| Company | Date Purchased | Purchased Price | Market Price | Gain/Loss |
| Ezion | 7-May-07 | 0.57 | 0.61 | 7.02% |
| Ezra | 20-May-09 | 1.28 | 1.77 | 38.28% |
| Innotek | 01-Apr-10 | 0.555 | 0.51 | -8.11% |
| Cambridge | 14-Jul-10 | 0.505 | 0.51 | 0.99% |
| SP Austnet | 12-Aug-10 | 0.96 | 0.97 | 1.04% |
Ezra Holdings’ (5DN.SG) $155.3 million cash call catches investors off guard as “they still have quite a lot of funds,” says analyst at Singapore brokerage, according to Dow Jones.
Supplier of offshore support vessels proposing 1-for-5 rights issue at $1.18 each, priced at 33.3% discount to last close, yielding $1.67 theoretical ex-rights price. Proceeds will be used to fund new business ventures, capex, vessel acquisitions.
| Pareto Securities starts Ezion Holdings (5ME.SG) at Buy with $0.85 target price, pegged at 8.3x FY12 P/E, according to Dow Jones. Adds Ezion’s recent moves to set up two supply bases in Australia will better enable company to bid competitively for projects. Notes Ezion has 4 lift-boats, of which two are secured charter contracts until 2014. Shares closed –0.8% at $0.625 yesterday. |
| Reit | Market Cap ($ Mil) | Price at 25th Aug 2010 ($) | Current DPU (Cents) | Forecast DPU (Cents) | Current Yield (%) | Forecast Yield (%) |
AIMS AMP Capital Industrial Reit | 322.6 | 0.22 | 2.16 | 2.08 | 9.82 | 9.45 |
Cambridge Industrial Trust | 483.2 | 0.505 | 4.96 | 5 | 9.82 | 9.9 |
India Bulls Property Inv Trust | 868.6 | 0.24 | 2.3 | 2.3 | 9.58 | 9.58 |
Lippo Mapletree Indon Retail Trust | 518.3 | 0.48 | 4.7 | 4.9 | 9.79 | 10.21 |
First Reit | 243.1 | 0.88 | 7.68 | 7.68 | 8.73 | 8.73 |
Fortune Reit (HK $) | 5949.6 | 3.63 | 30.2 | 25.4 | 8.32 | 7 |
Frasers Commercial Trust | 448.1 | 0.145 | 0.96 | 1.3 | 6.62 | 8.97 |
Funds raised to buy warehouse and logistics facility
AIMS AMP Capital Industrial REIT (AIMSAMPIREIT) is looking to acquire a ramp-up warehouse and logistics facility for $161 million, which will be partially funded through a rights issue.
It has proposed to acquire C&P Logistics Hub 2 – located at 27 Penjuru Lane – from DB International Trust (Singapore) Limited, which is the trustee of AMP Capital Business Space REIT.
As AMP Capital Business Space REIT is indirectly wholly-owned by AMP Capital Holdings, who is the sponsor and a controlling unitholder of AIMSAMPIREIT, the acquisition is considered to be a related party transaction.
The total cost of the acquisition is $163.1 million, which includes the $161 million purchase consideration, a $1.6 million acquisition fee for AIMSAMPIREIT’s manager AIMS AMP Capital Industrial REIT Management, and about $0.5 million in professional and other fees and expenses.
To help fund the acquision, AIMSAMPIREIT has proposed to issue 513.3 million new units through a fully underwritten and renounceable rights issue on a basis of seven rights units for every 20 existing units at an issue price of $0.155 per unit. The issue price represents a discount of 32.6 per cent to the closing price of $0.23 per unit on 19 August.
This will raise gross proceeds of some $79.6 million, of which $64.5 million will be channelled toward the acquisition.
Its sponsors, AIMS Financial Group and AMP Capital Investors (Luxembourg No. 4) SARL, have agreed to subscribe for their pro rata rights entitlements of 39.28 million and 82.5 million rights units respectively. Six unitholders, including Dragon Pacific Assets Limited and APG Algemene Pensioen Groep NV, have also committed to subscribing for their pro-rata rights entitlements and in some cases, to sub-underwrite a portion of the rights issue.
The warehouse facility, with a net lettable area of 975,823 sq ft, is leased out to C&P Holdings in a master lease that will expire in December 2012. It has a net property income yield of 7.7 per cent. Its annual rental for the rental year ending Dec 11, 2010, is $13 million.
Independent valuations by Colliers International Consultancy & Valuation (Singapore) and CB Richard Ellis put the purchase consideration at $162.5 million and $165 million respectively.
‘From management’s point of view, we think that we’re buying well, in a good part of the cycle. Certainly in our experience, market rents have bottomed, valuations have bottomed,’ said Nicholas McGrath, chief executive officer of AIMS AMP Capital Industrial REIT Management. ‘What we’re seeing now is increases in market rentals across our portfolio, which will translate to increases in valuations in the future.’
The acquisition also provides for the refinancing of the trust’s existing loan on improved terms. While the existing loan has an interest margin of 3.5 per cent, the $280 million new loan will have a weighted average interest margin of 2.16 per cent. The new loan is split into three tranches – a three-year $100 million term loan facility, a three- year $80 million revolving credit facility and a five- year $100 million term loan facility.
Mr McGrath also said that AIMSAMPIREIT will look to grow its presence in Asia in the medium to long term, especially in markets such as Japan and China. In Singapore, it will carry out enhancement works to increase the net lettable area at some of its properties.
It currently has 25 properties in Singapore and one in Japan.
If the acquisition goes through, its portfolio size will increase by 25.3 per cent to nearly $800 million.
| Singapore’s AIMS AMP Capital Industrial Reit said on Monday it plans to buy a property, which includes a warehouse and logistics facility, in the city-state for $161 million. |
• Acquires 2 properties for $37.1 million.
• Private placement to raise gross proceeds of $40.0 million
• Maintain hold and fair value of $0.52
Acquisition
Cambridge announced the acquisition of 2 properties at a consideration of $37.1 million. The purchase is at a slight discount to the appraised value of $37.2 million. The property located at 22 Chin Bee Drive has a lease term of 7 years and the initial yield is 9.0%, and there is a rent escalation component of 5% on the 3rd, 5th and 7th year. The property located at 1&2 Changi North St 2 has a lease term of 7 years with an option to renew of another 7 years and the initial yield is 8.01% with annual rent escalation of 1.5%. The total acquisition cost is approximately $37.7 million and will be partly funded with $24.7 million from the private placement proceeds and the remaining $13 million through debt.
Private placement
The private placement consists of 83,683,000 new units which will be placed out to two groups of investor. The first group consists of institutional and other investors and the new units are priced at an issue price $0.478. The second group consists of the Oxley Group and Mitsui & Co Ltd and the new units are prices at $0.503. The private placement is fully underwritten and will raise gross proceeds of $40.0 million and net proceeds of $37.6 million. Part of the net proceeds is used to fund the acquisition while the remaining proceeds will be used for future acquisitions.
Gearing
Gearing is expected to reduce from 42.3% to 41.5% post the acquisition. The REIT will also be repaying $32 million of the existing loan from the divestment proceeds and gearing is expected to further reduce to 39.5%. In relation to the acquisition, Cambridge has secured a $50 million term loan facility and a $20 million revolving credit facility on a 3 year tenor. The term loan facility has an all-in 3.05% interest cost and $13 million will be drawn down to part finance the acquisition.
Advance distribution
Due to the issuance of new units, Cambridge will pay out advance distribution to existing unitholders prior to the issuance of the new units. Management guided the advance payout to be between 0.6 to 0.7 cents. We estimate this to be 0.674 cents and 3Q10 DPU inclusive of the advance distribution to be 1.169 cents.
• Acquisition of 2 assets worth S$37.1m; part-funded by placement of 83.6m new units
• Lowered earnings by 2-6% in FY10-11F
• Downgrade to HOLD, TP S$0.51.
Looking towards growth. Cambridge REIT acquired 2 industrial properties for S$37.7m, yielding c8.0%. Income from these properties is backed by long-term leases of over 7 years with periodic step-ups. The acquisition is expected to complete in Sept 2010.
Private placement 83.6m new units to raise S$40m gross proceeds; new 3-year debt facility secured. The acquisition will be funded through (i) S$23.7m from private placement proceeds, (ii) S$13m drawn down from its debt facility at estimated c3.05% cost. The remaining placement proceeds of cS$15m will be used for future acquisitions or fund its planned asset enhancement initiatives. Gearing post acquisition is expected to head down to 41.5% from 42.3% as of 30th Jun 2010.
Dilutive to earnings, DPU adjusted downwards by 2-6%. Expect earnings dilution since placement price implies a yield of 10% against the asset yield of c8%. Our DPU estimates are adjusted downwards to 5.0 – 4.8 Scts in FY10-11F, reflecting the transaction.
Downgrade to HOLD, TP adjusted to S$0.51. We are somewhat surprised at management’s decision to acquire assets that are earnings dilutive. We remain on look out for future initiatives (AEI plans) that would grow earnings to offset the dilution. Given limited upside to our TP of S$0.51, we downgrade the stock to HOLD.
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SP Austnet is treading on the base of the range.
YZJ broke $1.47 resistance today on a upward trend.
Ezra is on an uptrend with higher highs and higher lows.
Resistance at 0.71 cents.