PARKWAY Life Real Estate Investment Trust (PLife Reit) posted an 11.6 per cent year-on-year increase in distributable income to $12.38 million for the fourth quarter ended Dec 31, 2009.

Distribution per unit (DPU) for the quarter amounted to 2.05 cents versus 1.84 cents in Q4 2008, which translates to a full year DPU of 7.74 cents and a 6.34 per cent distribution yield. In FY08, PLife Reit achieved a full year DPU of 6.83 cents.

For Q4 2009, gross revenue rose 9.7 per cent to $17.7 million compared to the same period last year.

Both property expenses and financing costs rose during the quarter as a result of the eight nursing homes acquired in November last year. Property expenses for Q409 were $0.2 million higher at $1.3 million and finance costs rose from $2.05 million to $2.24 million.

For the full year of 2009, distributable income came in at $46.7 million, a 13.4 per cent increase from the previous year.

Gross revenue surged by 23.7 per cent year-on-year from $53.89 million to $66.68 million, on the back of revenue contributions from properties in Japan acquired in 2008 as well as from the eight new nursing homes. Higher rent from the Singapore hospital properties – comprising Mount Elizabeth Hospital, Gleneagles Hospital, and East Shore Hospital – also boosted revenue.

The acquisition of the nursing homes brought PLife Reit’s total portfolio size, as at Dec 31, 2009, to 21 properties worth $1.15 billion, up 9.5 per cent from $1.05 billion in the previous year. It has a 100 per cent occupancy rate across its entire portfolio.

Yong Yean Chau, CEO of Parkway Trust Management, said: ‘Given our strong financial position, we were able to time the market and acquire quality properties in the fourth quarter at a very attractive pricing. We also saw our maiden asset enhancement initiative (at its Japan pharmaceutical product distributing and manufacturing facility P-Life Matsudo) thereby boosting our income stream further.’

The distribution payment will be made on Feb 26.

Source: Business Times, 23 Jan 2010

FIRST Real Estate Investment Trust (First Reit), Singapore’s first healthcare real estate investment trust, posted a distributable income of $5.3 million for the fourth quarter ended Dec 31, 2009, down 0.6 per cent from a year ago, its manager Bowsprit Capital Corporation reported yesterday.

Distribution per unit (DPU) for Q4 2009 was one per cent lower at 1.92 cents. Based on its closing price of 86 cents on Jan 20, 2010 and the annualised DPU of 7.62 cents, First Reit said that it has a distribution yield of 8.86 per cent.

Gross revenue and net property income inched up 1.4 per cent and 1.2 per cent to $7.7 million and $7.6 million, respectively.

On a full-year basis, distributable income increased 0.6 per cent to $21 million on the back of a 0.7 per cent rise in gross revenue to $30.2 million.

‘The recent global recession has demonstrated the resilience of the healthcare business, particularly in Asia which continues to perform well,’ Bowsprit said. First Reit’s portfolio consists of eight properties located in Indonesia and Singapore.

‘We are heartened that our hospitals in Indonesia have continued to perform well despite the global financial crisis last year. The variable rental component, in addition to the fixed annual rental escalation, will mean higher revenue to be generated by our Indonesian assets for FY2010,’ said Ronnie Tan, Bowsprit’s chief executive officer.

In Indonesia, First Reit’s Siloam Group of hospitals has witnessed robust growth in demand for services and higher occupancy, it said.

In Singapore, where First Reit owns three nursing homes, the group reported that prospects for private nursing care are bright in view of a steadily aging population and the government’s recent push to boost and raise awareness of palliative care services. ‘All these factors will help to underscore the current and future demand for quality nursing homes and eldercare facilities for short and long-term convalescent, respite and rehabilitative care’.

The Reit will continue to look at ways to enhance its nursing homes in Singapore. Plans are being proposed for extension works at the Lentor Residence. First Reit has also commenced comprehensive asset enhancement works for its Adam Road Hospital since November last year with completion targeted for mid-2011.

The cost of asset enhancement works, estimated at $18.6 million, will be funded through debt, and will raise First Reit’s gearing from 15.5 per cent as at Dec 31, 2009 to just below 20 per cent upon completion – which will still be lower than the regulatory limit of 35 per cent.

‘Our tight capital management and low gearing, coupled with the fact there is no refinancing requirement until 2012, have provided First Reit with ample headroom to pursue acquisition opportunities and carry out further asset enhancement works to provide best-in-class service for our patients. With improving market conditions, we are currently exploring acquisition opportunities with our sponsor, PT Lippo Karawaci Tbk and other third parties to expand our portfolio of yield accretive properties and raise our overall asset base,’ said Dr Tan.

As at Dec 26, 2009, First Reit’s eight properties were revalued at $340.9 million, representing an increase of $16 million over book value as at end December 2008.

First Reit will maintain a payout policy of 100 per cent of distributable income for FY2010.

The Reit last traded at 86 cents.

Source: Business Times, 23 Jan 2010

ASCENDAS India Trust has recorded distributable income of $14.1 million for its third financial quarter ended Dec 31, 2009, down 8 per cent from a year ago.

Distribution per unit (DPU) for Q3 was 1.85 cents, also lower by 8 per cent.

Total property income for the quarter was $29.9 million, which was 4 per cent higher than the corresponding quarter last year. Net property income was $19.3 million, up 13 per cent.

The trust’s portfolio of 4.8 million sq ft of completed space is fairly evenly distributed among Bangalore, Chennai and Hyderabad. The properties house 248 tenants operating in various IT sub-sectors such as software development, business process offshoring, research and development, and data centres.

Portfolio occupancy remained high at 97 per cent as at Dec 31, 2009, while tenant retention rate over the last nine months was 79 per cent, the trust said.

Jonathan Yap, chief executive officer of Ascendas Property Fund Trustee Pte Ltd, the trustee-manager, said: ‘We are pleased to report another strong portfolio performance in the third quarter. Indicators are suggesting that an economic recovery is well underway.’ The Indian economy grew 7.9 per cent year-on-year in the quarter ended September 2009.

‘We will focus on positioning the trust to benefit from further improvements in the general operating environment,’ he said.

The trust will continue to focus on growing the operating earnings of its assets by actively managing the portfolio, optimising its capital structure, and further growing the portfolio through developing the land it owns and pursuing yield accretive acquisitions.

Source: Business Times, 23 Jan 2010

HIGHER gross revenue from five malls has contributed to CapitaMall Trust (CMT) achieving a 25.5 per cent year-on-year surge in distributable income to $76.5 million for its fourth quarter ended Dec 31, 2009.

This in turn led to a 24.4 per cent surge in distribution per unit (DPU) to 2.4 cents for the three months.

The quarter’s DPU brought the total DPU for the 2009 full year to 8.85 cents, translating to a distribution yield of 4.97 per cent based on CMT’s closing price of $1.78 per unit yesterday.

Q4 gross revenue rose by 4.2 per cent to $140.1 million as five of CMT’s malls completed enhancement works and operating expenses fell.

For the year ended Dec 31, distributable income rose 18.3 per cent to $281.97 million while gross revenue grew 8.2 per cent to $552.7 million.

As at Dec 31, CMT’s occupancy weighed in at 99.8 per cent for its portfolio – which includes malls such as Junction 8, Tampines Mall and Plaza Singapura – up from 99.7 per cent as at Dec 31, 2008.

CMT has also commenced asset enhancement initiatives at Jurong Entertainment Centre and Raffles City, which are slated for completion in Q1 2012 and end-2010 respectively.

CMT is projecting an 8 per cent return on investment on its $200.32 million capital expenditure. The new Jurong Entertainment Centre will include an Olympic-sized ice skating rink.

Meanwhile, CMT is also working on reconfiguring the basement of Raffles City and constructing a new underground link which will add 12,180 square feet of net lettable area. Sixty-three per cent of this area has already been taken up.

Simon Ho, CEO of CapitaMall Trust Management Limited (CMTML) said yesterday: ‘We will be actively on the look-out for malls to buy . . . but we will be disciplined in our approach.’

He noted that the properties have to be yield-accretive and the income stream has to be sustainable.

CMT is also upbeat that the retail industry will benefit this year as the economy continues to pick up.

‘The improving economy and the opening of the two integrated resorts in 2010 should have a positive impact on the retail sector,’ said CMTML chairman James Koh.

Unitholders will receive the Q409 DPU on Feb 26.

Source: Business Times, 23 Jan 2010

TWO health care-based real estate investment trusts (Reits) produced differing full-year report cards yesterday – one was in the pink of health, while the other was just holding steady.

Parkway Life (PLife) Reit reported a double-digit gain in distribution income while that of First Reit was flat.

PLife’s distributable income jumped 11.6 per cent to $12.4 million in the fourth quarter ended Dec 31 last year.

For the full year, PLife’s distributable income shot up by 13.4 per cent to $46.7 million.

Its distribution per unit (DPU) also rose in both the fourth quarter and full year, recording 2.05 cents and 7.74 cents respectively. This translates into a 6.34 per cent distribution yield for the full year 2009, based on the closing price of $1.22 at Dec 31.

Gross revenue rose by 9.7 per cent in the fourth quarter to $17.7 million and 23.7 per cent to $66.7 million in the full year.

The strong performance was mainly due to acquisition of eight new nursing homes in Japan in 2008 and higher rent from the Singapore Hospital Properties.

Said chief executive Yong Yean Chau: ‘We were able to time the market and acquire quality properties in the fourth quarter at a very attractive pricing.’

PLife Reit also enjoyed growth in its net property income, rising 23.1 per cent to $62 million for the full year.

By contrast, First Reit’s full-year statement showed little growth.

Its fourth-quarter distributable income dipped by 0.6 per cent to $5.3 million. The full year, however, recorded a rise of 0.6 per cent to $21 million.

First Reit’s DPU remained steady at 1.92 cents in the fourth quarter and 7.62 cents in the full year.

Based on its closing price of 86 cents on Wednesday, the distribution yield stands at 8.86 per cent, down 49.4 per cent from the year before.

Quarterly gross revenue rose by 1.4 per cent to $7.7 million in the fourth quarter and 0.7 per cent to $30.2 million for the full year.

Net property income also recorded slight growth, up 1.2 per cent for the quarter to $7.6 million and up 0.3 per cent to $29.9 million for the full year.

Both trusts remain upbeat about their prospects this year despite the relatively uncertain economic outlook.

Source: Straits Times, 23 Jan 2010

MAPLETREE Investments yesterday said it signed on Golden Harvest Cinema as its first anchor tenant for VivoCity Xi’an, its maiden retail mall in China.

The mall, which is part of a 200,000 square metre integrated residential and retail development called Future City, is the group’s first VivoCity to be built outside Singapore.

Mapletree said in a press statement yesterday that the group plans to open more VivoCity malls in China and the rest of Asia. Work on its second VivoCity mall in China will start soon. This latest mall is located in Nanhai.

VivoCity Xi’an, scheduled to open in December this year, will be a one-stop family lifestyle mall with a gross floor area of about 62,500 square metres over four levels. It will offer consumers a mix of shopping, dining and entertainment options. Golden Harvest Cinema is taking up a total of 2,317 sq m of space, or close to 6 per cent of the total lettable space.

Mapletree is in advanced talks with several retailers for a further 30 per cent space in the mall. It expects to sign on two more anchor tenants – a supermarket and a food court operator – as well as several mini anchors in the fashion, food and beverage and entertainment trade in the next couple of months.

Hiew Yoon Khong, chief executive officer of Mapletree, said the Future City project underscores the importance of China as an investment location for Mapletree. So far, Mapletree has sold more than 80 per cent of the 1,017 residential units launched for Future City. The remaining 351 units will be released soon.

Future City is undertaken by a US$1.16 billion Mapletree-sponsored private real estate fund called Mapletree India China Fund which invests in commercial, residential or mixed-use integrated development projects in India and China.

The total investment in VivoCity Xi’an is about 550 million yuan (S$113 million). The other assets currently in this fund include Nanhai Business City in Foshan and Mapletree Tower in Beijing.

Source: Business Times, 23 Jan 2010

SINGAPORE has dropped to 43rd place from 10th in DTZ’s latest ranking of office occupancy costs around the world, and is a cheaper place for businesses compared with other Asia-Pacific cities such as Tokyo and Hong Kong.

According to the property consultancy, annual occupancy costs per workstation in offices at Raffles Place fell 49 per cent, to US$8,440 in 2009 from US$16,610 in 2008. The slump ‘was triggered by weak demand and a substantial amount of new supply, which dragged down rents and thus total occupancy costs,’ DTZ said in a report.

London’s West End was the most expensive office location in 2009, up from fifth place in the previous year. Tokyo’s Central 5 Wards was ranked second, down from first. In third spot was Washington DC, which rose four places.

Hong Kong kept its fourth position even though annual occupancy costs per workstation there dropped 22 per cent to US$16,970 last year. It was the only other Asia-Pacific city apart from Tokyo to be within the top 10.

Other Asia Pacific cities ranked above Singapore include Sydney, Mumbai and Brisbane.

DTZ expects Hong Kong to ’strongly outpace’ Tokyo by 2013. Its annual occupancy costs per workstation could rise to US$23,800 then, exceeding Tokyo’s US$21,160.

The consultancy estimates that annual occupancy costs per workstation in Singapore could slide another 17 per cent to US$7,020 this year. They might start climbing to reach US$7,840 in 2013, but are unlikely to surpass 2009 levels. ‘This is driven by surplus space driving down rents in the near term,’ it said.

DTZ added that companies in Singapore are set to benefit not just from low occupation costs. There will be ‘a wider and better pool of properties to choose from – the office market will offer tenants real value for money in the current climate’.

Source: Business Times, 23 Jan 2010

Resale prices hit record, with the HDB resale price index rising to 150.8 points, up 3.9% from the previous quarter

CASH is king, and this adage rang particularly true in the public housing market in Q4 2009, when the cash premium for Housing & Development Board (HDB) flats doubled from the previous quarter.

The median cash over valuation (COV) for all resale transactions was $24,000 – up from $12,000 in Q3. Nevertheless, the Q4 figure remains some way off from the record in HDB’s books, which was $42,000 in Q3 1996.

Resale flat prices also peaked in Q4 2009. The HDB resale price index rose to 150.8 points, up 3.9 per cent from the previous quarter and 8.2 per cent from the previous year. The increases surpassed HDB’s flash estimates slightly, which projected growth at 3.8 per cent quarter-on-quarter and 8.1 per cent year-on-year.

On the back of a strong housing market, HDB will be pushing out 6,900 flats in H1 2010, spread across areas such as Sengkang, Sembawang, Punggol, Yishun and Jurong West. There will also be monthly launches of build-to-order (BTO) flats for the next few months.

The sharp rise in COV, or the amount of cash buyers pay above flats’ valuations, caught the attention of several industry watchers. COVs indicate that buyers see greater worth in the flats than professional valuers do, and this happens especially in a rising market. In Q4, 93 per cent of resale deals occurred above valuation, compared with 79 per cent in Q3.

Most observers attributed the high COVs to strong demand for flats, while supply remains limited. C&H Realty managing director Albert Lu believes there could have been some panic buying as well.

HDB prices have risen in the last few quarters and with the economy expected to pick up this year, some home seekers could fear further price hikes, he said. ‘That might have prompted them to say ‘hey, better buy before prices go up again’.’

Median COVs displayed the biggest increases for larger flats. It was $25,000 in Q4 for executive flats – 2.8 times the $9,000 in Q3. Median cash premiums of $50,000 were even seen in Clementi and Queenstown for this flat type.

The good news for buyers is that COVs are unlikely to continue their steep rise, according to property consultants. HDB revealed that for the first half of this month, the median COV for all resale transactions has dipped slightly to $22,000.

‘With the resale HDB market trading at such high COVs, many buyers have become resistant and are exploring other options,’ said ERA Asia Pacific associate director Eugene Lim. Some are thinking of buying smaller flats, delaying their purchases or joining the queue for new flats.

He believes that COVs will continue inching up this year, though at a slower pace because ‘we are not in very positive economic waters yet’. PropNex Realty CEO Mohamed Ismail does not expect the overall median COV to exceed $30,000 this year.

Consultants are projecting HDB resale price growth of 5-10 per cent this year. In Q4, the median resale price of executive flats was $485,000 – those in Queenstown even achieved an eye-popping median price of $800,000.

Buyers filed a total of 37,205 resale applications last year, up 31 per cent from 2008. There were 8,926 applications in Q4 2009 alone, though this was 23 per cent down from the previous quarter.

Last quarters of the year tend to be quieter, and rising valuations and COVs could have contributed to the fall, Mr Ismail explained. ‘Furthermore, the steady launch of new BTO projects, the government’s continued assurance of more BTO projects in the pipeline and the increased chances for first-time buyers of BTO flats have all helped to assuage demand.’

HDB recently offered 1,300 flats from two BTO projects in Choa Chu Kang and Hougang and the flats drew a flood of applications. It also launched the tender of two executive condominium sites in Sengkang and Yishun which could yield about 900 units together.

Source: Business Times, 23 Jan 2010

ASCENDAS India Trust has reported an 8 per cent drop in distributable income to $14.1 million in its third quarter.

As a result, its distribution per unit for the three months ended Dec 31 fell to 1.85 cents from 2.02 cents in the previous corresponding period.

Net property income was up 13 per cent at $19.3 million.

For the nine months to end-December, distribution per unit rose 5 per cent to 5.76 cents on the back of a 17 per cent jump in net property income to $56.8 million.

On an annualised basis, the distribution works out to a yield of 7.4 per cent against a closing price of $1.03 on the Singapore Exchange on Thursday.

Ascendas India, the first listed Indian property trust in Asia, manages four IT parks in Bangalore, Chennai and Hyderabad.

The occupancy rate of its portfolio of properties remains high, well above the rates of other similar properties in the vicinity.

Lauding its strong showing, Mr Jonathan Yap, chief executive of the trustee manager of Ascendas India, said: ‘Portfolio occupancy remained high at 97 per cent as at Dec 31, 2009, while tenant retention rate over the last nine months was 79 per cent.’

Those who did not renew gave Ascendas India an opportunity to introduce new tenants and refresh its tenant profile.

Low gearing, or debt to equity, level of 18.7 per cent also means that the trust has the flexibility of taking additional debts to fund future expansion.

Ascendas India said it may make acquisitions from the market or through two right-of-first-refusal arrangements.

Already on its drawing board are plans to develop new space on land that it owns totalling about 1.7 million sq ft, of which about 1.2 million sq ft are due for completion this year.

When fully completed, the 1.7 million sq ft of new space will increase its current 4.8 million sq ft of income-producing space by about 35 per cent.

As payouts to unit holders are made twice yearly, the third quarter’s distribution will be made at the same time as that in the fourth quarter.

Ascendas India units yesterday ended three cents higher at $1.06.

Source: Straits Times, 23 Jan 2010

OFFICE and shop prices appear to have bottomed out at the end of last year.

Both categories of commercial property saw small price rises in the fourth quarter, ending five quarters of decline.

Office prices rose by 1 per cent while shop prices inched up 0.6 per cent, said the Urban Redevelopment Authority. But office prices were still down 16.4 per cent for last year as a whole, and are 24 per cent lower than their peak in 2008. Similarly, shop prices fell 6.1 per cent for the whole of last year, and are still 11 per cent down from their 2008 highs.

‘On the whole, the office market weathered the storm much better than anticipated,’ said Mr Li Hiaw Ho, executive director of CB Richard Ellis Research.

But while sellers of commercial property may be cheerier, landlords are less so.

Office and shop rentals continued to fall in the fourth quarter, for the sixth consecutive time. Office rentals fell another 3.3 per cent, bringing the full-year decrease to a sharp 23.6 per cent. Shop rentals fell 1.4 per cent in the quarter, ending the year down 7.4 per cent.

But property consultants noted that the rate of decrease is slowing, and rents may even rise next year. ‘The expected economic recovery in 2010 will give a boost to business sentiment,’ said Ms Tay Huey Ying, Colliers International’s director for research and advisory.

Still, the upcoming supply of more than 2.5 million sq ft of office space will weigh on the market in the short term, she said. She expects office rents to ease by another 5 per cent in the first half of the year before bottoming out.

One good sign: With lower rents, tenants are taking up more office space.

The amount of office space taken up in the fourth quarter jumped 10 times from that in the third quarter, from 32,292 sq ft to 301,392 sq ft. This meant the office vacancy rate dipped to 12.1 per cent in the fourth quarter, even though an extra 226,044 sq ft of new office space was completed, said Mr Li.

Source: Straits Times, 23 Jan 2010