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Archive for January 31st, 2009

Starhill Global to pass on tax rebates to tenants

Posted by luxuryasiahome on January 31, 2009

STARHILL Global Reit, which owns Wisma Atria and Ngee Ann City in Singapore, is among the latest in the list of landlords to pass on property tax rebates from the Budget to its tenants. The news came yesterday as the trust released improved results for the fourth quarter ended Dec 31, 2008.

‘We are in the process of working out the quantum of the rebates to tenants,’ trust manager YTL Pacific Star’s CEO, Franklin Heng, told BT. Last week, the government announced a 40 per cent property tax rebate for industrial and commercial properties this year and urged landlords to share these benefits.

Besides handing out rental rebates, Starhill Global will step up marketing efforts to boost pedestrian traffic and sales at Wisma Atria. ‘Some of the leases also have a stepped-up rent feature that lightens the burden for tenants, particularly new ones operating in the centre for the first year,’ Mr Heng added. ‘Where necessary, we have also introduced other ‘payment-friendly’ lease structures to help tenants sustain their businesses.’

Starhill Global saw a 17 per cent year-on-year increase in net property income to $26 million in 4Q 08. Higher rents from renewals and new leases in its Singapore properties, together with higher revenue from its China property, boosted performance.

As a result, distributable income rose 12 per cent to $18.1 million in 4Q 08. This translates to a distribution per unit (DPU) of 1.85 cents, exceeding the 1.68 cents in the same period last year. On an annualised basis, the DPU stands at 7.36 cents and generates a distribution yield of 14.2 per cent, based on Starhill Global’s closing price of 52 cents on Dec 31. The counter closed unchanged at 51.5 cents yesterday. For FY2008, Starhill Global reaped a distributable income of $69.4 million, up 18 per cent from a year ago. This led to a DPU of 7.17 cents, 16 per cent more from FY2007.

As the recession lingers, Starhill Global will continue to adopt prudent capital management and proactive asset management strategies, said YTL Pacific Star’s executive chairman, Francis Yeoh. The trust’s gearing ratio was 31 per cent as of Dec 31. It has around $17 million of debt due this year and another $601 million will mature in 2010. ‘We will also focus on building up the ‘Starhill’ brand and sourcing for yield accretive acquisitions of prime assets to enhance the long-term growth prospects of Starhill Global Reit,’ said Dr Yeoh.

Source : Business Times – 31 Jan 2009

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Starhill Global REIT reports 10.1% on-year rise in 4Q 2008 DPU

Posted by luxuryasiahome on January 31, 2009

Starhill Global Real Estate Investment Trust will pay 1.85 Singapore cents per unit for the fourth quarter of 2008.

This is 10.1 per cent higher than the same period a year ago.

For the three months to December last year, Starhill Global REIT had distributable income of S$18.1 million.

The Trust says its net property income over the period was 17.1 per cent higher at S$26.0 million.

This is due mainly to higher gross revenue, which grew 13.4 per cent to S$33.8 million.

The REIT manager booked higher rates on renewals and new leases at its properties at Wisma Atria and Ngee Ann City in Singapore.

It also saw higher revenue from its properties in China.

Starhill Global REIT says it plans to pass on the government tax rebates announced at the recent Singapore Budget to its tenants.

Finance Minister Tharman Shanmugaratnam had said the government is giving a 40 per cent property tax rebate for industrial and commercial properties in 2009.

He also urged landlords to pass on the benefits of the rebate to tenants.

Source : Channel NewsAsia – 31 Jan 2009

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CDL Hospitality to pay 1.8 cents per stapled security for Q4 2008

Posted by luxuryasiahome on January 31, 2009

CDL Hospitality Trusts will pay unitholders 1.8 cents per stapled security for the fourth quarter ending December 31, 2008. This is about 34 per cent lower than the same period in 2007.

But the full-year distribution per unit is up by 18 per cent to 10.62 cents in 2008, compared with a year ago.

The Trust said its net property income rose nearly 20 per cent on-year to S$102.8 million. Gross revenues jumped 26.5 per cent to S$114.7 million.

The strong operating performance was due to organic growth across the portfolio and a full-year’s contribution from Novotel Clarke Quay which was acquired in mid-2007.

However, CDL Hospitality Trust expects 2009 to be a challenging year in view of the global economic crisis. It said the Revenue Per Available Room (RevPAR) index already showed a 29 per cent decline in early January.

The absence of events like the Singapore Airshow in February will result in poorer operating performance in the first quarter of 2009 over the same period in the previous year.

Despite the economic downturn, the Trust is confident about the positive mid to long-term prospects for the tourism sector in Singapore.

It is also proactively managing its portfolio and financing risks, with discussions to find ways to secure refinancing of its S$273 million borrowings due in July 2009.
Source : Channel NewsAsia – 31 Jan 2009

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Reits forge ahead

Posted by luxuryasiahome on January 31, 2009

ALL but one of the real estate investment trusts (reits) listed in Singapore had reported their quarterly earnings by yesterday – and most met analysts’ expectations. And looking forward, reits are set to deliver stable earnings in 2009, analysts say – inasmuch as anyone can predict anything with any certainty at the moment.

Most reits’ Q4 2008 earnings announcements so far have been followed by ‘buy’ and ‘outperform’ calls from research firms.

Many reits already have a substantial portion of their FY 2009 earnings locked in. Frasers Centrepoint Trust (FCT), for example, says it has 90 per cent of its FY 2009 income locked in. CapitaMall Trust (CMT), on the other hand, says gross rental revenue locked in for 2009 already exceeds 87 per cent of 2008’s total gross revenue. And CapitaLand’s other trust, CapitaCommercial Trust (CCT), says 79 per cent of 2009 forecast gross rental income has been locked in.

Reit managers also say they have been ‘actively engaging’ tenants for forward lease planning.

Bearing all of this in mind, analysts expect most reits will post flat growth but meet distribution per unit (DPU) forecasts for 2009.

‘Income streams for reits should be all right in the first half of this year,’ says CIMB analyst Janice Ding. ‘As for the second half, things look less certain.’ The impact from the economic slowdown will likely be really felt only in 2010, she said. And that year she expects office reits to take the biggest hit as a large amount of new space comes on stream.

The main area of concern remains the expected fall in office and retail rents. Retail rents, in particular, are expected to be hit as shopper traffic and retail spending gradually taper off following Chinese New Year. As such, tenants’ bargaining power could increase, sparking either a fall in retail rentals or a restructuring of existing leases, notes DMG & Partners Securities analyst Brandon Lee.

But even taking rent drops into account, reits are still considered attractive from a valuation standpoint. Following CCT’s results announcement, Citigroup analyst Wendy Koh said she is revising CCT’s DPU and target price to reflect prime grade A office rental rates at $6 per square foot.

And despite her cautious view on the office sector, she maintained her ‘buy’ rating on CCT ‘for valuation reasons’. ‘The shares offer a 13 per cent yield,’ she noted in a Jan 20 report.

But refinancing still remains a major area of concern for reits – despite a few major refinancing deals reported over the last few months. While Cambridge Reit, CCT and Ascendas Reit (A-Reit) all recently announced successful capital-raising exercises, this also suggests that the already-limited pool of ready credit has shrunk.

‘With several Reits yet to refinance major chunks – such as CMT, CDL Hospitality Trusts (CDLHT) and Frasers Commercial Trust (FCOT) – and the credit markets still not exhibiting distinct signs of ameliorating, we believe the fight for credit will toughen further,’ says DMG’s Mr Lee.

Suntec Reit, for example, is now looking to refinance $700 million of commercial mortgage-backed securities due in December 2009. At present, the trust’s management is talking with several banks to secure finance.

Other than the fact that the pool of ready credit has decreased, Mr Lee thinks another issue will plague Suntec Reit’s refinancing – office and retail capital values could head further south from current levels as rents and occupancies taper off amid the weakening macro-economic environment. This implies a rise in loan-to-value (LTV) ratios that could make banks more cautious when it comes to extending credit.

In 2009, more equity issues could be on the cards. During its Q4 results briefing, A-Reit announced an equity fund-raising via private placements and preferential offerings of up to 354 million new units to raise gross proceeds of $400 million.

The trust’s equity raising was within expectations, but the timing took some by surprise, as refinancing with bank debt was not an immediate problem. More Reits can be expected to take such pro-active steps to lower their gearing, although at least one – CCT – has come out to say that it has no ‘immediate’ plans to raise equity.

Source : Business Times – 31 Jan 2009

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Prudent CDLHT retaining $4m

Posted by luxuryasiahome on January 31, 2009

CDL Hospitality Trusts (CDLHT) said yesterday that it plans to retain about $4 million of its second-half 2008 distributable income, citing ‘financial prudence’, as its revenue per available room (RevPAR) dipped in Q4.

The trust will distribute 90 per cent of its taxable income – as it is allowed to under its listing prospectus – for its H2 2008 payout. It previously paid out 100 per cent of its taxable income. It will continue to distribute 100 per cent of its tax-exempt income. The change will allow CDLHT to retain about $4 million.

Q4 distributable income fell 16.6 per cent to $19 million – from $22.8 million a year ago. This led to a similar 17 per cent drop in Q4 distribution per unit (DPU) to 2.29 cents, from 2.76 cents in Q4 2007.

This brings DPU for the full 2008 financial
year to 11.11 cents, still 23.7 per cent higher than 2007’s DPU of 8.98 cents.

Net property income for Q4 fell 19.4 per cent to $21.7 million, from $26.9 million in Q4 2007. The fall was despite a 0.7 per cent climb in gross revenue to $28.1 million. CDLHT attributed this to a ’significant’ increase of $5.2 million in property expenses, partly due to a hike in property tax.

It was hit by one-off additional property tax assessed of about $3.2 million in respect of 2006 and 2007. CDLHT is contesting this and should know the outcome ’soon’, said Vincent Yeo, chief executive of the trust’s manager.

In Q4 2008, RevPAR for the trust’s Singapore hotels – Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel, Copthorne King’s Hotel and Novotel Clarke Quay – dipped 1.6 per cent to $188, from $191 a year earlier. The average occupancy rate fell 4.9 percentage points to 83.7 per cent.

For the whole of 2008, RevPAR rose 20.9 per cent to $208, while the average occupancy rate fell 2.1 percentage points to 85.2 per cent.

CDLHT also said that the properties in its portfolio have been revalued at $1.48 billion, down 9.1 per cent, from $1.63 billion previously.

Mr Yeo acknowledged that the trust is in for a difficult year this year. He said that the hotels in the trust’s portfolio will target more stable streams of visitors, such as aircrew and people in town for training. The trust will also be more efficient in the utilisation of its staff, he said.

‘In light of the global economic downturn, we are continuing our focus to protect the profitability of CDLHT by implementing several revenue and cost initiatives and exercising financial prudence. Distributing 90 per cent instead of 100 per cent of taxable income will further boost CDLHT’s financial flexibility,’ Mr Yeo said.

CDLHT gained one cent to close at 65 cents yesterday.

Source : Business Times – 31 Jan 2009

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Moody’s cuts Ascendas Reit rating to Baa1

Posted by luxuryasiahome on January 31, 2009

MOODY’S Investors Service has downgraded Ascendas Real Estate Investment Trust’s corporate family rating from A3 to Baa1 as the industrial property trust has not fully addressed refinancing issues and the significant operating challenges facing A-Reit in a recession.

The outlook for the rating remains negative, reflecting A-Reit’s still-weak liquidity profile, the challenging state of the operating environment and the tightening headroom of financial covenants.

Moody’s lead analyst Kathleen Lee said: ‘The downgrade reflects the trust’s ongoing refinancing risk, given that it has not fully addressed its reliance on uncommitted revolving credit facilities to support its long-term assets.’

A-Reit recently announced a private placement and an underwritten non-renounceable preferential rights issue totalling about $400 million. A-Reit plans to use $200 million from the net proceeds to meet its committed development projects as well as potential future projects and the remainder will go towards debt reduction.

‘While the equity raising is a positive move to reduce the Reit’s leverage, the downgrade reflects the fact that the planned use of the proceeds for debt reduction will only partially alleviate A-Reit’s refinancing needs in 2009,’ Ms Lee said.

‘The downgrade also reflects the significant operating challenges facing the trust against the backdrop of a recessionary macro-environment in Singapore in 2009 . . . In addition, a pipeline of new supply coming on-stream in 2009/10 is expected to exacerbate downward pressure on A-Reit’s rental revenue, occupancy rate and asset values.

As a result, the trust’s credit metrics are expected to weaken and the headroom to meet its financial covenants will be tightened,’ Ms Lee notes.

On a more positive note, Moody’s noted that A-Reit has ’some access to the capital markets and leading banks, leveraging on its close relationship with its sponsor, Ascendas Pte Ltd, which is a wholly-owned subsidiary of JTC Corporation and which, in turn, is a Singapore government statutory body.’

Earlier this month, A-Reit reported net property income of $74.2 million for its third quarter ended Dec 31, 2008, an increase of 20.9 per cent compared to a year ago.

Income available for distribution was $54 million for the quarter, an increase of 14.4 per cent year on year, while distribution per unit (DPU) was 4.05 cents per unit, an increase of 13.8 per cent.

Source : Business Times – 31 Jan 2009

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Rules of conservation

Posted by luxuryasiahome on January 31, 2009

More than 6,500 buildings have been marked for conservation since the URA started its urban conservation programme in the 1980s. Conserved buildings fall under four main district areas. As well as general rules, each area and building type also has additional specific restoration guidelines.

Historical districts

These date back to Singapore’s founding in 1819 and include Chinatown, Boat Quay and Little India. Most buildings are shophouses. The buildings have architectural features unique to the different races and cultures that have lived there. Some area-specific guidelines include preserving the building’s exterior and interior in their original states.

Residential historic districts

Applies to rows of terrace houses along the streets of Cairnhill and Emerald Hill. Most are people’s homes although some are commercial premises.

The guidelines have some allowances, such as permitting a rear extension, for owners who want to maximise living space.

For houses used as businesses, shopfronts cannot be a blank wall as this would be out of character. Decorative features on the facade must also be kept and restored.

Good Class Bungalow and fringe areas

Bungalows in this category include those in Nassim Road, Chatsworth Park and Mountbatten Road. They are usually in woody areas and are either one or two storeys. The architecture is a mix of Western and local building styles.

The URA specifies that the main house must be kept, although outhouses can be demolished for extensions. If it is large enough, the land can be also divided for other developments.

Secondary settlements

This covers old buildings surrounded mostly by newer developments, such as shophouses in areas like Jalan Besar, Joo Chiat, Mount Sophia and River Valley.

Here, the external facade, the original structure and defining features must remain untouched. Owners may modify the interior to suit their needs.

Source : Straits Times – 31 Jan 2009

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Estate agents should be licensed

Posted by luxuryasiahome on January 31, 2009

I refer to the letter, ‘Property Agents Mislead With Ads’ by Dr and Mrs Rupert See (Life! Jan 17).

The Institute of Estate Agents (IEA) is very much concerned with the product knowledge, skills, ethics and professionalism of estate agents.

For a better regulated industry, IEA has been advocating mandatory regulations such as pre-requisite qualifications and licensing of estate agents to ensure that they are properly trained and qualified before they are allowed to practise. Over the years, non-compulsory measures that were implemented have proven inadequate to lift industry standards.

I empathise with Dr and Mrs See regarding their unpleasant encounters with estate agents. There is no excuse for agents to act improperly, using false or inaccurate advertising to mislead their customers. Such acts betray the trust of their customers and give the other estate agents a bad name.

IEA is concerned about the unprofessional conduct of those who act as ‘runners or salesmen’. Such individuals perform a perfunctory role on behalf of others in showing the property, usually with little or no product knowledge. IEA is aware of such practices although it does not sanction this.

Mandatory regulations should be implemented to eventually license all estate agents. With proper legislation in place, every agent can then be held accountable. Service standards and professionalism will be raised and it will be good for consumers too.

Jeff Foo
President, Institute of Estate Agents

Source : Straits Times – 31 Jan 2009

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Local firm wins final Marina expressway contract

Posted by luxuryasiahome on January 31, 2009

HOME-GROWN Hock Lian Seng Infrastructure has become the first and only local builder to clinch a contract for the Marina Coastal Expressway (MCE), Singapore’s most expensive road.

Its $305 million bid pushes the cost of the 5km underground and undersea MCE past $4 billion, far outstripping that of the second costliest road here – the 12km Kallang-Paya Lebar Expressway (KPE) that cost $1.7 billion.

The new highway will connect the KPE to the Ayer Rajah Expressway (AYE).

Hock Lian Seng’s portion – a 1km western stretch with slip roads leading to Maxwell Road – is the sixth and final civil contract on the 10-lane MCE.

The first five contracts were secured by Japanese and Korean builders.

The company’s executive director Lim Peng Kiat told The Straits Times yesterday that it had ‘put in a good and reasonable tender’.

‘We’re very happy to be part of this very prestigious project,’ he said.

Hock Lian Seng’s winning bid was half that submitted by its one and only rival bidder, a joint venture between Germany’s Ed Zublin and Singapore Piling.

The disparity in the bids sparked talk among industry players, with some speculating that Ed Zublin may have priced itself out, and others reckoning that Hock Lian Seng may have under-estimated the cost of the project.

Referring to the project, which includes reclaiming 9.1ha of land from the sea at Marina Wharf, Mr Lim said: ‘We are quite familiar with this kind of works. As with every job, we’ve priced in a reasonable profit.’

The Land Transport Authority (LTA) took four months to award this contract.

Its chief executive Yam Ah Mee said: ‘We have chosen Hock Lian Seng after detailed evaluation of the bidders’ technical proposals and pricing packages. We are pleased to award the final major MCE civil contract to a locally based company that meets our stringent safety, engineering and budget requirements.’

The tab on the MCE was initially put at $2.5 billion. Mr Yam attributed the cost overrun to ’several important factors’, including ’steep cost increases of materials and resources’ and the fact that soil conditions in the area have emerged ‘considerably weaker’ than expected.

He added that the latest building specifications laid out by the Building and Construction Authority and revised international fire-safety standards also added to the cost.

Hock Lian Seng is the name behind infrastructural projects such as the North-East Line’s Buangkok MRT station and the Circle Line’s Kim Chuan MRT depot, one of the world’s largest underground train depots.

It is now building the Downtown Line’s Marina Bay station and a new vehicular viaduct from Bartley Road to Airport Road.

Construction of the MCE has started. It is slated for completion by 2013.

Source : Straits Times – 31 Jan 2009

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