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Wednesday, October 15, 2014

MAS releases consultation paper to review policy on Reits

The Monetary Authority of Singapore has recently release a consultation paper to review various policies with regards to S-REITs. Other than policy review that touches on the statutory duty of the REIT manager and its directors to prioritize the interests of REIT investors over those of the REIT manager and its shareholders in the event of a conflict of interest, following are other major changes proposed:

Gearing Limit of 45% of Assets 
Currently the gearing limit of the REITs is 35% without credit rating and 60% with credit rating (see All About REIT - The Basics Part 4: Gearing Limit). MAS has proposed a single gearing limit of 45 per cent whether it is with or without credit rating. There will no longer be a separate 60% gearing limit with credit rating. Currently most of the REITs have a gearing of around 30 to 40%. Based on past history, when a REIT reaches a gearing close to or above 40%, it will go by the way of rights issue if it requires funding for acquisition. Very seldom do we see REITs reaching a gearing limit above 50%.

Development limit to be raised to 25%
Development limit for a REIT will be raised to 25 per cent of its deposited property. Currently the limit is set at 10% (see All about REIT - REIT as a Property Developer). To date I think only Ascendas Reit and CapitaMall Trust have ever been involved in property development activities. Their asset values are the highest among the REITs, while for the smaller REITs the 10% will be too low for them to be engaged in property development activities. Raising this limit to 25% might bring about the tipping point for some REITs to engage in development projects as alternative stream of income on top of the rental income.

The consultation paper will be open for comments till 10 November 2014.

Friday, June 10, 2011

A-REIT awarded Business Park site at Fusionopolis for S$110 million

A-REIT awarded Business Park site at Fusionopolis for S$110 million  :
Key Points
  • Further to the release “A-REIT tenders for Business Park Site at Fusionopolis for S$110 million” made by Ascendas Funds Management (S) Limited (the “Manager”) in its capacity as the Manager of Ascendas Real Estate Investment Trust (“A-REIT”) on 20 May 2011, the Manager is pleased to announce that Jurong Town Corporation (“JTC”) has awarded A-REIT the said site (the “Site”) at Fusionopolis for S$110 million.
  • Upon completion, expected in 3QFY2013/14, this development will strengthen A-REIT’s leading position in the Business & Science Parks segment and bring about economies of scale in operations. The high quality specification and good location of the proposed development will be attractive to target potential users.
  • In addition, this development will allow A-REIT to further widen its product offerings in catering to the knowledge and value-based type industries and gives it an opportunity to further diversify its customer base.”
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Saturday, June 4, 2011

Standard & Poor's Reaffirms Cambridge Industrial Trust ("CIT") BBB-/Stable/-- Rating

Standard & Poor's Reaffirms Cambridge Industrial Trust ("CIT") BBB-/Stable/-- Rating:

Key Points
  • Cambridge Industrial Trust Management Limited, as manager of CIT, would like to announce that Standard & Poor's has reaffirmed the BBB-/Stable/-- credit rating of CIT in its report dated 1 June 2011.

Thursday, June 2, 2011

CacheLog marks foray into China with purchase of chemical warehouse facility

CacheLog marks foray into China with purchase of chemical warehouse facility  for RMB 71.0 million:
Key Points
  • Cache is acquiring a chemical warehouse facility in Shanghai from CWT Limited (“CWT”) via an acquisition and leaseback arrangement.
  • This acquisition marks Cache’s entry into China. 
  • The property is located in Jinshan District within the successful Shanghai Chemical Industrial Park (“SCIP”), one of the largest petrochemical bases in Asia.
  • Cache’s newly purchased facility is sited on a land area of 33,506 square metres, with a built-up gross floor area of about 13,547 square metres.
  • CWT is the Sponsor of Cache and the CWT properties in Asia-Pacific fall under the right of first refusal granted to Cache at the time of the IPO in April 2010.
  • This transaction marks the first successful acquisition of a CWT asset since the IPO. 
  • The consideration paid for the property is RMB 71.0 million (or approximately S$13.5 million).
  • CWT will leaseback the facility for a period of three years with an option for a further three years.
  • The net property income yield of 8.6% is higher than the Cache present portfolio of 7.6%. 
  • The average of the two valuations provided by CB Richard Ellis and Knight Frank Petty, who acted on behalf of the Manager and the Trustee respectively, is RMB 76.6 million (or approximately S$14.6 million).
  • The acquisition is accretive at the distribution level, with the annualised pro forma financial effect on Cache’s DPU for FY2011 expected to be an additional 0.03 cents per unit after applicable taxes in China, and offers the potential for future capital appreciation. 
  • The transaction also allows investors to gain exposure to a segment of the market which they may not be able to do so efficiently. 
  • Post-completion, Cache’s leverage will rise from 27.9% to 29.2%.
Author's Note
This is the second acquisition by CacheLog since its IPO, and a first from its sponsor CWT. It is also the first overseas acquisition.
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Wednesday, June 1, 2011

Saizen Reit Repays YK Shintoku loan

Saizen Reit Repays YK Shintoku loan:
Key Points
  • The manager Saizen REIT is pleased to announce that the loan of YK Shintoku had been fully repaid on 31 May 2011.
  • Following the completion of the Repayment and the cancellation of the mortgage over YK Shintoku’s property portfolio, YK Shintoku’s portfolio of 27 properties which is valued at approximately JPY 4.3 billion1 (S$65.6 million) will become unencumbered. 
  • Together with the property portfolios of YK Keizan, YK Shingen and GK Chosei, the total value of Saizen REIT’s unencumbered properties will amount to approximately JPY 14.9 billion (S$227.5 million).
  • After the Repayment, Saizen REIT’s borrowings comprise five loans amounting to approximately JPY 9.0 billion (S$137.4 million), with the nearest loan maturity due in June 2013. 
  • Saizen REIT’s gearing after the Repayment is approximately 24%.
Author's Note
The term "unencumbered" here means that the properties are not currently under any mortgage agreements, or are being used as collateral for loans. 

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