SGHOUSING.COM 新加坡房地产网

ASCENDAS Real Estate Investment Trust (A-Reit) has awarded a $76.5 million design-and-build contract to a unit of Lum Chang Holdings for the construction of a new eight-storey tower and a three-storey ancilliary podium in Changi Business Park.

The building will be on land with an area of over 28,000 square metres - one of the biggest developments there, Lum Chang said. The project is due to be completed by October 2009.

The contract marks the second time that A-Reit has appointed homegrown construction company Lum Chang for a Changi Business Park development.

In 2007, Lum Chang was awarded a $71.8 million tender to build an eight-storey office building - the first of three towers in the Changi Business Park commercial development.

Construction of this building as well as the basement carpark is currently underway, and progress is well on track for completion in the first quarter of 2009.

The building has been leased to Citigroup to house up to 4,000 operational and backroom staff.

The latest contract brings the total value of contracts Lum Chang still has in progress to over $456 million, the company said.

The newest project is expected to be 60 per cent completed by the end of the financial year ending June 30, 2009.

The earnings from this contract will be recognised progressively according to the stage of completion, Lum Chang said.

Lum Chang’s shares lost two cents to close at a 52-week low of 19 cents yesterday. A-Reit’s stock similarly shed two cents to end the day at $2.30.

Source : Business Times - 22 Aug 2008

Latest offering will comprise 3 malls worth RM2b: chief investment officer

CAPITALAND will list its second Malaysian real estate investment trust (Reit) this year, barring unfavourable market conditions, the company’s chief investment officer Kee Teck Koon said yesterday.

The Reit will initially comprise three shopping malls worth RM2 billion (S$849 million), he said. CapitaLand will gauge market sentiment to ensure the launch is timed ’so it can capture the imagination of investors’.

At a news briefing after the topping-out ceremony for Kuala Lumpur’s Tower D, which is owned jointly by CapitaLand and Malaysia’s Quill Group, Mr Kee said that the listing plan for the second Reit has not changed. ‘The intention is very clear,’ he said.

Penang’s Gurney Plaza and two malls in the Klang Valley - Mines Shopping Fair and Sungei Wang Plaza - will form the Reit’s initial core assets. Mr Kee would not say who CapitaLand’s local partner in the Reit would be.

The company’s reservations about market sentiment are warranted. The last three listings on Bursa Malaysia have debuted below their offer price. In the latest, shares of Perwaja Steel yesterday opened 10 sen short of the RM2.90 offer price before closing at RM2.48.

Although Malaysian Reits are seen as defensive, interest among foreign investors has been dampened by relatively high withholding tax.

Still, some investors continue to be attracted to local real estate because its comparative pricing ought to allow for greater capital appreciation down the road.

For example, the Malaysia Commercial Development Fund (MCDF) - a US$270 million closed-end private equity investment fund launched jointly by CapitaLand and Maybank in March 2007 with a gross development value of US$1 billion - is fully invested, CapitaLand Commercial chief executive Wen Khai Meng said yesterday.

CapitaLand ‘may consider subsequent funds’ focused on residential, commercial and retail segments, he said.

MCDF provides a pipeline of projects to be injected into Quill Capita Trust - a commercial Reit jointly listed by Quill and CapitaLand in January 2007 with an initial fund size of RM276 million, which has grown to over RM800 million.

Tower D in the KL Sentral area will allow them to further leverage on strong demand for commercial property and is likely to be injected into the Reit.

To be completed by January, the Grade A building, which has a net lettable area of 355,000 square feet, has a confirmed tenancy rate of 65 per cent and is expected to be fully tenanted by March.

The 29-storey office block with a six-storey retail podium has attracted several multinational and big local companies as tenants, said Quill director Michael Ong.

Rental rates are around RM6 to RM7 per square foot and a number of tenants have signed three-plus-three-year leases, he said.

CapitaLand, through MCDF, owns 40 per cent of Tower D developer Quill Realty.

Source : Business Times - 21 Aug 2008

Funds turning in ‘decent results’ and should see better earnings in near term

Home prices are peaking, sales are sliding, and property counters are among the stock market’s worst performers.

What’s a property investor to do?

Fortunately, there is still one safe haven, according to a recent report by Credit Suisse. It tips real estate investment trusts, or Reits, as a good bet for investors.

Reits turned in ‘decent results’ in the second quarter and should see better earnings in the near term, the bank said in its report.

Reits are listed funds that buy properties and collect rental income, which they distribute to unit holders like dividends.

Credit Suisse said three Reits, in particular, surprised with better-than-expected results: Mapletree Logistics Trust, Suntec Reit and CDL Hospitality Reit. But another three - Frasers Centrepoint Trust (FCT), Lippo-Mapletree Indonesia Retail Trust, and CapitaRetail China Trust - were disappointments, it reported.

The bank noted that quarter-on-quarter, office trusts delivered the strongest growth in terms of earnings, while hospitality Reits turned in the weakest performances.

On a year-on-year basis, retail Reits grew the most in terms of earnings and industrial ones the least.

Overall, CapitaCommercial Trust was the only Reit expected to grow by more than 20 per cent in terms of distribution per unit for both the current and next financial year, predicted Credit Suisse.

It also said it preferred large defensive Reits in the suburban retail and industrial sectors, particularly CapitaMall Trust and Ascendas Reit.

Another bank, Citigroup, also issued some positive calls on Reits last month.

It upgraded Suntec Reit to a ‘buy’, forecasting high yields of over 7.5 per cent. The trust’s results had come in above market expectations, boosted by strong rental renewals for its office and retail space.

Credit Suisse’s report marked a turnaround of sorts for the Singapore Reit sector, which was overcast with clouds as recently as three months ago.

Ratings agency Moody’s Investors Service issued in May a negative rating outlook for Singapore Reits, citing negative sentiment and short-term refinancing risks due to tighter liquidity. Some analysts followed up by downgrading or cutting their target prices for Reits on the back of rising interest rates.

Most Reits, however, have since managed to secure refinancing for their debt despite the global credit crunch. They are also now better bets than developers for their ‘recurrent income and more predictable cash flows’, Credit Suisse said.

Its report concluded that the debt profile of Singapore Reits had improved and earnings were expected to be resilient in the near term.

The bank warned, though, that risks of credit availability and high borrowing costs still exist, as do concerns over asset devaluation.

For now, though, asset values are still expanding and interest rates are expected to remain low, it added.

Source : Sunday Times - 17 Aug 2008

Frasers Centrepoint has completed its acquisition of an 18-per-cent stake in Allco Reit and all of Allco Singapore, which manages the property trust. Allco Reit will now be renamed Frasers Commercial Trust following the $180-million deal.

Frasers Centrepoint has now dropped plans to list its own separate commercial property trust. Instead, it will offer its current portfolio of commercial assets, worth about $700 million, as a potential pipeline for the acquired trust to buy.

“We have commenced a strategic review of the properties in the portfolio, which is expected to take three months,” said Frasers Commercial Trust chief executive Low Chee Wah.

“We will be evaluating the feasibility of asset enhancement plans that were announced for the Singapore properties earlier. In the near-term, management will focus on active asset management to improve the property yields of the current portfolio.”

Frasers Commercial Trust has commenced discussions with banks to refinance its existing loans.

Mr Lim Ee Seng, chief executive of Frasers Centrepoint, said: “We are committed to this trust and will dedicate its resources to strengthening its capital structure, enhancing the property portfolio and grow it further.”

Source : Today - 15 Aug 2008

I REFER to the article entitled ‘Safety in Reits? Don’t count on it: analysts’ (BT, Aug 4).

The article mentioned that Reits are not necessarily defensive plays as these are subject to the cyclical property sector. While this association is generally true for Reits which have short-term lease agreements with their tenants, the cyclical nature of the property sector does not impact those Reits which have long-term leases - examples of which would be First Reit, Parkway Life Reit and CDL Hospitality Trust.

In the case of First Reit, our Indonesian and Singapore healthcare assets are leased to master lessees for long tenures of 10 or 15 years, with provisions for favourable yearly rental increases. What this means is that even when the property market takes a downturn or the economy slows down, we will still enjoy a stable revenue structure with rental increases according to agreed lease terms with the master lessees. The risks associated with short-term leases and multiple tenants such as the possibility of loss of tenants or reduced rental rates during economic downturns are thus avoided.

Ronnie Tan
CEO, Bowsprit Capital Corporation Limited
Manager of First Reit

The editor replies: The article did make reference to Reits with long-term leases. Specifically, it said that ’some Reits may be more resilient because they can lock in leases over several years, which helps stabilise earnings’.

Source : Business Times - 05 Aug 2008