Highlights

THE SINGAPOREAN INVESTOR

Author: ljunyuan   |   Latest post: Mon, 23 May 2022, 1:22 PM

 

My Summary of Mapletree Commercial Trust's EGM

Author: ljunyuan   |  Publish date: Mon, 23 May 2022, 1:22 PM


My Summary of Mapletree Commercial Trust's EGM

This morning (23 May 2022), Mapletree Commercial Trust (SGX:N2IU) held its Extraordinary General Meeting (EGM) to seek unitholders’ approval on the REIT’s proposed merger with Mapletree North Asia Commercial Trust (SGX:RW0U).

As the CEO’s presentation was exactly the same as that delivered during the dialogue session organised by SIAS with the REIT’s unitholders on 11 May, you can read about it in full in a separate post here.

What you’ll find in this post are responses provided by the REIT’s management during the live Q&A session, along with results of the 4 resolutions put to vote during the meeting:

Responses Provided by the REIT’s Management to Questions Raised by EGM Attendees

  • Responding to a question on why Mapletree Logistics Trust (SGX:M44U) was not considered for the merger, but Mapletree North Asia Commercial Trust, Chairman Tsang Yam Pui said that the latter’s nature of business (which invests in retail, office, and business park properties) are aligned to Mapletree Commercial Trust’s. Also, Mapletree Logistics Trust invests in logistics properties, which is a totally different sector altogether.
  • On the extent to which Covid-19 have impacted Mapletree North Asia Commercial Trust, CEO Ms Sharon Lim shared that most of the impact were directly felt by the retail sector – where the REIT only had one property in Festival Walk. She added that while the particular property is still recording a negative rental reversion, but it has shown improvements (from -34.0% in the first quarter to -18.0% in the fourth quarter of FY2021/22.) For the office and business park properties, Ms Lim shared that they have continued to remain resilient.
  • Another unitholder wanted to know the overall investment strategy of the merged entity (in Mapletree Pan Asia Commercial Trust, or MPACT), targeted geographical concentration, as well as its criteria for selection (of properties into invest in.) In response, Ms Lim said that the REIT’s investment preference will be towards office and business park properties (along the scales of Sandhill Plaza in China and Mapletree Business City in Singapore), while remaining very selective on retail properties (where they should preferably be “best-in-class” properties, as well as be minimally affected by structural changes.) On the second part of the question relating to targeted geographical concentration, Ms Lim said that 50+% of MPACT’s Asset Under Management (AUM) will continue to remain in Singapore, which will continue to provide stability for the REIT, with the remaining in key gateway markets to pursue growth. She added that the REIT will continue to remain invested and open to further opportunities in the Singapore, Korea, and Japan market, but for the Hong Kong market, the REIT will wait till Festival Walk has fully recovered before pursuing further investments in the geographical location. Finally, on the criteria for selection, Ms Lim shared that some of the evaluation criteria include whether or not the asset (i) is a quality fit (to the REIT’s overall portfolio); (ii) has any upsides to leasing; (iii) financial returns.
  • One unitholder was concerned by MNACT being inferior in terms of its DPU, NAV, and AUM growth compared to MCT over the years, and that the merged entity will be adversely impacted. In response, Ms Lim said that while she understood the unitholder’s concerns and acknowledged the “bumpy roads” ahead, but she also expressed her confidence in the assets (of MNACT) recovering to a certain level which the REIT is comfortable with in the foreseeable future. She also stressed the need to focus on MNACT’s ability to provide MCT with a ready platform to swiftly take advantage of and expand its business presence into key gateway markets (as opposed to embarking on individual asset acquisitions which is very time consuming, and hence, the growth rate will not be as fast as compared with through the proposed merger.)

Results of the 4 Resolutions Put to Vote during the EGM

  • Resolution 1, which is to approve the proposed Merger of Mapletree Commercial Trust and Mapletree North Asia Commercial Trust by way of a trust scheme of arrangement, was passed with 91.67% of the votes for, and 8.33% of the votes against.
  • Resolution 2, which is to approve the proposed allotment and issuance of units of Mapletree Commercial Trust to the holders of units in Mapletree North Asia Commercial Trust as full or part of the consideration for the Merger, was passed with 91.70% of the votes for, and 8.30% of the votes against.
  • Resolution 3, which is to approve the Whitewash Resolution in relation to the Concert Party Group, was passed with 85.73% of the votes for, and 14.27% of the votes against.
  • Resolution 4, which is to approve the proposed amendments to the MCT Trust Deed to adopt the Management Fee Supplement, was passed with 92.15% of the votes for, and 7.85% of the votes against.

Related Documents

Disclaimer: At the time of writing, I am a unitholder of Mapletree Commercial Trust.

  Be the first to like this.
 

A Look at EC World REIT's Latest Q1 FY2022 Results

Author: ljunyuan   |  Publish date: Thu, 12 May 2022, 6:31 PM


A Look at EC World REIT's Latest Q1 FY2022 Results

After market hours this evening (12 May 2022), China-based e-commerce and port logistics REIT in EC World REIT (SGX:BWCU) made available its results for the first quarter of FY2022 ended 31 March 2022.

For those who are not familiar with the REIT, a quick introduction – its portfolio currently constitutes of 8 properties, where all but 1 (located in Wuhan) are located in Hangzhou. Also, the REIT is one of the few remaining Singapore-listed REITs that have continued to provide its full financial reports on a quarterly basis after the Singapore Exchange no longer mandates listed companies to report their full financial results in that timeframe from FY2020. It is also one of the few Singapore-listed REITs that have declared a distribution payout to its unitholders on the same timeframe.

In this post, you’ll read about my review on the REIT’s latest set of financial results, portfolio and debt profile, along with its distribution payout declared for the current quarter under review.

Let’s begin…

Financial Performance (Q1 FY2021 vs. Q1 FY2022)

The following table is EC World REIT’s financial results reported for Q1 FY2022 compared against that reported last year (i.e. Q1 FY2021):

Q1 FY2021Q1 FY2022% Variance
Gross Revenue
(S$’mil)
$30.8m$32.2m+4.4%
Property Operating
Expenses (S$’mil)
$3.1m$2.4m-22.6%
Net Property
Income (S$’mil)
$27.7m$29.7m+7.4%
Distributable Income
to Unitholders
(S$’mil)
$12.4m$11.2m-9.4%

The 4.4% and 7.4% improvements in the REIT’s gross revenue and net property income respectively were mainly due to the strengthening of the Chinese Renminbi (however, if we were to compare its gross revenue and net property income in RMB-terms, they would have been up by a smaller percentage at 1.3% and 4.4% respectively), late fee income, along with organic rental escalation.

However, its distributable income to unitholders saw a 9.4% dip due to higher income tax expenses and provision for pre-termination compensation to 3rd party tenant (amounting to RMB19.2m, or approximately S$4.1m; of which 30% has been recognised in the current quarter under review) as a result of the compulsory expropriation of Fu Zhuo Industrial – where the PRC authorities will be providing a compensation package of RMB108.5m (this amount is 92.8% of the property’s latest valuation, and 26.8% higher than its purchase consideration at IPO) to be paid in 3 tranches to the REIT; as at 31 March 2022, 30.0% of the compensation package has been received.

Portfolio Occupancy Profile (Q4 FY2021 vs. Q1 FY2022)

Next, let us take a look at the REIT’s portfolio occupancy profile – where I will be taking the statistics reported for the current quarter under review (i.e. Q1 FY2022 ended 31 March 2022) and compare them against the statistics reported for the previous quarter 3 months ago (i.e. Q4 FY2021 ended 31 December 2021) to find out whether they have continued to hold steady (like in the previous quarters):

Q4 FY2021Q1 FY2022
Portfolio Occupancy
(%)
99.2%98.6%
Portfolio WALE (by
Gross Rental Income – years)
2.7 years2.4 years

My Observations: Compared to the previous quarter, the REIT’s portfolio has weakened slightly, due to a drop in the occupancy rate of Wuhan Meiluote (down from 84.7% in Q4 FY2021 to 78.8% in Q1 FY2022), as well as in Chongxian Port Logistics (down from 100.0% in Q4 FY2021 to 97.8% in Q1 FY2022.) All the other properties continue to remain 100.0% occupied.

As far as lease expiries are concerned, only 8.0% (by gross rental income) will be due for renewal in the remaining quarters of the current financial year 2022, with another 15.9% due for renewal in FY2023. However, a huge bulk (74.9%) of the leases will be due for renewal in FY2024 (which is something to be mindful of.)

Finally, regarding the recent lockdowns in China, I understand that the REIT has not received any request for rental rebates from its tenants at this juncture, and that it is monitoring the situation very closely (this is something which I have also checked with its investor relations about – and I was told that the REIT have been communicating through calls every day to stay updated about the situation in the country; so far, its still business as usual in the REIT’s properties.)

Debt Profile (Q4 FY2021 vs. Q1 FY2022)

The following table is a comparison of the REIT’s debt profile recorded for the current quarter under review against that reported in the previous quarter (just like how I have reviewed its portfolio occupancy profile in the previous section):

Q4 FY2021Q1 FY2022
Aggregate Leverage
(%)
38.2%37.3%
Average Cost of
Debt (%)
4.1%4.2%

My Observations: From my understanding, as of 31 March 2022, the REIT has aggregated facilities of S$706.5m outstanding – apart from RMB77.0m of onshore facility which will due in 2029, the rest are due in the current financial year – to which I understand that the Manager is in the final stage of negotiation for the refinancing and will provide updates as and when there are further developments. I also note from its presentation slides that “the Manager expects that the refinancing exercise will be completed prior to the maturity dates of the term loans.”

Personally, I have also been following up on this and trying to seek for updates from the Investors Relation but was also told the same. It’s something I will keep a close watch on and provide updates as and when I have them.

Distribution Payout to Unitholders

For the current quarter under review, the REIT’s management have declared a payout of 1.383 cents/unit, a 9.7% drop from its payout of 1.532 cents/unit in the same time period last year (i.e. Q1 FY2021.)

If you are a unitholder of the REIT, do take note of the following dates regarding its distribution payout this time round:

Ex-Date: 14 June 2022
Record Date: 15 June 2022
Payout Date: 29 June 2022

Closing Thoughts

The REIT’s latest set of financial results in my opinion is a little on the “flattish” side in my opinion – pretty much expected considering that the REIT have not embarked on any acquisitions, and as such, improvements to its financial results can only be from rental escalations, and/or from favourable currency exchange rate.

While its portfolio occupancy rate continues to remain pretty resilient, but I remain concerned by the fact that a 74.9% of the leases will be expiring in a single year – in FY2024. I have posted a question during its AGM to ask about this, and the following was the REIT’s response, and I quote:

“The Manager has not commenced lease renewal negotiations for the leases expiring in FY2024. Majority of the expiring leases in FY2024 are attributed to the master leases for Fuzhou ECommerce, Stage 1 Properties of Bei Gang Logistics, Chongxian Port Investments as well as Fu Heng Warehouse.

Typically, negotiations for large lease renewals are conducted between six months to a year prior to the lease expiries. The Manager will provide timely updates to unitholders should there be any material developments in the lease renewal exercise.”

Another area I have concerns on is the REIT’s debt refinancing (for borrowings that will be expiring this year – particularly, with one tranche expiring in end-May 2022) – I’m disappointed that the response provided by the REIT still remains the same (i.e. it is still in the final stages of negotiation) considering the fact that we are just mere 2+ weeks or so to the end of the month. It will certainly be keeping a VERY close watch on this, and provide updates as and when I have them.

With that, I have come to the end of my review of EC World REIT’s latest first quarter results for FY2022. As always, please note that all the opinions above are purely mine, which I’m sharing for educational purposes only. They do not imply any buy or sell calls for the REIT’s units. You should always do your own due diligence before you embark on any investment decisions.

Related Documents

Disclaimer: At the time of writing, I am a unitholder of EC World REIT.

  Be the first to like this.
 

My Summary of SIAS' Virtual Dialogue Session with the CEO of Mapletree Commercial Trust

Author: ljunyuan   |  Publish date: Wed, 11 May 2022, 3:50 PM


My Summary of SIAS' Virtual Dialogue Session with the CEO of Mapletree Commercial Trust

Yesterday evening (10 May 2022), Securities Investors Association (Singapore), or SIAS for short, facilitated a virtual dialogue session between Mapletree Commercial Trust (SGX:N2IU) (or MCT for short) and its unitholders on the REIT’s proposed merger with Mapletree North Asia Commercial Trust (SGX:RW0U) (or MNACT for short).

For context, it was announced on 31 December 2021 that the 2 Mapletree REITs have proposed a merger, with the combined entity (to be known as Mapletree Pan Asia Commercial Trust, or MPACT for short) becoming one of Asia’s Top 10 REITs – with its portfolio comprising of 18 retail and office properties in Singapore, Hong Kong, China, Japan, and South Korea, and a total asset under management of approximately S$17.1bn (you can read the news article published on The Straits Times in full here.)

I have attended the session as a unitholder of MCT to learn more about the proposed merger and for the benefit of those who are not able to attend, in this post, you’ll find my summary of the CEO’s presentation, along with the Mapletree’s (CEO of MCT, Ms Sharon Lim, as well as Deputy CEO of Mapletree Investments Pte Ltd, Mr Chua Tiow Chye) responses to questions posed by fellow attendees.

Let’s begin:

Presentation by CEO of MCT

Rationale for the Merger:

  • Due to limited growth opportunities available in Singapore, and in order for the REIT to sustain its growth on a long-term basis, it will have to expand overseas.
  • MNACT, which is anchored by a diversified portfolio (with investments in key gateway markets including China, Hong Kong, Japan, and South Korea) offers the best opportunity as the REIT has a ready launchpad with a similar Standard Operating Procedure and systems (as both are under the Mapletree umbrella), which allows for a seamless integration.
  • Also, compared to the REIT embarking on inorganic acquisitions themselves (which will take a much longer time), the merger will allow them to very quickly gain access to key markets.
  • Merged entity will leapfrog to become the 7th biggest REIT in Asia (compared to being in 13th position for MCT, and in 29th position for MNACT currently.)
  • Pro forma DPU (up 6.8% from 9.53 cents to 10.18 cents), as well as NAV (up 7.1% from $1.69 to $1.81) accretive.

Overview of Merged Entity:

  • 18 assets across 5 markets with the number of properties and percentage concentration (by assets under management) in brackets: Singapore (5 properties, 52%), Hong Kong (1 property, 26%), China (2 properties, 11%), Japan (9 properties, 10%), South Korea (1 property, 2%)
  • Best-in-class assets (in Festival Walk, VivoCity, and Mapletree Business City) constitutes 67% of the REIT’s portfolio.
  • Portfolio occupancy will be at 97.2%, with a WALE (Weighted Average Lease Expiry) at 2.5 years.

Scheme Consideration Options:

  • MNACT unitholders will have to choose from the following (where all 3 options amount to S$1.1949, in-line with the REIT’s Net Asset Value as at 30 September 2021, and a 1.0x Price/Net Asset Value):
    • Scrip-Only: 0.5963 new MCT units for every MNACT unit;
    • Cash-and-Scrip: 0.5009 new MCT units, plus S$0.1912 in cash for every MNACT unit;
    • Cash-Only: S$1.1949 in cash for every MNACT unit, which is also the default option.
  • Mapletree Investment Pte Ltd, a Sponsor for both Mapletree REITs, has elected to receive the “Scrip-Only” consideration.

Preferential Offering by MCT to Fund for the Additional Cash Consideration:

  • Ms Lim explained that this came about following the inclusion of the “Cash-Only” consideration, where the Sponsor have also undertaken to subscribe for the Maximum Preferential Offering Units of up to S$2.2bn (based on the issue price of S$2.0039), along with agreeing to a voluntary 6-month lock-up period of the unitholdings (to add, Mr Chua gave his reassurance that the Sponsor does not have any intention to divest the units even after the lock-up period.)
  • On top of that, Ms Lim shared that the Sponsor have agreed to waive off acquisition fees related to the transaction.

New Management Fee Post-Merger:

  • Ms Lim noted that many unitholders have expressed their concerns about the 10.0% base fee of distributable income for the merged entity (compared to MCT’s base fee of 0.25% per annum of total assets and performance fee of 4.0% per annum of Net Property Income), to which she has clarified that based on Mapletree Commercial Trust’s current fee structure, its base + performance fees amounts to 0.42% of the total assets under management. However for the merged entity, it will be at a lower 0.35% (assuming all MNACT Unitholders, excluding the MIPL Entities, elect to receive the “Cash-and-Scrip” or “Cash-Only” consideration) to 0.36% (assuming all MNACT Unitholders elect to receive the Scrip-Only Consideration) – this is in spite of the merger being a DPU-accretive one (between 4.3% and 6.8%.)

Post-Merger Strategy:

  • Exploring opportunities to further acquire office and office-like business park properties (something like Mapletree Business City), which Ms Lim cited has a rental advantage, and at the same time, having a reasonable valuation.
  • Unlocking value through selective strategic divestments at an opportune time, along with expanding their business presence in other geographical location (in that light, Ms Lim shared that MPACT is looking to deepen its presence in South Korea, where the REIT currently only have 1 property.)

Indicative Timeline (Selected Items):

  • MCT’s EGM – 10.00am on Monday, 23 May 2022
  • MNACT’s EGM – 2.30pm on Monday, 23 May 2022
  • Expected Application Period (in respect of the Preferential Offering) for MCT unitholders – Thursday, 28 July 2022 to Friday, 05 August 2022
  • Expected Effective Date of Trust Scheme – Monday, 08 August 2022
  • Expected Date of Settlement of Scheme Consideration – Wednesday, 17 August 2022
  • Expected Date of Delisting of MNACT – Friday, 19 August 2022

Responses to Questions Raised by Session Attendees

  • One unitholder wanted to know why the REIT cannot remain status quo (and continue to acquire properties in Singapore) since the merged entity will also remain Singapore-centric. Ms Lim explained that there have been limited acquisition opportunities available in Singapore over the past few years (on top of that, Mr Chua said that the Sponsor have no intention to sell any properties to which MCT has ROFR to in the near-term as they are due for re-development, in-line with the Singapore Government’s Greater Southern Waterfront project.) At the same time, she shared that many unitholders have expressed their concerns about the REIT’s growth potential ahead. Taking all these into consideration, the REIT will need to expand overseas to ensure its long-term growth, and the proposed merger with MNACT will propel it into a new era of growth.
  • Responding to unitholders’ concerns about the REIT’s risk profile following the merger, Ms Lim understood that unitholders may feel jittery about it (as the risk profile will definitely be higher compared to investing in properties in a safe haven like Singapore), but she explained that in order for the REIT to be able to maintain its growth in the years ahead, they will need to expand overseas, and as such, the increase in risk profile is inevitable. That said, she added that the reward will be an improvement in the REIT’s DPU and NAV (on a pro-forma basis.)
  • Another unitholder wanted to know whether it is the right time to embark on such a transaction at this point in time, considering the current headwinds posed by rising interest rates, lockdown in China (due to its “Zero Covid” strategy), as well as geopolitical tensions between Russia and Ukraine. In response, Ms Lim said that while she understood the unitholder’s concerns, but she explained that there is no “perfect” time, as there will always be challenges. She added that all the considerations have been extensively studied, and it was concluded that for the long-term, there are more positives than negatives (hence the proposed transaction at this point in time.) Furthermore, the proposed transaction has been supported by third-party validators.
  • Pertaining to concerns that the REIT’s aggregate leverage will go up to 38.8% (assuming all MNACT Unitholders elected to receive either the “Cash-and-Scrip” or “Cash-Only” consideration; should they elect to receive the “Scrip-Only” consideration, it will be at 37.5%) post-merger, Ms Lim said that it is still well below the guidelines set by the MAS (Monetary Authority of Singapore), and that there still remains S$3.9bn of debt headroom before the regulatory limit of 50.0% is reached – which is not straining in her opinion.
  • On another question pertaining to plans to reduce the merged entity’s aggregate leverage after the merger, Ms Lim said there is no need to actively bring it down as there still remains a huge debt headroom before the regulatory limit (set by the MAS) is reached. She also shared that if the merged entity manage to record a positive performance, the properties’ valuations will go up, and this will also help to bring down the REIT’s aggregate leverage.
  • In response to a unitholder’s question as to whether or not the properties of MNACT are acquired at a “bargain price”, Ms Lim highlighted the need to be “fair” to unitholders of both Mapletree REITs and as such, the acquisition price has been extensively negotiated and deemed to be at a “fair value”, and also well-supported by 805 audit opinion.
  • On concerns as to whether or not the lease in Festival Walk (in Hong Kong) will be renewed upon its expiry in the year 2047, Ms Lim shared that historically, the Hong Kong Government have always granted fresh lease renewals and as such, and she does not foresee any problems as far as lease renewal for the particular property is concerned.
  • Another question relating to Festival Walk is about headwinds surrounding it – in response, Ms Lim expressed her confidence in the property, where she explained that it is very similar to VivoCity in terms of its tenant-mix, size, as well as connectivity. She added that even though the mall is still recording negative rental reversions (for new and/or renewed leases), but it has narrowed in the recent quarters. Also, safe management measures in Hong Kong have recently been relaxed, and Ms Lim is positive that visitor traffic and tenant sales will improve, similar to that experienced in VivoCity, where the mall experienced a hike in sales volume (she also added that VivoCity’s tenant sales for Q4 FY2021/22 ended 31 March 2022 have surpassed pre-Covid levels.) Mr Chua further reassured unitholders by sharing that apart from the social unrest (which he do not foresee a repeat) and Covid, Festival Walk has contributed positively towards MNACT’s financial performance in the other years. That said, he is confident of the mall’s contribution towards the merged entity’s overall performance in the years ahead.
  • Since the preferential offering price of S$2.0047 is much higher than the REIT’s open market price (currently), there’s a strong possibility that unitholders will not be subscribing to it. As such, a unitholder wanted to know whether there will be a dilution effect (to those who choose not to subscribe.) To this, Ms Lim explained that there is no dilution, as the total number of units remain the same – if unitholders were to opt for the “Cash-Only” option, then units will fall into the hands of the Sponsor. Likewise, if unitholders choose not to subscribe to the preferential offering, the Sponsor will also be taking up all the units. Additionally, she highlighted the fact that the Sponsor is prepared to subscribe to the units at S$2.0047, goes to show their conviction in the long-term growth potential of the REIT.
  • Responding to a question on what will happen if the proposed transaction does not go through, Ms Lim said everything will remain status quo. However, she cautioned about the limited growth potential of the REIT (due to the limited M&A opportunities available in Singapore) should that happen.
  • Addressing another question on whether there is a reduction in demand for office space brought upon by the hybrid work model post-pandemic, Ms Lim said that a majority of them have maintained their current office sizes, as companies are aware that employees prefer to maintain a “safe distance” between work desks and have re-configured their office spaces to cater to such a requirement – in other words, while the number of employees at the office have reduced, but it is offset by having a bigger space for each employee present at their workplace.
  • A unitholder wanted to know about the merged entity’s reconstitution plans, to which Ms Lim shared that it will involve portfolio recycling (where they will look to divest certain properties and redeploy the capital into higher yielding ones.) Ms Lim also shared the possibility of rebalancing its Japan assets (where it has 9 assets constituting 10% of the merged entity’s AUM) either through selective divestment of some of the assets in the country, or by adding more assets in other countries.
  • Another unitholder wanted to know whether there will be a shake-up of the Board after the merger, which Ms Lim said more details will be announced after the EGM. At this point in time, the Board has yet to be formed.

Related Documents

Disclaimer: At the time of writing, I am a unitholder of Mapletree Commercial Trust.

  Be the first to like this.
 

Key Pointers to Take Note of in Ascendas REIT's Q1 FY2022 Business Update (and My Thoughts about Them)

Author: ljunyuan   |  Publish date: Wed, 4 May 2022, 6:16 PM


Key Pointers to Take Note of in Ascendas REIT's Q1 FY2022 Business Update (and My Thoughts about Them)

Ascendas REIT (SGX:A17U), Singapore’s first and largest-listed business space and industrial REIT (with its portfolio comprising 96 properties in Singapore, 34 properties in Australia, 49 properties in the United Kingdom/Europe, and 41 properties in the United States, along with a customer base of more than 1,500 international and local companies from a wide range of industries and activities), have made available its business update for the first quarter ended 31 March 2022 after market hours today (04 May 2022.)

As the REIT is no longer mandated to report its full financial statements on a quarterly basis, no such figures were reported for the current quarter under review. Also, the REIT have also switched to paying out a distribution on a half-yearly basis (as such, there are no distributions declared for the current quarter under review too.)

For the current quarter under review, only updates about its portfolio occupancy and debt profile were made available (where I will be comparing them against the stats reported in the previous 3 months ago), which you’ll read about in this post:

Portfolio Occupancy (Q4 FY2021 vs. Q1 FY2022)

Q4 FY2021Q1 FY2022
Portfolio Occupancy
(%)
93.2%92.6%
Rental Reversion
(%)
+2.9%+4.6%

My Observations: Apart from the portfolio occupancy in UK (which remained the same at 96.7%), Ascendas REIT’s portfolio occupancy in all the other geographical locations saw slight declines (with the portfolio occupancy rate of its Singapore properties down from 90.2% in Q4 FY2021 to 90.0% in Q1 FY2022, the portfolio occupancy rate of its Australia properties down from 99.2% in Q4 FY2021 to 96.8% in Q1 FY2022, and the portfolio occupancy rate of its United States properties down from 94.5% in Q4 FY2021 to 94.0% in Q1 FY2022), the REIT’s overall portfolio occupancy rate saw a 0.6 percentage point (pp) dip to 92.6% – personally I do not think there’s a big concern here as the portfolio occupancy still remains high at above 90.0% in all the geographical locations (where the REIT has properties in.)

Rental reversion-wise, its good to note that it has further improved compared to the previous quarter – particularly, all the new/renewed leases in Singapore, Australia, and United States saw positive rental reversions at +3.9%, +16.5%, and +14.0% respectively.

For the remaining quarters of FY2022, 16.5% of the leases will be up for renewal, with another 19.5% of the properties with leases expiring in the coming FY2023 ahead, 17.0% in FY2024, 14.4% in FY2025, and the remaining 32.6% of the properties will only be expiring in FY2026 or later.

Debt Profile (Q4 FY2021 vs. Q1 FY2022)

Q4 FY2021Q1 FY2022
Aggregate Leverage
(%)
35.9%36.8%
Interest Coverage
Ratio (times)
5.7x5.7x
Average Term to
Debt Maturity (years)
3.5 years3.5 years
Average Cost of
Debt (%)
2.2%2.1%

My Observations: Compared to the previous quarter 3 months ago, I felt that the REIT’s debt profile have more or less remained the same – while its aggregate leverage have went up slightly, but at the current level, there still remains a debt headroom of about S$4.6bn before it reaches the regulatory limit of 50.0% – again, I’m not too concerned.

Also, 79.1% of the debts are at fixed rates, which provides adequate “protection” against upcoming interest rate hikes by the Federal Reserve.

Closing Thoughts

The REIT’s portfolio occupancy, as well as its debt profile, still remains resilient in my opinion – as far as the former is concerned, no doubt its overall portfolio occupancy edged down slightly (compared to the previous quarter), but on the whole, its overall portfolio occupancy for the individual geographical locations (Singapore, Australia, United States, as well as the United Kingdom) are all over 90.0% occupied, with rental reversions for new/renewed leases made in the current quarter under review continuing to at improved rates; for the latter, while its aggregate leverage inched up slightly, at its current level, there remains a good debt headroom before the regulatory limit is reached (hence allowing the REIT to embark on more yield-accretive acquisitions as and when an opportunity to do so arises.)

With that, I have come to the end of my review of the Ascendas REIT’s business update for the first quarter of the financial year 2022. Do note that everything you’ve just read above are purely meant for educational purposes only, and they do not imply any buy or sell calls for the REIT’s units. You’re strongly encouraged to do your own due diligence before you make any investing decisions.

Meet up with Ascendas REIT’s CEO Mr William Tay “Live” in REITs Symposium on 21 May 2022

Co-organised by InvestingNote, you can meet up with Ascendas REIT’s CEO Mr William Tay in the upcoming REITs Symposium – where he will be in the “REITs Live Chat” session between 12.50pm and 1.20pm to share more about the REIT.

The event will be held in a “hybrid format” – meaning you can choose to attend it either online (where your attendance is confirmed), or offline (where it will be pending confirmation, due to limited tickets available.)

If you are new to investing, and would like to know more about the different Singapore-listed REITs (the managements of 12 REITs will be attending the event), then this event is one I recommend attending (in case you’re wondering, its absolutely free of charge.) You can sign up here.

The Singaporean Investor is proud to be one of the media partners of the upcoming REITs Symposium 2022.

Related Documents

Disclaimer: At the time of writing, I am a unitholder of Ascendas REIT.

  Be the first to like this.
 

CapitaLand Integrated Commercial Trust's Q1 FY2022 Business Update - What You Need to Know

Author: ljunyuan   |  Publish date: Fri, 29 Apr 2022, 6:01 PM


CapitaLand Integrated Commercial Trust's Q1 FY2022 Business Update - What You Need to Know

Singapore’s first and the largest listed REIT (currently) in CapitaLand Integrated Commercial Trust (SGX:C38U), or CICT for short, have made available its business updates for the first quarter of FY2022 shortly after market hours this evening (29 April 2022.)

For those of you who are unfamiliar with the REIT, it invests in retail and office properties with a huge majority of them located n Singapore (20 in total.) Outside of its home country, the REIT have 2 office properties in Frankfurt, Germany, and another 2 office properties in Sydney, Australia.

As the REIT is one that have changed to half-yearly reporting of its full financial results, it only provided a snippet of it for the current quarter under review. Also, there are no distribution payouts being declared as well this time round as the REIT have also switched to paying out a distribution on a half-yearly basis.

In this post, you’ll read about my review of the REIT’s key financial performance figures, along with its portfolio occupancy and debt profile.

Let’s begin:

Financial Performance (Q1 FY2021 vs. Q1 FY2022)

The following table contains some of the REIT’s key financial performance figures for the current quarter under review (i.e. Q1 FY2022), compared against the same time period last year (i.e. Q1 FY2021):

Q1 FY2021Q1 FY2022% Variance
Gross Revenue
(S$’mil)
$334.8m$339.7m+1.5%
Property Operating
Expenses (S$’mil)
$87.7m$91.4m+4.2%
Distributable Income
to Unitholders
(S$’mil)
$247.1m$248.3m+0.5%

From my understanding in the REIT’s presentation slides, the reason for the net property income edging up by just 0.5% was due to higher utilities expenses. Gross revenue, in my personal opinion, is also rather “flattish”.

Portfolio Occupancy Profile (Q4 FY2021 vs. Q1 FY2022)

Moving on, let’s take a look at the REIT’s portfolio occupancy statistics reported for the current quarter under review (i.e. Q1 FY2022 ended 31 March 2022), which I will be comparing against that reported in the previous quarter 3 months ago (i.e. Q4 FY2021 ended 31 December 2021) to find out whether it has continued to remain resilient (just like in the previous quarters):

Q4 FY2021Q1 FY2022
Portfolio Occupancy (%)
(Retail)
96.8%96.6%
WALE (by GRI – years)
(Retail)
1.9 years2.0 years
Portfolio Occupancy (%)
(Office)
91.5%91.4%
WALE (by GRI – years)
(Office)
3.2 years4.0 years
Portfolio Occupancy (%)
(Integrated Development)
96.0%97.6%
WALE (by GRI – years)
(Integrated Development)
5.0 years5.4 years

My Observations: Compared to the portfolio statistics recorded in the previous quarter ended 31 December 2021 (i.e. Q4 FY2021), only the portfolio occupancy of its integrated development properties saw a 1.6 percentage point (pp) improvement, while the portfolio occupancy of its retail and office properties recorded a slight decline. That said, I personally do not think there’s too big a concern as the portfolio occupancy rates for the 3 property types (retail, office, and integrated development) still remain strong at above 90.0%.

In terms of lease expiries from now till the end of the current financial year 2022, only 12.1% of retail leases, and 4.0% of its office leases are due for renewal – again pretty minimum. Also, no single tenant contributes more than 6% towards the REIT’s total gross rental income.

Debt Profile (Q4 FY2021 vs. Q1 FY2022)

Just like how I have reviewed the REIT’s portfolio occupancy profile in the previous section, you will also find my review of its debt profile where I have compared the stats reported for the current quarter under review (i.e. Q1 FY2022 ended 31 March 2022) compared against the previous quarter (i.e. Q4 FY2021 ended 31 December 2021) to find out if it continues to remain healthy:

Q4 FY2021Q1 FY2022
Aggregate Leverage
(%)
37.2%39.1%
Interest Coverage
Ratio (times)
4.1x4.2x
Average Term to
Debt Maturity (years)
3.9 years3.9 years
Average Cost of
Debt (%)
2.3%2.3%

My Observations: Debt profile, in my opinion, still remain largely stable. The 1.9pp increase in its aggregate leverage was due to the REIT’s recent acquisition of a 50.0% interest in 101-103 Miller Street and Greenwood Plaza and CapitaSky (formerly known as 79 Robinson Road.)

Looking at its debt maturity profile, it is pretty well-staggered over the next couple of years – with just 10% (or S$969m) of its borrowings due for refinancing in the remaining quarters of FY2022, 17% (or S$1,624m) expiring in FY2023, 16% (or S$1,455m) expiring in FY2024, and the remaining 57% (or S$5,281m) of its borrowings due only in FY2025 and later.

Another thing to note is that 85% of its borrowings are on fixed interest rate – hence providing a good “shield” against interest rate hikes.

Closing Thoughts

Looking at the blue-chip REIT’s key financial performance, portfolio occupancy and debt profile, I felt that they continue to remain stable. Some people may want to know of my thoughts about its flat gross revenue and net property income growth – while I am a little bit disappointed, but I always believe that one quarter of slower performance does not “break” a company. I remain optimistic of the REIT’s resilient performance ahead and will continue to monitor its financial performance in the coming quarters.

With that, I’ve come to the end of my review on CICT’s latest first quarter business update. Do take note that the contents in this post does not constitute any buy or sell calls for the REIT’s units. You’re strongly advised to do your own due diligence before making any investment decisions.

Learn More about CICT in the Upcoming REITs Symposium 2022

Among the 12 Singapore-listed REITs that have participated in the upcoming REITs Symposium on Saturday, 21 May 2022 (between 9.00am and 6.15pm) is CICT – and it will be represented by its CEO, Mr Tony Tan.

You can catch him in an interview session which will be held between 11.00am and 11.30am on that day itself, where you can learn more about the REIT (and what better than to find out more from the REIT’s CEO himself, right?)

The event will be held in a hybrid format (i.e. both online as well as offline), and registration is FOC.

So, if you are available on that day, and would like to learn more about the various Singapore-listed REITs, you can sign up here.

The Singaporean Investor is proud to be selected as one of the media partners for the event.

Related Documents

Disclaimer: At the time of writing, I am a unitholder of CapitaLand Integrated Commercial Trust.

  Be the first to like this.
 

A Quick Summary of Hong Leong Finance's 62nd AGM for FY2021

Author: ljunyuan   |  Publish date: Fri, 29 Apr 2022, 11:56 AM


A Quick Summary of Hong Leong Finance's 62nd AGM for FY2021

This morning, finance company Hong Leong Finance (SGX:S41) held its annual general meeting (AGM) for the financial year ended 31 December 2021 (FY2021), where I’ve attended as a shareholder.

The meeting was held virtually (due to precautionary measures as a result of Covid-19), and it was an extremely short one (15 minutes in length from start to finish), with no live Q&A session (and according to Chairman Mr Kwek Leng Beng, there were no questions submitted by shareholders as well, apart from SIAS, to which they have already responded to, and you can read about it here), nor live voting of resolutions.

For the benefit of those who would like to know about the company’s updates but are unable to attend the meeting, in this post, you’ll find a summary of the Company President Mr Ang Tang Chor’s presentation (who shared about the company’s performance highlights for the year), along with results of all the resolutions put to vote during the meeting:

FY2021 Performance Highlights Presentation by Mr Ang Tang Chor

  • Net profit for FY2021 rebounded strongly to $84.8m (FY2020: $63.9m) on the back of the pandemic, largely contributed by an increase in net interest margin, along with successful management of funding cost.
  • Its total equity as at 31 December 2021, at $2.bn, was a record for the finance company. Mr Ang also added that the company’s balance sheet remains resilient supported by strong capital and liquidity buffers.
  • Customer loans declined by 2.3% to $10.3bn (FY2020: $11.0bn) on lower net loan, with customer deposits also managed down by 3.5% to $10.8bn (FY2020: $11.2bn) to optimise loan funding.
  • The key pillars of loans continue to remain strong, with limited exposures significantly impacted by the pandemic – by product, 74% comprised of mortgage (commercial/residential), and 13% comprised of HP Vehicles; by sector, 50% was to building and construction, 21% to professional and private individuals, and 18% to hotels, associations, and charitable organisations. On top of that, its loan portfolios are largely collateralised.
  • NPL ratio, as at 31 December 2021, was at 1.6%, of which secured NPL stands at 95.1%.
  • Total dividend for FY2021 was at 12.0 cents (with payout ratio at 63.3%.)

Results of Resolution Put to Vote during the AGM

  • Resolution 1, on the receipt of Director’s Statement and Audited Financial Statements together with the Auditor’s Report thereon, was passed with 99.99% of the votes for, and 0.01% of the votes against.
  • Resolution 2, on the declaration of a final dividend, was passed with 99.99% of the votes for, and 0.01% of the votes against.
  • Resolution 3, on the approval of Directors’ fees, was passed with 99.99% of the votes for, and 0.01% of the votes against.
  • Resolution 4(a), on the re-election of Mr Kevin Hangchi, was passed with 99.43% of the votes for, and 0.57% of the votes against.
  • Resolution 4(b), on the re-election of Mr Peter Chay Fook Yuen, was passed with 99.39% of the votes for, and 0.61% of the votes against.
  • Resolution 4(c), on the re-election of Mr Tan Tee How, was passed with 99.98% of the votes for, and 0.02% of the votes against.
  • Resolution 4(d), on the re-election of Mr Clarence Yeo Gek Leong, was passed with 99.98% of the votes for, and 0.02% of the votes against.
  • Resolution 5, on the re-appointment of KPMG LLP as Auditors, was passed with 99.43% of the votes for, and 0.57% of the votes against.
  • Resolution 6, on the authority for Directors to issue shares and/or make or grant offers, agreements or options pursuant to Section 161 of the Companies Act 1967 and the Listing Manual of Singapore Exchange Securities Trading Limited, was passed with with 99.99% of the votes for, and 0.01% of the votes against.
  • Resolution 7, on the authority for Directors to offer and grant options to eligible participants under the Hong Leong Finance Share Option Scheme 2001 (the “SOS”) other than Parent Group Employees and Parent Group Non-Executive Directors and to issue shares in accordance with the provisions of the SOS, was passed with 98.37% of the votes for, and 1.63% of the votes against.
  • Resolution 8, on the adoption of the new Constitution, was passed with 99.43% of the votes for, and 0.57% of the votes against.

Disclaimer: At the time of writing, I am a shareholder of Hong Leong Finance Limited.

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
 
 

188  175  228  588 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 Sembcorp Marine 0.1130.00 
 HSI 19000MBeP.. 0.055-0.033 
 Ntegrator 0.024+0.004 
 HSI 21400MBeC.. 0.084+0.031 
 HSI 20400MBeC.. 0.153+0.048 
 HSI 18200MBeP.. 0.035-0.023 
 YZJ Fin Hldg 0.47-0.015 
 SingTel 2.70-0.03 
 Jiutian Chemical 0.107+0.001 
 Acesian Partners 0.0530.00 
PARTNERS & BROKERS