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ASCOTT Residence Trust (ART) achieved a unitholders’ distribution of $15.86 million for the third quarter ended Sept 30, a 32 per cent increase year-on-year. Distribution per unit (DPU) for the quarter is 2.61 cents, a 31 per cent increase from a year earlier.

Lim Jit Poh, chairman of Reit manager Ascott Residence Trust Management Ltd (ARTML), said: ‘Ascott Reit posted a strong operating performance. Revenue increased $10.7 million. Sixty-six per cent was attributable to organic growth across the portfolio. The other 34 per cent was contributed by newly acquired properties subsequent to Q3 2007.’

ARTML chief executive Chong Kee Hiong said ART continued to benefit from geographic diversification and its extended-stay business model. Its properties in Beijing enjoyed strong growth in average daily rates during the Olympic Games. And its Australian and Singapore properties also performed well.

As at Sept 30, ART’s gearing was 34.9 per cent - well within the 60 per cent gearing limit allowable under MAS’s property fund guidelines.

The trust’s average cost of debt was 3.3 per cent, and its interest cover a healthy 5.1 times. ARTML said that more than 70 per cent of ART’s debt is on a fixed-rate basis, as it has consistently taken a conservative approach to capital management.

Some $84.6 million or 15 per cent of total debt is due for refinancing in the current Q4. The trust said it has sufficient cash and bank facilities to meet these refinancing needs. More than 80 per cent of total debt is not due for refinancing until 2011 and beyond.

‘We will continue to focus on active management of our properties to maximise asset yields to deliver stable returns to unitholders, despite the difficult economic conditions,’ Mr Lim said.

Source : Business Times - 23 Oct 2008

FIRST Real Estate Investment Trust (First Reit) yesterday reported net distributable income of $5.3 million for the third quarter ended Sept 30, 2008 - 12.4 per cent more than a year ago.

This was driven by a 7.4 per cent year-on-year hike in gross revenue to $7.6 million in Q308. Higher rentals from four Indonesian properties acquired in 2006 and rentals from another four local properties bought last year contributed to the revenue increase.

To be paid out on Nov 28, distribution per unit (DPU) for the healthcare trust in Q308 was 1.92 cents, 0.2 cent more than in the same period last year. This translates to an annualised DPU of 7.60 cents. Based on the closing price of 39.5 cents on Oct 17, the distribution yield stands at 19.2 per cent.

‘In today’s challenging economic environment around the world, we remain optimistic that the demand for quality healthcare will continue to grow,’ said Ronnie Tan, CEO of First Reit manager Bowsprit Capital Corporation Ltd.

‘Healthcare tends to be a resilient sector - everyone still has to look after his health in good or bad times. Moreover, the aging population and its related diseases will continue to provide opportunities for healthcare services.’

First Reit’s portfolio comprises eight properties in Singapore and Indonesia. According to the trust, revenues are derived from long- term leases which are denominated in Singapore dollars and have no provision for downward rental revisions.

Looking ahead, First Reit said that it will focus on improving the income-generating capacity of its existing healthcare properties. It will enhance assets and work with tenants to continually upgrade healthcare services.

While the trust continues to have headroom for more acquisitions (with debt-to-property valuation ratio standing at 15.6 per cent), Dr Tan said: ‘We will continue to exercise prudence in assessing the attractiveness, timing and sequence of future acquisitions.’

The manager expects First Reit to continue performing well for the rest of the financial year. The trust’s unit price ended 1.5 cents higher yesterday at 41.5 cents.

Source : Business Times - 22 Oct 2008

MAPLETREE Logistics Trust (MapletreeLog) cut its leverage ratio to 36.9 per cent in the third quarter of this year - down significantly from 56.3 per cent in Q2.

At Sept 30, its debt was down about 30 per cent - from $1.461 billion in the previous quarter - to $1.023 billion, with the help of a rights issue in July.

However, this had a dilution effect on its distribution per unit (DPU).

For Q3, MapletreeLog reported DPU of 1.84 cents, down 9.8 per cent quarter on quarter but up 7 per cent year on year.

Distributable income of $25.4 million was 33.1 per cent higher than a year earlier, while net property income was up 18.7 per cent to $40.2 million.

At the close of the rights issue offer period, only 59.9 per cent of valid acceptances were received. MapletreeLog’s sponsor Mapletree Investments took up the balance of the units and applied for excess rights, lifting the final demand tally to 130.7 per cent.

The rights issue, which was completed on Aug 22, saw 831.1 million new units issued, increasing the number of outstanding units from 1.108 billion to 1.939 billion. MapletreeLog raised $606.7 million from the issue - and used a significant portion to repay loans.

Of its current debt of $1.023 billion, $114 million is due to mature within 12 months. ‘We are comfortable with this,’ said Chua Tiow Chye, the chief executive of Reit manager Mapletree Logistics Trust Management.

Mr Chua also said the trust has committed bank lines and firm proposals that are twice the amount, as well as other uncommitted lines.

‘We are well positioned to weather the current challenging environment as there is no funding or refinancing risk,’ he said.

Weathering the ‘challenging environment’ means MapletreeLog will get off the acquisition trail for a while, especially as it would like to maintain a leverage ratio of 40-45 per cent.

It has announced two acquisitions with a book value of $46 million that are pending completion.

Mr Chua said that looking forward, growth will be at a more moderate pace of 3 per cent. ‘If we do acquisitions, it will be based on debt and equity,’ he said.

MapletreeLog’s less aggressive stance will also extend to its tenants. ‘With the downturn, we need to be more circumspect on how much we can push tenants on rental reversion,’ Mr Chua said, adding that the trust will look instead at ‘rental retention’.

Expenses increased 26.4 per cent year on year to $5.8 million in Q3, due to higher property taxes and land rents.

Still, rental reversion was about 30 per cent higher. The trust’s portfolio of 79 buildings, valued at $2.485 billion, also had an occupancy rate of 99 per cent.

Source : Business Times - 22 Oct 2008

CREDIT rating agencies have turned more pessimistic on two real estate investment trusts (Reits) in Singapore: Frasers Commercial Trust (FCT) and MacarthurCook Industrial Reit (MI-Reit).

Standard & Poor’s (S&P) Ratings Services yesterday changed its CreditWatch status on BB-rated FCT from positive to developing. The revision arose from concerns over FCT’s debt of $70 million, which will be due on Nov 22.

‘FCT has yet to finalise its refinancing plans to the level of certainty we expected,’ said S&P credit analyst Wee Khim Loy.

FCT owes $70 million to the Commonwealth Bank of Australia, due next month. In addition, it owes the bank $400 million and $150 million, which will fall due in July and December 2009 respectively.

According to S&P, FCT has said it is making progress in obtaining firm commitment from a consortium of banks to refinance the debts. This is helped by the financial flexibility and satisfactory credit profile of Frasers Centrepoint Ltd (which owns 18.27 per cent of FCT) and Fraser and Neave Ltd (which owns Frasers Centrepoint).

S&P expects FCT to have firm committed refinancing arrangements ready by Oct 31. Otherwise, FCT’s rating may be placed on CreditWatch negative or lowered.

Separately, Moody’s Investors Service yesterday placed MI-Reit’s Baa3 corporate family rating on review for a possible downgrade.

With ‘dramatically changed market conditions’, MI-Reit is ‘likely to retain much greater asset and tenant concentration than is consistent with a Baa3 rating’, said Moody’s lead analyst for the trust, Kathleen Lee.

The review also recognised refinancing risks facing MI-Reit. The trust has 91 per cent of its total debt or $201 million falling due next April, which is not covered by available committed facilities.

Nonetheless, Moody’s noted that MI-Reit’s credit metrics still have reasonable headroom against its bank loan covenants. Its revenue stream is also supported by a relatively long- lease maturity profile, mitigating the effects of low asset diversification and moderate tenant concentration.

Moody’s review will focus on MI-Reit’s progress in securing committed financing for debt maturing in April next year. It will also consider management’s strategy in improving the asset portfolio and revenue streams in the next 1-2 years.

Source : Business Times - 22 Oct 2008

HEALTH-CARE investment trust First Reit’s business is seemingly recession- proof, judging by its latest quarterly results and prognosis for the future.

In the third quarter to Sept 30, First Reit’s distribution per unit grew by 11.6 per cent to 1.92 cents.

On an annualised basis, the payout works out to a whopping 18.3 per cent yield, based on First Reit’s last traded price of 41.5 cents yesterday.

The good performance is not a one-off either, as Dr Ronnie Tan explained: ‘In today’s challenging economic environment around the world, we remain optimistic that the demand for quality health care will continue to grow.’

The chief executive of Bowsprit Capital, which manages First Reit, added that the trust’s revenues come from long-term leases in Singapore dollars.

Thus, there is no currency risk.

There is also no provision for downward revision in rentals.

‘Health care tends to be a resilient sector; everyone has to look after his health in good or bad times.

‘Moreover, the ageing population and its related diseases will continue to provide opportunities for health-care services,’ Dr Tan said.

For the year to date, First Reit’s distribution per unit is 5.68 cents, up 14.3 per cent over the same period last year.

Going forward, the health-care real estate trust will continue to focus on improving the income-generating capacity of its existing health-care properties through asset enhancement and working with tenants to upgrade services.

For example, the sponsor of its Indonesian assets, Lippo Karawaci, has been expanding and enhancing services offered by the Siloam Group of hospitals to grow patient volume and revenue.

In Singapore, Bowsprit is also concluding plans to enhance the Adam Road Hospital to its maximum plot ratio.

While First Reit’s debt-to-equity ratio remains relatively low at 15.6 per cent - giving it ample capacity for further acquisitions - it will be very selective in acquiring new properties.

Source : Straits Times - 22 Oct 2008