Singapore Corporate News - 23 Jan 2008

CapitaLand plans to set up Reit for Indian retail malls

CAPITALAND plans to create a Real Estate Investment Trust or listed vehicle holding Indian malls as an exit strategy for retail projects that it will develop jointly with two separate Indian partners.

The Singapore property giant yesterday announced separate joint ventures with Prestige Group and Advance India Projects Ltd (AIPL) to develop/invest in and manage an initial portfolio of 15 retail or predominantly retail projects worth over $2.12 billion. They will have a total lettable area of more than 11 million sq ft.

The tie-up with Prestige Group, the developer of The Forum in Bangalore, will be for malls in South India. The partnership with AIPL is for North India.

CapitaLand will participate in the develop- ment/investment of these various projects through the CapitaRetail India Development Fund, which has an equity fund size of about US$600 million (S$880 million). CapitaLand has 45 per cent stake in this fund, which was set up late last year.

The group's 2006 tie-up with Indian retailer Pantaloon, which was to jointly manage about 50 malls throughout India, is moving on a slow track as these malls do not meet the rules for foreign direct investment in India, which means CapitaLand cannot take stakes in them. Foreigners are only allowed to invest in the development of properties in India with built-up areas of more than 50,000 sq metres.

However, CapitaLand Retail CEO Pua Seck Guan did not preclude Pantaloon - whose retail formats include Big Bazaar hypermarkets and Food Bazaar supermarkets - being a tenant at some of the 15 malls under the latest partnerships with Prestige and AIPL.

There may also be potential collaborations between CapitaLand and Prestige or AIPL to develop built-to- suit malls for Pantaloon, Mr Pua added.

Under the earlier deal, it has been reported that CapitaLand also made a US$75 million investment in the Pantaloon-sponsored Horizon Realty Fund, which is investing in predominantly retail real estate development assets in locations like Mumbai, Chennai, Bangalore and Kolkata.

CapitaLand Group president and CEO Liew Mun Leong said the latest joint ventures with Prestige and AIPL will further boost CapitaLand's position as the leading retail real estate player in Asia and replicate its success in China. The group's portfolio includes over 70 malls in China, seven in Japan, 17 in Singapore, and two in Malaysia. It has also started to look out for malls in Vietnam.

All 15 malls under yesterday's announcements are under construction. When completed, the assets are likely to generate property yields (based on project cost), of 16 to 22 per cent - higher than the borrowing cost of 11-12 per cent in India, with a sufficient gap for a development profit.

Prestige Group chairman and managing director Irfan Razack pointed to abundant opportunities in India's retail real estate market, with rapid urbanisation and growing affluence, and where 'organised retail formats', such as shopping centres and department stores, constitute only 3 per cent of the retail market.

AIPL executive director Daljeet Singh said CapitaLand's strong real estate financial skills sets will add significant value to their joint venture, especially when the two parties share a common exit strategy for the retail assets, through a listed vehicle or Reit.

AIPL's Udaipur Celebration mall in Rajasthan, one of India's top tourist destinations, opens in Q1 2009. In all, the CapitaLand-AIPL joint venture has identified an initial batch of eight projects which will be completed between Q1 2009 and 2010 and worth about S$1 billion (26.5 billion rupees), based on 100 per cent ownership.

CapitaLand Retail will hold a majority stake (expected to be over 60 per cent) in both the development/investment and mall management entities covering the joint venture, with AIPL holding the rest.

CapitaLand's tie-up with Prestige is for an initial slate of seven projects expected to be completed between Q1 2009 and 2011 and worth about S$1.12 billion (29 billion rupees), based on 100 per cent ownership. The two partners will hold 50:50 stakes in both the develop- ment/investment and mall management entities for their joint venture.

CapitaLand will also have right of first refusal for future mall or predominantly retail projects by Prestige and AIPL.

CMT Q4 income rises to $62m

CAPITAMALL Trust (CMT) yesterday posted distributable income of $62.27 million for the fourth quarter of last year, 19 per cent higher than the preceding corresponding quarter's $52.33 million. Full-year distributable income rose 24.7 per cent to $211.19 million.

And the trust's manager is forecasting a 9.5 per cent growth in distributable income for this year to $231.3 million.

The trust committed $168.6 million total capital expenditure for asset enhancements across eight retail properties last year, and is projecting further capex of $153.2 million this year and $112.3 million next year.

The higher distributable income for the year ended Dec 31, 2007, was on the back of a 30.2 per cent increase in gross revenue to $431.86 million - due mainly to a full-year's contribution from CMT's 40 per cent stake in Raffles City acquired on Sept 1, 2006, as well as contributions from the three malls in the CapitaRetail Singapore portfolio. Other malls also accounted for higher revenue due mainly to new and renewed leases at higher rates as well as higher revenue from major asset enhancement initiatives at IMM Building.

As CMT completed an equity fund raising exercise on Nov 6 last year, its latest payout to unit holders will be for the period of Nov 7 to Dec 31 of 2007. The distribution per unit (DPU) of 2.34 cents works out to an annualised figure of 15.53 cents, translating to a 5.8 per cent distribution yield based on CMT's closing price of $2.66 yesterday.

The counter ended one cent higher yesterday after plunging to a 52-week low of $2.50 in early morning trade. CMT's unit price has lost 38.4 per cent from its 52-week high of $4.32 reached in May last year on the back of the stock market slide. Nonetheless, since its inception in 2002, CMT has achieved an average annual DPU growth of 12.8 per cent.

CMT's portfolio valuation increased $200 million within eight months to $5.8 billion, resulting in net asset value per unit rising from $1.87 as at Dec 31, 2006 to $2.21 as at Dec 31, 2007.

'Going forward, with a a strong capital structure and relatively low gearing of 34.7 per cent, we are well-positioned to capture yield-accretive opportunities presented in the market and are on track to achieve our local target asset size of $8 billion by 2010,' said CapitaMall Trust Management Ltd's CEO Pua Seck Guan.

The $8 billion target size is based on a secured pipeline of malls in parent CapitaLand's portfolio - ION Orchard (50 per cent stake), Clarke Quay and the mall in the one north precinct.

Mr Pua is also optimistic about growth prospects for Singapore retail rents, pointing out that unlike residential and office rents, they have yet to surpass the last high in 1996/1997.

As well, prime Singapore retail rents are about 20-30 per cent of New York's and 40-50 per cent of Hong Kong's.

New attractions like the Integrated Resorts and F1, as well as population growth have been resulting in an influx of new international retailers into Singapore, which will provide depth to the local retail market, he noted.

CMTML's 13.90-cent DPU forecast for full-year 2008 compares with 13.34 cents for full-year 2007.

First Reit beats Q4 forecast with $4.8m distributable income

FIRST Reit, Singapore's first healthcare real estate investment trust (Reit), has reported distributable income of $4.8 million and a distribution per unit (DPU) of 1.76 cents for the fourth quarter ended Dec 31, 2007.

This exceeds its forecasts by 9.1 and 9.3 per cent respectively.

On a full-year basis, distributable income was $18.3 million and DPU was 6.73 cents, exceeding its forecasts by 5.6 and 5.7 per cent respectively.

Based on the closing price of 75 cents per unit on Jan 18, the full-year DPU represented a distribution yield of 9 per cent, said First Reit.

Ronnie Tan, chief executive of First Reit's manager Bowsprit Capital Corporation, said: 'We believe that our yield of 9 per cent remains one of the highest among the Singapore Reits (S-Reits) and this, in our opinion, is an attractive proposition.'

For the quarter, net property income was $7.2 million, 18.6 per cent above its forecast.

First Reit, which is sponsored by Lippo Karawaci, has assets in Indonesia and Singapore. A recent independent valuation put its asset value at $325.6 million, representing an increase of $17.6 million over the book value as at Sept 30, 2007.

Dr Tan said: 'We will continue to work with our sponsor, Lippo Karawaci, in Indonesia. In addition, China will also remain a key focus in our acquisition pipeline as we believe that the healthcare needs in the country will continue to grow exponentially as income rises.'

Of the four memoranda of understanding for Chinese asset acquisitions it previously announced, Dr Tan said that it expects to conclude at least one acquisition in the second quarter of this year.

Noting that regulations have opened the way for possible consolidation in the S-Reit market, Dr Tan also said: 'We are all for consolidation.'

The target portfolio size for First Reit is $400 million in 2008 and $500 million in 2009.

In terms of asset enhancement, Dr Tan said that it had recently submitted for regulatory approval plans for the redevelopment of its Adam Road Hospital, which has a 1.4 plot ratio. He added that First Reit could also sell units of the redeveloped hospital.

First Reit closed trading yesterday at 72 cents per unit, down two cents.

Pacific Shipping Trust Q4 DPU up 6% to 1.1 US cents

PACIFIC Shipping Trust (PST) will be distributing 1.1 US cents per unit for the fourth quarter of 2007.

This is 6 per cent higher than the 1.04 US cents distributed for the corresponding quarter in 2006.

Based on its initial public offering price of US$0.45 per unit, the distribution per unit (DPU) amounted to an annualised yield of 9.7 per cent, said PST. The yield came to 10.6 per cent based on the closing price of US$0.41 of PST units on Jan 21.

The rise in the DPU came on the back of higher income distribution for the fourth quarter ended Dec 31, 2007, which amounted to US$3.7 million, compared with US$3.52 million a year ago.

The Q4 2007 distribution will bring full-year income distribution to US$14.5 million, which represents 100 per cent of PST's distributable amount as set out in its IPO prospectus. The amount is net of repayment of a loan principal.

Net profit for Q4 2007 totalled US$1.6 million compared with US$3.4 million in Q4 2006. The decrease was due to fair value losses in interest rate swaps (entered into to fix the cost of borrowings) which have no impact on the distributable income.

The net profit was achieved on gross revenue of US$8.7 million from the charter of PST's existing portfolio of vessels and interest income.

Said Subhangshu Dutt, CEO of PST Management, the trustee-manager of PST: 'For the past six quarters, we have consistently exceeded our IPO projections and we are reasonably confident of maintaining this performance in 2008.'

'Our four new vessels coming on stream this year are expected to raise PST's total contracted revenue per annum by 79 per cent. We hope to continue improving on our performance in the coming years with further quality acquisitions.'

Last year, PST announced the acquisition of four vessels which will expand its current portfolio by 50 per cent to 12.

PST's current fleet comprises eight vessels valued at US$287 million as at December 2007. The valuation, carried out by an independent ship broker, was 15 per cent higher than their book value and nearly 6 per cent above the vessels' total purchase price.

The latest distribution of 1.10 cents will be made on Feb 29. Unit-holders do not have to pay Singapore tax on the distributable income.

PST is the first business trust listed on the Singapore Exchange. It provides shipping companies with financing and leasing structures that enable them to expand their fleet without straining their capital.

Chinese property developer CentraLand launches IPO

CHINESE property developer CentraLand Ltd yesterday launched its initial public offering (IPO) of 245 million new shares at 50 cents each for a mainboard listing on the Singapore Exchange.

The company, based in the city of Zhengzhou in Henan province, expects to raise net proceeds of about $113.9 million, after expenses.

The IPO comprises five million shares available to the general public and 240 million placement shares.

CentraLand said that at 50 cents each, the offer shares are priced at a discount of about 11.3 per cent to its estimated net tangible assets per share of 56.4 cents as at end-June last year.

CentraLand chief executive Yan Tao said: 'Our listing marks the beginning of a new phase for CentraLand and serves as a launching pad for us to take CentraLand to its next phase of growth.'

Of the expected $113.9 million in net proceeds, $38.3 million will be used to buy land, $70.6 million to boost a subsidiary's capital base, and the rest as working capital.

The company is banking on increasing investment in property developments in Zhengzhou, growth in the city's population and rising disposable income among the city's residents to drive its growth.

The company's revenue rose 89.9 per cent to 276.5 million yuan (S$55.2 million) in 2006 - based on its most recent audited full-year financial statements - from 145.6 million yuan in 2005. Its net profit in 2006 was 45.4 million yuan, up from 15.1 million yuan the previous year.

For the first six months of 2007, the company recorded revenue and net profit of 150.8 million yuan and 17.8 million yuan respectively.

Boulton Capital Asia is the issue manager and UOB Kay Hian is the underwriter and placement agent for CentraLand's IPO.

The IPO opens today and closes on Jan 30. The shares are expected to begin trading on Feb 1.

SingPost, BNI set up new remittance service

INDONESIANS working in Singapore can now remit money home using a new service offered by Singapore Post (SingPost) and PT Bank Negara Indonesia (BNI).

Boasting convenience and security, the new remittance service allows money remitted by customers at any one of the 51 designated SingPost branches to be picked up in Indonesia on the same day, if the remittance is sent before 3pm.

Funds remitted after 3pm will be received the next business day.

BNI has a wide network of 972 branches and nearly 20,000 ATMs in Indonesia.

Wilson Tan, group chief executive of SingPost, said: 'Customers are also able to rest easy knowing that their funds are in the safe hands of SingPost, Singapore's public postal licensee, and BNI, one of the largest banks in Indonesia.'

Customers need to register for a free 'Cashome card' at any post office to start using the service. They can use their Nets card or cash to remit funds.

The Cashome card is an identification card, which means customers do not need to fill up forms each time they remit money.

The maximum remittance amount is $3,500 per sender each day, with a $10 transaction fee levied for every remittance.

One can send money to a maximum of three recipients a day as long as the remittance amount does not exceed the limit.

Loh Choo Beng, SingPost's executive vice-president for retail and financial services, said: 'We are pleased to partner BNI to offer yet another value-added service to our customers who will get to enjoy the best of both worlds - SingPost's wide retail network of post offices and BNI's extensive branches and ATMs in Indonesia.'

According to Indonesia's National Agency for the Placement and Protection of Overseas Labour, Indonesian migrant workers globally sent US$2.7 billion to Indonesia each year, with funds remitted from Singapore contributing to 3 per cent of this amount.

There are 306,354 Indonesians working in Singapore, according to the agency, with SingPost hoping to reach out to a third of them.

The new remittance service is offered under SingPost's Cashome brand, which provides remittance services to over 200 countries.

Mapletree fund buys 4 Johor properties

MAPLETREE Industrial Fund (MIF), a private real estate fund, said yesterday that it has signed two separate agreements with two related Malaysian investment and construction companies to acquire their four properties in Johor for RM61.5 million (S$27 million).

The agreements with Tangkai Jaya Sdn Bhd and Setegap Jaya Sdn Bhd are on a sale-and-leaseback basis.

The properties at the Tampoi Industrial Estate consist of four double-storey purpose-built detached factory buildings with a total gross floor area of 406,250 square feet.

Each of the four properties is sub-leased to individual tenants.

Phua Kok Kim, chief executive of Mapletree Industrial Fund Management Pte Ltd (MIFM), said: 'This acquisition has enabled the MIF to increase its portfolio of good quality industrial assets in Malaysia, thus highlighting our commitment towards growing the MIF into a pan-Asian industrial fund.

'The properties are well positioned to benefit from their location within the burgeoning Iskandar Development Region, which forms the nucleus of a dynamic economic and growth region in Malaysia's southern region.'

MIFM, a wholly owned subsidiary of Mapletree Investments Pte Ltd, is the manager of MIF.

Pacific Star, Israeli firm plan Viet property fund

SINGAPORE-BASED Pacific Star Group said yesterday that it has signed a binding memorandum of understanding (MOU) with Alony Hetz to set up a fund to invest in Vietnamese real estate.

Both parties expect to raise US$200 million for the fund from institutional investors by July. Tel-Aviv Stock Exchange-listed Alony Hetz has meanwhile committed to investing US$50 million in the fund, its first real estate investment in South-east Asia.

Under the deal, Pacific Star and Alony Hetz will both manage the fund through a joint venture company to be established.

Commenting on the latest venture, Frank Rainer Vaessen, president of Pacific Star Fund Management, said: 'We are pleased to partner a firm with highly efficient management practices and an outstanding investment track record in Israel, Europe and North America.'

And Nathan Hetz, founder and chief executive of Alony Hetz, said: 'Pacific Star has extensive local experience in Asia and is thus an excellent partner for our entry into the region.'

Recently, Alony Hetz also invested US$40 million in a real estate fund in India, while Pacific Star has launched a 500 million euro (S$1.05 billion) Asian Real Estate Fund set up with HSH Real Estate AG, as well as a US$400 million Asian Real Estate Prime Development Fund which invests in prime development projects in Singapore, Malaysia, mainland China, Hong Kong, Macau, Japan and Korea.

Anwell installs Blu-ray Disc for US customer

ANWELL Technologies said the group will install its first Blu-ray Disc (BD) replication system for its California-based customer, CD Video, in the first quarter of 2008. Anwell also said the Chinese government had awarded it an additional 3 million yuan in funding for R&D in BD technology.

Sarin acquires US$3.4m stake in IDEX

SARIN Technologies is buying a 23 per cent stake in IDEX Online SA for US$3.4 million. IDEX operates a business-to-business polished diamond traders' network.

SPH buys one million of its own shares

SINGAPORE Press Holdings, which has a mandate to buy back up to about 158.46 million of its own shares, bought one million shares yesterday at an average price of $4.1942 each.

EMS to buy remaining Airchem stake

EMS Energy said it is buying over the remaining 47.62 per cent stake in Airchem Holdings Sdn Bhd for $594,036. This will be satisfied by the issue of new EMS shares to the vendor Wong Fook Ming. EMS currently has a 52.38 per cent stake in Airchem.