Accretive acquisition of 29 Woodlands Industrial Park E1, NorthTech for S$72.0 million.
Sale of 23 Changi South Ave 2 for $16.7 million, 3.1% above book value.
Sale of Asahi Ohmiya Warehouse, Tokyo Japan for JPY1.49 million, 1.6% above book value.
Well supported private placement, raising gross proceeds of S$43.5 million.
Negotiated three year S$45.0 million acquisition debt facility in February 2011 which provides the Trust with additional financial flexibility.
Revaluation of 25 Singapore properties:
+2.67% vs 30 September 2010 valuations +4.00% vs 31 March 2010 valuations
Portfolio size grew from S$803.9 million to S$853.2 million.
Distribution Timetable DPU: 0.255 cents Ex-date: 26 April 2011, 9.00am Books closure date: 28 April 2011, 5.00pm Distribution payment date: 8 June 2011
Cambridge Industrial Trust Management Limited, the Manager of Cambridge Industrial Trust (“CIT”), is pleased to announce that CIT’s unaudited financial results for the first quarter ended 31 March 2011, will be released on Thursday, 28 April 2011 after market close. Chris
AIMS AMP Capital Industrial REIT Management Limited, as manager of AIMS AMP Capital Industrial REIT (“AIMSAMPIREIT”), is pleased to announce that AIMSAMPIREIT’s unaudited financial results for the financial year ended 31 March 2011 will be released on 19 April 2011, after market close.
A final one-tier tax-exempt dividend of S$0.02 per ordinary share for the year ended 31 December 2010. Record date - 18th May 2011 Payable date - 31st May 2011
Singapore’s Aims Amp Capital Industrial Reit (AA Reit) (AART.SI) said it plans to increase the share of business park assets in its portfolio through acquisitions in order to benefit from higher rental income.
The trust, part-owned by Australian institutional real estate fund manager AMP Capital Investors (AMPGCH.UL), also aims to grow its portfolio by about $200 million, its chief executive officer Nicholas McGrath told Reuters in an interview. “We have an increasing bias towards business parks and high-tech space,” said McGrath, a trained lawyer who moved to Singapore six years ago.
“We think rentals are likely to grow faster than in industries where margins may be under pressure and therefore the ability to afford higher rentals is under pressure”.
In the last 15 months, AA Reit bought about $300 million worth of assets and sold its sole Japanese property for 1.49 billion yen in order to focus its business on Singapore.
Currently, it has 26 properties in the city-state worth about $832.9 million and hopes to see business park assets account about 20-30% of its portfolio in about 3 years, McGrath said. They make up about 18% of its portfolio now.
The trust hopes to acquire more industrial properties that cater to higher-end manufacturing or high-technology businesses, as Singapore seeks to move away from low cost manufacturing activities.
“Singapore’s government policy as a whole is to move up the value chain...It is not the low cost manufacturer of products that it once was. Our strategy is very much aligned with where the market is moving,” said McGrath.
He added that he expects demand for business parks to increase faster than that for manufacturing facilities, which currently account for about 22% of AA Reit’s total portfolio.
Although AA Reit is one of the smallest amongst its peers with a market capitalisation of US$358 million ($452 million), it had a high distribution yield of 9.5%. This compares with an average of about 7% for Singapore-listed real estate investment trusts.
AA Reit is also looking at redeveloping and enhancing several of its warehouses, logistic and manufacturing facilities as they currently have underutilized plot ratios.
This would help the reit to boost its gross floor area and rental income, McGrath said.
AA Reit is also exploring acquiring properties in China or Australia, where its sponsors AMP Capital and AIMS Financial Group already have a presence.
“Over the next several years, call it a 5-year plan, we can be a reit that is well-diversified, not only across different asset classes within the general moniker of industrial, but also well diversified geographically,” McGrath said.
However, the trust has no immediate plans to buy assets in overseas markets due to the relatively high interest rates and low yields in Chinese and Australian markets, McGrath said.
Further to the previous announcements made by AIMS AMP Capital Industrial REIT Management Limited (the “Manager”) as Manager of AIMS AMP Capital Industrial REIT (‘Trust”), the Manager wishes to announce that the sale of the Trust’s effective 99.2% interest of the Property has been completed today.
A joint inspection of the Property by the purchaser, the Trust’s Japan asset manager and an independent engineer indicated JPY6.9 million (SGD107,619.45)1 of repairs were required on the Property following the earthquake.
Accordingly, the sale price has effectively been reduced from JPY1.49 billion to JPY1.483 billion. The net sales proceeds will be used to repay debt, reducing the aggregate leverage of the Trust to approximately 32.0%.
JPMorgan says it’s reversing its cautious call on the Singapore REIT sector. It notes S-REITs have modestly underperformed the STI year to date, trading at 6.2% FY11E yield and 0.99X P/B.
“With the likely postponement of a number of equity fundraisings and the interest rate hike expectations in the current macro environment, we believe S-REITs sector should provide better risk-adjusted return given the strong yield support and stable growth.”
It says capital structure is stable; “Interest cover for all the REITs under our coverage remains at above three times even if we assume a 20% decline in renewal rents and 100bps increase in borrowing cost for debt to be renewed in 2011.”
The house’s top picks for the sector are CapitaMall Trust (C38U.SG) and Frasers Centrepoint Trust (J69U.SG), “a clear preference for the retail REITs.”
It adds, “our call is largely predicated on the fact that Singapore domestic economy, especially retail spending and tourism arrivals, will retain its existing growth rate despite the current macro environment.”
Amid the current volatile market, CIMB suggests combining a strategy of looking for value from oversold stocks and putting money into high-yield stocks.It notes, since the mega-earthquake and tsunami that hit Japan on March 11, “most SGX-listed stocks have taken a beating” with the STI Index down 3.6% since March 10 close. “which typically offer better dividend yields relative to the average stock,” and were not spared in the selloff. “Some REITs fell more than the STI over this period despite the lack of exposure to Japan. Stocks like Frasers Commercial Trust (ND8U.SG), down 7.3%, and Frasers Centrepoint Trust (J69U.SG), off 5.3%, are examples.
These stocks may be oversold, and as such, could present traders an opportunity for accumulation,” offering attractive CY11 yields of 7.8% and 6.0% respectively post the sell-down.
It adds, changes in travel plans may benefit tourism plays, like CDL Hospitality Trust (J85.SG), yielding 6.5%, which has fallen 4.4% since the quake.
DBS Vickers says S-REITs’ 4Q10 results were “a continuation of the strong showing in 3Q10 with the sector reporting topline, net property income and distributable income growth of 10%, 13% and 11% respectively.”
It notes, hospitality REITs continued to outperform with strong organic growth, while acquisitions completed in 2010 lifted distributions for the remaining S-REITs.
“While retail and industrial S-REITs continue to deliver single digit growth, office REITs reported weaker results both on year and on quarter, as passing rents remained below the peak rents signed in 2007-2008. We expect this trend to continue in the coming quarters, only to reverse in 2012.”
The house adds, S-REITs are good inflation hedges given their ability to grow rental income above inflation. The house keeps its view that hospitality REITs will continue to exhibit the strongest earnings potential.
CDL Hospitality Trusts (J85.SG), rated buy with a $2.30 target, is its top pick, “to leverage on the robust growth from this sector.”
OCBC says any impending interest rates hike will add on to borrowing costs of S-REITs and affect distributable income for unitholders. “Any rate hike is likely to have a greater impact on S-REITs that 1) have a lower percentage of fixed rate borrowings, and 2) have a substantial amount of borrowings maturing near the interest rate hike period (likely 2H11-FY12).”
It says overall, “fundamentals for the majority of the S-REITs remain strong and any increase in interest rate will have some but not material impact on S-REITs’ financials, since most have already expected or are preparing for it.”
The house remains positive on the medium-term prospects of S-REITs and it is confident that most REIT managers will optimize their financial means to protect the trusts from further interest rate and refinancing risks. The house maintains an Overweight call on S-REITs.
Armstrong Industrial Corporation Limited is a leading foam and rubber components manufacturer specializing in noise, vibration & heat management for the automotive and electronics industries.
4Q2010 vs 4Q2009
Gross Profit increased by 15.7% to S$15.4 million from S$13.3million with improved Gross Margin
Net Profit attributable to shareholders maintained at S$6.2 million.
Net profit margin declines 0.4% mainly due to JPY appreciation and USD depreciation against SGD.
FY2010 vs FY2009
Record Revenue & Net Profit achieved
Gross Profit increased by 40.5% to S$62.0 million from S$44.2 million
with Gross Margin improving from 25.4% to 27.5%
Net Profit attributable to shareholders grew by 77.1% to S$24.9 million.
Recommends final dividend of two Singapore cents to supplement interim dividend of two Singapore cents, a yield of 10.4% based on closing share price on 24 Feb 2011 of S$0.385.
12 mth Revenue increased by 3.5% (Q4 increased by 4%).
Gross profit dropped by 3% (Q4 dropped by 6%).
Profit dropped by 12.2% (Q4 dropped by 34.2%)
EPS(Group) increased from 3.53 cents to 3.91 cents (Profit drop yet EPS increased?)
NAV (Group) dropped from 44.83 cents to 33.10 cents
Interim dividend (0.97 cents) Final dividend (0.97cents)
------------------------------------------------------------ Comments: It seems like the Q4 results is pretty disappointing and YOY profit has dipped more than 10%. With the reduced dividend (previously 2cents in total), the yield of this company is about 8.1% only. I would certainly look at selling this stock soon.
Revenue 15.1% higher at S$415.9 million in FY10; 4Q’10 revenue increased 6.8% to S$99.0 million on higher sales of stamping components and Frame products
Net profit for FY10 rose 134.1% to S$17.8 million from S$7.6 million in FY09,reflecting cost and operational improvements. FY10 EPS of 7.75 cents is 138.5% higher than 3.25 cents in FY09
Proposes final dividend of 5.0 cents per share, unchanged for third year
Financial position remains strong – Group net cash position of S$56.6 million as at 31 December; also holds 19.6 million treasury shares
SINGAPORE, 25 February 2011 –InnoTek Limited (“InnoTek” or “the Group”) announced today that its net profit after tax for the financial year ended 31 December 2010 (“FY10”) rose 134.1% to S$17.8 million from S$7.6 million in FY09 on higher sales and continued cost and operational improvements.
For the third year in a row, the SGX Mainboard-listed company also declared a first and final dividend of 5.0 cents per share.
InnoTek’s net profit was achieved on revenue of S$415.9 million in FY10, 15.1% higher than S$361.4 million in FY09, as its wholly owned Mansfield Manufacturing Company Limited (“MSF”) recorded improved sales from stamping products due to stronger demand for TV components.
Revenue from the precision components and sub-assembly segment rose to S$375.4 million in FY10 from S$323.5 million in FY09. Apart from higher sales of TV components, frame sales from its Dutch subsidiary Exerion PrecisionTechnology Holding B.V. also rose to S$40.5 million in FY10 from S$37.9 million in FY09 due to higher demand for printing and medical equipment components.
MSF’s FY10 net profit was S$11.1 million higher than FY09 due to higher sales and re-classification of a factory building from property, plant and equipment to an investment property, resulting in lower depreciation and reversal of S$2.7 million impairment loss provided for in FY09. MSF also wrote-back a S$1.2 million provision after collecting doubtful debts provided for in FY09.
On the other hand, MSF’s FY09 bottom-line was affected by a one-time provision of S$2.0 million relating to employees’ severance and end-of-contract payments and provision of S$1.4 million of doubtful debts.
The Company reported a loss of S$2.5 million due to lower interest income in FY10 and a one-off reversal of tax provision in FY09 following tax exemption for certain overseas interest income remitted between 22 January 2009 and 21 January 2010. However, this was mitigated by S$0.6 million gain from disposal of an investment which had been fully provided for in FY07.
For the quarter ended 31 December 2010 (“4Q’10”) InnoTek’s net profit after tax increased 35.1% to S$4.0 million from S$3.0 million in 4Q’09, revenue also rose 6.8% to S$99.0 million from S$92.7 million.
Earnings per share rose to 7.75 cents in FY10 from 3.25 cents in FY09. Net asset backing per share as at 31 December 2010 stood at 85.4 cents compared to 85.8 cents as at 31 December 2009 following payment of dividend in May 2010 amounting to S$11.4 million and acquisition of treasury shares in FY10 amounting to S$4.8 million.
The Group’s financial position remains healthy, with net cash position of S$56.6 million or 24.9 cents per share, comprising cash and cash equivalents of S$89.5 million less total borrowings of S$32.9 million, as at 31 December 2010. To enhance shareholder value, InnoTek purchased a further 1.2 million treasury shares in 4Q’10, bringing the total treasury shares held to 19.6 million.
To reward shareholders, the Group has proposed a first and final one-tier tax exempt dividend of 5.0 cents per share, unchanged for three years in a row. The FY10 dividend represents 64% of net profit.
The directors expect Q1’11 demand for office automation and automotive components to sustain but demand for TV components to soften. As such, Q1’11performance is expected to be challenging.
“In the absence of any unforeseen circumstances, we expect the Group to remain profitable in FY11 as we continue to focus on cost management and improving efficiency to mitigate the impact of inflationary cost and the rising Chinese Yuan. Additionally, the Group is diversifying its products and customer base,” said InnoTek Group Managing Director Mr Yong Kok Hoon. “In line with the Group’s long-term growth strategy, we will continue to actively pursue appropriate merger and acquisitions opportunities. We will maintain our cautious stance, focusing on earnings-accretive businesses, and stringently evaluate feasible investment proposals,” he added.
The amount of cash distribution return to shareholders pursuant to the capital reduction is S$0.57 for each share held as at book closure date to be determined by the directors of the company.
Transpacific Industries Group Ltd (TPI) confirms that its results for the half year ended 31 December 2010 will be released to the market on Thursday 24 February 2011.
SP AusNet is pleased to announce it has successfully executed an A$150 million 3 year bank debt facility. The proceeds will be used to refinance existing bank debt and to fund growth capital expenditure.
SP AusNet maintains a well diversified debt maturity profile together with well diversified sources of debt. This, together with a strong investment grade credit rating, allows SP AusNet ready access to debt markets both in Australia and offshore. SP AusNet is therefore not reliant on any one capital market or any one source of debt.
• Private Placement to raise minimum gross proceeds of S$43.5 million • New Units to be offered at between S$0.1976 and S$0.2041 per New Unit • Proceeds from the Private Placement to be used to fund the acquisition of a property located at 29 Woodlands Industrial Park E1, Singapore 757716 (“NorthTech” (the “Acquisition”))
Overview of Acquisition NorthTech is a four-storey high technology light industrial building with basement car park located in the northern part of Singapore at the corner of Admiralty Road West and Woodlands Avenue 8 and is easily accessible by the Seletar Expressway and the Admiralty MRT Station. Surrounding developments are predominantly industrial in nature, comprising purpose-built factories and ramp-up and terrace factories. The property is primarily used for office and warehouse and has an occupancy rate of 98.3% as at 1 January 2011 with a total gross rental of S$1.8 million from 1 October 2010 to 31 December 2010. NorthTech is a multi-tenancy building and a majority of the tenants are in the engineering and technology sector,for example, Broadcom, Nikon Precision and Schmidt Electronics.
Title: URA leasehold estate with a remaining land tenure of approximately 44.0 years Land area: 197,691 square feet (“sq ft”) Net lettable area: 390,130 sq ft Gross floor area: 489,560 sq ft
Merits of the Acquisition and Private Placement
(i) Acquisition of a High Quality Asset NorthTech has a weighted average lease expiry of 3.5 years as at 31 December 2010. The initial net property income yield (“NPI Yield”) for NorthTech is 7.6%. This compares favourably with the NPI yield of AIMSAMPIREIT’s current portfolio of 7.2%.
(ii) AIMSAMPIREIT will have readily available financing to capitalise on growth opportunities. With the proposed Acquisition, AIMSAMPIREIT was able to secure the Acquisition Loan Facility from SCB. Upon completion of the Acquisition and the sale of 23 Changi South Avenue 2 (“KTL”), based on the Minimum Issue Price, AIMSAMPIREIT will have a total of S$37.6 million in undrawn debt facilities. Following the completion of the Acquisition and the sale of KTL, AIMSAMPIREIT’s Aggregate Leverage is expected to be 33.6%, which is below the maximum Aggregate Leverage of up to 60.0% permitted by the Monetary Authority of Singapore (the “MAS”) for real estate investment trusts in Singapore.
(iii) Possible increase in trading liquidity of Units. The New Units to be issued pursuant to the Private Placement will increase the number of Units in issue by 219,989,907 Units, which is an increase of 11.1% of the total number of Units in issue as at 31 December 2010.
Advanced Distribution AIMSAMPIREIT’s policy is to distribute its distributable income on a quarterly basis to Unitholders.
In connection with the Private Placement, the Manager however intends to declare in respect of the Units in issue immediately prior to the issue of the New Units (“Existing Units”), a distribution of the distributable income of AIMSAMPIREIT for the period from 1 January 2011 to the day immediately prior to the date the New Units are issued pursuant to the Private Placement (the “Advanced Distribution”).
The next distribution thereafter will comprise AIMSAMPIREIT’s distributable income for the period from the day the New Units are issued pursuant to the Private Placement to 31 March 2011. Quarterly distributions will resume thereafter.
The Advanced Distribution is intended to ensure that the distributable income of AIMSAMPIREIT accrued up to the day immediately preceding the date of issue of the New Units (which at this point, will be entirely attributable to the Existing Units) is only distributed in respect of the Existing Units, and is being proposed as a means to ensure fairness to holders of the Existing Units.
The current expectation of the Manager is that the quantum of the distribution per Unit (“DPU”) under the Advanced Distribution will be approximately 0.285 cents per Unit, estimated based on actual revenue and expenses for the three months ended 31 December 2010. The actual quantum of the DPU under the Advanced Distribution will be announced on a later date after the management accounts of AIMSAMPIREIT for the relevant period have been finalised.
As previously advised in 2010, IMF (Australia) Ltd announced that it proposes to fund a class action against Transpacific Industries Group Ltd (TPI) on behalf of certain investors who acquired TPI shares in the period between 29 August 2007 and 16 February 2009. While no proceedings have been commenced, TPI has now been invited to enter into discussions, on a without prejudice basis, with Maurice Blackburn & Co (IMF’s lawyers) in relation to these matters, failing which Maurice Blackburn & Co advise they have been instructed to commence proceedings. If any such proceedings are commenced, TPI will vigorously defend them.
(1) NeraTel Currently trading at about 39 Cents with 4 cents of Dividends. Stock has proven track record in giving 3 cents dividend.
(2) Lattitude Tree international The company has just released the HY results and has announced a 1.4 cents Dividend. Stock price has closed at 29.5 cents. With the assumption that another 1.5 cents will be given during end of FY result, we can see that the share has achieved a yield of 10%.
(3) New Toyo The current price is 0.245 cents. Has been issuing dividends of 1.27 cents (in May 2010) and 0.97 cents (in Sept 2010). This amounts to a yield of 9.1 %.
Dividend Aims Amp announced a 0.51 cents dividend to be distributed on 15th Mar. First Reit Announced a 0.87 cents dividend to be distributed on 28th Feb.
Purchase Added more Aims Amp shares at $0.215 and bought New Toyo shares on 26th Jan 2011 at $0.24.
First Real Estate Investment Trust (First REIT) announced a healthy set of 4Q 2010 results on 21 January 2011. Revenue for the quarter rose 3.8% YoY to S$8.0m (inclusive of S$0.3m deferred rental income from Pacific Cancer Centre @ Adam Road) while distributable amount inched up 2.8% YoY to S$5.4m. Our dividend discount model values the company at an intrinsic value of S$0.910, representing an upside of 19.7% over its last traded price of S$0.760. Maintain Increase Exposure. http://firstreit.listedcompany.com/misc/SIAS-FirstREIT_26Jan11.pdf
Stable DPU performance: 0.51 cents, translating to annualised DPU yield of 9.5%
Strong increase in gross revenue of 56.0% y-o-y, 16.6% q-o-q
Net property income increased by 47.1% y-o-y, 20.7% q-o-q
Well supported rights issue was 1.3 times subscribed, raising gross proceeds of S$79.6 million
Portfolio grew from S$640.1 million to S$803.9 million with the acquisition of 27 Penjuru Lane
Refinanced the S$175.0 million facility at an improved interest margin of 2.16% compared to 3.5% previously. Average debt maturity increased to 3.7 years.
Sale of 23 Changi South Avenue 2 for S$16.7 million, 3.1% above book value
Distribution Timetable DPU: 0.51 cents Ex-date: 31 January 2011, 9.00am Books closure date: 2 February 2011, 5.00pm Distribution payment date: 15 March 2011
Key Financial Metrics Appraised Value of Property Portfolio: S$803.9 million (2nd Q S$640.1 million) Market Capitalisation: S$427.2 million (2nd Q S$447.1 million) NAV per Unit: S$0.27 (2nd Q S$0.31) Discount to NAV: 19.5% (2nd Q 27.4%) Aggregate Leverage: 34.0% (2nd Q 28.9%) Interest Cover Ratio: 5.0 times (2nd Q 4.4 times) Weighted Average Debt Maturity: 3.7 years (2nd Q 2.2 years)
Key Highlights Year 2010 •Including deferred rental income from proposed Pacific Cancer Centre @ Adam Road (currently under redevelopment), gross revenue increased by 4.4% to S$31.5* million, mainly due to higher rental income from the Indonesia properties Variable rental growth component of 1.25%of the total gross revenue of four Indonesian assets kicks in in FY 2010; in addition to the annual escalation based on 2 times Singapore CPI (capped at 2%)
•Net property income increased by 4.2% to S$31.1* million
•Distributable income increased by 1.8% to S$21.3 million
•Net asset value per unit at 77.00¢as at 31 Dec 2010 (based on enlarged share base a result of rights issue)
•No major refinancing needs till 2012
Projection Year 2011 •Projected distribution per unit (DPU) stands at 6.4 cents
•Projected distribution yield for 2011 at 9.14%, based on a theoretical ex-rights price of S$0.70 (as per the Circular to unitholders dated 10 November 2010)
•Based on the projected DPU of 6.4 cents and the closing price of S$0.765 as at 19 January 2011, the yield is 8.37%.
DPU •Distribution per unit is lower in 4Q 2010 due to the issuance of 345,664,382 Rights Units on 31 December 2010 in relation to the acquisitions of MRCCC and SHLC
•Holders of new rights units will be entitled to 4Q 2010 distribution, but the properties only start to contribute to earnings and distributions in 2011
•For Unitholders who subscribed to the new rights units, the effective distribution per unit would be equivalent to 1.96 cents. *Actual DPU for 4Q 2010.Consistent DPU
Distribution Per Unit 0.87¢ -Taxable 0.07¢ -Tax-Exempt 0.72¢ -Capital 0.08¢ Book Closure Date: 31 January 2011 Distribution Payment Date: 28 February 2011
Source from DMG: Based on the company’s initial assessment, three of CIT’s 43 properties will be affected to varying degrees by this land acquisition: (i) 1 Tuas Ave 3 – likely to be wholly acquired, but management feels minimal impact as CIT has two years to work with tenant to look for an alternative site or possibly develop a facility for CWT, so loss of NPI may not materialise at all. (ii) 30 Tuas Road – only entrance expected to be impacted, likely truncated (iii) 120 Pioneer Road – least impact, grass patch in front of building. As management will be meeting up with the authorities in the next two weeks, management should have more details by release of its 4Q10 results on 11 Feb. Maintain BUY, with TP of S$0.61.
My comments: As according to the above info provided, the largest effect on CIT's rental income is on 1 Tuas Ave 3 which is about SG$2.6Mil in year 2009. The impact seems not great but will need more information to confirm on the overall effect.
Cambridge Industrial Trust Management Limited, the Manager of Cambridge Industrial Trust (“CIT”) (“the Company”) wishes to announce that it has received a formal notice from Singapore Land Authority (“SLA”) on 11 January 2011 with regard to the compulsory acquisition of land on Tuas Road, Pioneer Road, Tuas West Road, Tuas West Drive and Tuas South Avenue 3 for the construction of Tuas West Mass Rapid Transit (“MRT”) extension and road works along the Pan Island Expressway, Tuas Road, Pioneer Road, Tuas West Road, Tuas West Drive and Tuas South Avenue 3.
Based on the Company’s initial assessment, three of CIT’s 43 properties will be affected to varying degrees by this land acquisition: 1) 30 Tuas Road (Lot No 1289X pt Mukim 7) 2) 120 Pioneer Road (Lot No 3237M pt Mukim 7); and 3) 1 Tuas Avenue 3 (Lot 1422X Mukim 7) All or part of the land where these properties are situated will be possessed by the Government by January 2013. The relevant authorities will be arranging for their representatives to discuss the details of the compulsory land acquisition with the Company, including details of compensation. The Company will continue to assess the situation and will issue further announcements when it has more information.
My comments: Base on the gross rental income in FY 2009, the land acquisition of these 3 properties will reduce CIT's revenue by approximately 5.5 mil (or 1.375 mil per quarter). This will in turn reduce the DPU per quarter starting in year 2013. As for how much reduction in DPU and compensation amount given by SLA, more information needs to be provided. Questions that I have: (1) Amout of DPU reduction (2) Are the 3 properties fully paid up? I suppose not since CIT gearing is pretty high. (3) How much is SLA compensating (4) What is CIT's plan on using the compensation. To pay off debts or more acquisition in line.
Ahead of the earnings release for Singapore REITs starting with Ascendas REIT (A17U.SG) later today, Daiwa says it expects “a mixed bag for net-property income and distribution-per-unit growth because several S-REITs completed major acquisitions and refinancing during the quarter.”
It also expects distortions from asset refurbishments, divestments, and negative rental reversions to accelerate in the office space. “We expect the hospitality-related S-REITs to continue to record the strongest underlying DPU growth, though the pace might moderate in 2011.”
It says the 12 S-REITs under its coverage trade at a weighted average FY11 DPU yield of 5.7%.
“We maintain our Neutral view for the broad sector and continue to prefer the industrial-property and hospitality names for their above-sector average yields and positive DPU growth in the current low interest-rate environment.”
In industrial space, it rates Ascendas REIT, Mapletree Logistics Trust (M44U.SG), Cambridge Industrial Trust (J91U.SG) at Buy. In hospitality rates, Ascott Residence Trust (A68U.SG), CDL Hospitality Trusts (J85.SG) at Buy.
Bowsprit Capital Corporation Limited, as Manager of First Real Estate Investment Trust (“First REIT”) will be announcing the unaudited financial results of First REIT for the fourth quarter and full year ended 31 December 2010 on Friday, 21 January 2011.
JPMorgan says “2011 will likely be a volatile year for S-REITs sector with a total return expectation of 8.0%, dominated largely by the dividend yield.”
It notes this compares with its return expectation of about 15% for the STI. It says while rental growth expectation for most commercial segments remains positive and physical market transactions will continue to pick up, the potential supply in the equity market through primary and secondary issuances will keep unit prices in check.
It adds, valuations are no longer compelling as S-REITs are trading at a forward dividend yield of 6.0%, P/B of 1.1X and 7.5% premium to house NPV estimates. It downgrades CapitaCommercial Trust (C61U.SG) to Underweight vs Neutral on lack of growth, deteriorating portfolio quality and rich valuation.
It also cuts CapitaMall Trust (C38U.SG) to Neutral vs Overweight "as we believe that constant cash calls from the sector would put pressure on the stock.
Cambridge Industrial Trust Management Limited, the Manager of Cambridge Industrial Trust (“CIT”), is pleased to announce that CIT’s unaudited financial results for the fourth quarter and full year ended 31 December 2010, will be released on Thursday, 10 February 2011 after market close.
