japan portfolio.
The six new properties are valued at 4.04 billion yen, using the discounted cashflow method. The purchase price is 2.8 per cent below the valuation.
Each of these properties will have a fresh 20-year master lease/operating lease agreement with Sawayaka, currently the largest private nursing home operator in Kyushu Island.
PLife Reit said the long lease term will improve the total portfolio weighted average lease term to expiry (by gross revenue), which stands at 13.2 years as at March 31, thus boosting the resilience of its portfolio.
To mitigate the risk of any potential rental defaults, Uchiyama and Bonheure will provide rental income guarantees for the properties for the entire lease period.
Uchiyama and its subsidiaries have also entered into a memorandum of understanding to give a right of first refusal to PLife Reit over future sales of nursing homes owned by them.
PLife Reit noted that this arrangement will enhance its growth potential in Japan. It is now adopting a clustering acquisition and partnership approach to achieve critical mass and reap economies of scale in its core markets, starting from Japan.
Mr Yong said the Reit manager will also continue to explore future acquisition or collaboration opportunities with Uchiyama, such as having them as backup operators or replacement operators for the other nursing homes in PLife Reit's portfolio.
The acquisition is expected to be fully funded via a five-year unsecured term loan facility of 4.2 billion yen from CIMB Bank Berhad, one of the Reit's key partner banks.
This loan is at an all-in funding cost of about 2 per cent per annum, better than the recent similar financing PLife Reit obtained in November 2009 at 3.22 per cent per annum.
With this funding, PLife Reit's gearing will rise to 32.2 per cent from 28.5 per cent as at March 31.
Source: Business Times, 10 Jun 2010
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