Friday 24 February 2017

CDL Hospitality Trusts (CDLHT) Q4FY16

Dividend


It has been on the declining trend since 2013 to 2016 majority due to the weakness of Singapore market where CDLT derive more than 60% of the total portfolio NPI which were due to more competition from the new hotel room supplies and weak SGD. Acquisition between 2013 to 2015 has support the dividend to be in the range of 10 cents.

Q4 dividend include one-off consumption tax refund of S$2.5 million (JPY 205 million) relating to the Japan Hotels acquisition which mean the dividend would have been lower.

 
2013 2014 2015 2016
10.97 10.98 10.06 10
-3.09% 0.09% -8.38% -0.60%




Singapore New Hotel Supply and RevPAR


From 2013 to 2016 the average new room supply was around 3000 per year and in 2017 estimate it will be another estimate 3000 rooms. This will is will likely put the RevPar under the pressure further. Seem it will only take a breath only in 2018 and a little bit challenge in 2019. This provided there is no significant backlog being carry to 2018 and tourist keep coming and go up and up.

Maldives


The environment seem very challenging the sad part it was just acquired in early and end of 2013.
The Maldives Resorts recorded a YoY collective RevPAR (USD) decline of 14.7% and 25.1% in 4Q 2016 and FY 2016 respectively. The decline in NPI was partially mitigated mainly by the recognition of minimum rent for Angsana Velavaru and this is the 2nd time the minimum rent is recognized. Total minimum rent has been recognize is US$1 million out of US$ 6 millions

UK Hotel


Enjoying a good growth with uncertainty due to the impending commencement of the formal EU exit negotiations in March 2017

Quoted from the presentation slide
  1. Hilton Cambridge City Centre recorded a YoY RevPAR (GBP) growth of 10.8% and 11.9% in 4Q 2016 and FY 2016 respectively
  2. The growth was largely fuelled by healthy demand, the refurbished product as well as the rebranding of the hotel during the year
  3. Negative currency translation resulted in lower NPI contribution despite stronger underlying hotel performance

Australia Hotels


Quoted from the presentation slide
  1. NPI for 4Q 2016 increased 4.2% YoY due to the stronger AUD during the quarter
  2. Coupled with the increase in new hotel rooms supply in Perth and Brisbane, trading performance of the hospitality sector will likely remain challenging
  3. However, any weakness is mitigated by the defensive lease structure which provides CDLHT with a high proportion of fixed rent
The base rent is currently around A$13.7 million per annum and FY2016 gross revenue for Australia is $14,4 million, does not seem it will have any big impact for now as per the information shared in the slides.

Otherwise the revenue will be under pressure, below quoted from FY15 annual report on Australia market review
Based on forecast supply and historic trends it is expected that occupancy levels will continue to decline over the medium term to 2018 and reach a trough in the low 70% range, after which demand is expected to exceed supply and  occupancy is forecast to increase again

New Zealand


Enjoying a good growth in NPI mainly due to revised lease structure with higher variable income.

Quoted from the presentation slide

  • NPI for 4Q 2016 more than doubled YoY mainly due to:
    1. Strong underlying performance of the hotel with a YoY RevPAR (NZD) growth of 4.9%
    2. Higher variable income under the revised lease structure which benefited from the burgeoning tourism market in New Zealand

To note on the potential supply in the future
  1. Park Hyatt Wynyard Quarter – The 196-room, Construction has begun on site and the hotel is expected to open in mid to late 2017.
  2. Ritz Carlton – 266-room Ritz Carlton hotel suggested a completion date of 2020, however the current status of the building is unknown. 
  3. There are few more development with the unknown completion date

Japan Hotel


Japan hotel seem to have enjoying the growth in 1Q16 to 2Q16 and start to feel the competition in 3Q16 onward as
  1. a combined yoy RevPAR (JPY) drop of 6.6% for 3Q 2016
  2. a combined YoY RevPAR (JPY) drop of 5.0% for 4Q 2016
Potential room supply
Based on industry journals available,it was announced that approximately 10,700 hotel rooms,and Ryokan rooms are planned for opening in Tokyo by,2019. For example, "Keio Presso Inn Hamamatsucho" with 330 rooms in Minato-ku, Tokyo and "APA Hotel RyogokuEkimae",with 1,000 rooms in Sumida-ku, Tokyo are scheduled to open in winter 2017 and April 2018 respectively.

Summary

  1. Weakness in Singapore market currently was supported by the recent acquisition between 2013 to 2015, this is basically the asset has growth but the dividend is less and stagnant around 10 cents.
  2. Singapore segment will take sometime to recover as the new supplies will still coming till 2019, RevPAR likely will still under pressure or stabilize at best
  3. Japan Hotel start to see drop in RevPAR, something need to be watch out in the future.
  4. Uncertainity in UK segment due to Brexit
  5. Maldives continue to face challenge and has utilise US$1 million out of 6 million minimum rent.



Friday 17 February 2017

Maple Greater China Commercial Trust (MGCCT) Q3 FY16/17

Gearing

  1. Gearing increased to 40.5% mainly due to higher translated borrowings partially offset by higher translated investment properties
  2. Reduction in average all-in cost of debt to 2.78% due to better refinancing terms from the new bank facilities as compared to expiring IPO debt
  3. No debt for 2017 to be refinance and left with HK$510M to be refinance in Mar 18, which is good as it will have less impact to interest rate hike if any
  4. The management also provide guidance any increase of 50bps in interest rate may result in reduction in DPU by an estimate of 0.014 cents based on based on 2,786,644,330 units as of 31 Dec 2016 and the proportion of fixed-rate debt remains unchanged at about 85%
  5. Group total liabilities amounted to S$2,845.0 million as of 31 December 2016, and was S$107.6 million higher compared to 31 March 2016. The increase in total liabilities was mainly due to higher translated borrowings of S$65.2 million as a result of HKD appreciation at period end, and additional loan drawn down for distribution payment to Unitholders


Lease Expiry

For FY16/17, The management has manage to have positive rental revision for 8.5% lease renewed and the rate seem it will continue for the remaining 6.4% lease to expired for Q4 FY16/17.

As for the FY17/18, One of the tenant has extended the lease and this reduced the expiry lease from 36.9% to 28.9%.


Festival Walk

Drop in the Tenant sales, however for Festival Walk the majority of the rent is derived mainly from a fixed rental base, with a smaller contribution from variable turnover rent.

Future Acquisition

There is a potential acquisition in 2018 on-ward as the sponsor new office building will be ready, depend on when it will dump into MGCCT.

Dividend

After the drop due to property tax and vat impact, the DPU has growth 1% compare to Q2FY16/17. We can look forward if management can maintain the current rental reversion for FY17/18 as it will have about 28.9% lease to expired.


Friday 10 February 2017

First Reit Q4FY16

Siloam Hospitals Labuan Bajo - completed on 30th Dec 2016

  1. 15 years lease and option to renew further for 15 years if exercised.
  2. Base rent of $1.85 million and will only subject to increase every year after 5 years which will be end 2021. The increase will be at a rate equal to twice the percentage increase of the Singapore CPI subject to a floor of 0-2%. Another cap in place is the increase subject to max of 5% per 5 years.
  3. Base rent will form the main bulk of the total rent which required to achieves Fist Reit's required returned.
  4. No variable rent for the initial 5 years, variable rent will be based on the gross operating revenue growth.
Using the assumption used in the announcement on the Pro Forma DPU in FY2015 and outstanding shares of 772,320,491 for FY2016, It will contribute around or less 0.029 cents for FY17 dividend.

Debt

  1. Increase to 31.1% as at 31 Dec 2016 due to acquisition of SHLB.
  2. Issues $60m of subordinated perpetual securities at 5.68% p.a for 5 years
  3. 92.3% of the debt is on fixed rate basis
  4. With the debt of $142.5m in 2017 and $149.5m in 2018, will need to see the refinancing rate if it will be higher than the current effective interest rate.
    • You can read from the FY2015 Annual report from page 85 onward to find out more on the debt 

Below are taken from AR FY2015

Dividend

Year on year growth is 2% which is mainly come from acquisition of Kupang property in end of FY2015. Nothing much to be expected except from new acquisition as the increase of base rent of existing properties are based on CPI. Increase in interest rate might impact the dividend for FY17 and net off the contribution from SHLB.


Previous Post

Friday 3 February 2017

Frasers Commercial Trust (FCOT) Q1FY17

Dividend

For Q4FY16 and Q1FY17, no management fees were paid in unit yet the management able to maintain 2.51 cents dividend compare to previous year Q1FY16 where 23% of management fees were paid in units. To note there is 0.28 cents from capital distribution to support income loss which include 0.9m from the disposal of the Hotel development rights at China Square Central in August 2015 which target to complete by mid 2019. Without 0.9m support the dividend would be reduced by around 0.11 cents which translate to 2.4 cents dividend. Still pretty decent for me.

Lease Expiry profile

About 17.1% (5.4 % is HP) of total gross rental income in 2017 and the significant will be 29.4% in 2018 (12.1% is HP)




FY2017 Lease Expiry
  1. 5.1% - China Square Central average passing rent are $6.9 (office) and $7.4(retail)
  2. 1.4% - 55 Market Street average passing rent $7.2
  3. 8.2% - Alexandra Technopark average passing rent $4.2
  4. 0.6% - Central Park average passing rent A$569 (office) and A$4623(retail)


Based on the below chart, seem it will be able to maintain the expiry lease average passing rent for the office if they are able to renewed it for China Square and 55 Market Street.




As for the Alexandra techno park, I am expecting a drop in the income due to HP moving out which contribute about 17% ++ and it is represent 5.4% out of 8.2% and not far into 2018 it will have another 12.1% of the trust gross rental income. If the manager manage to re-lease the whole space it will be a bonus for me.




For the Central park, it is not significant however the current range is between A$600 to A$725 and the current occupancy rate is just 80% on the positive side, it will have 10-20% upside if the rental market recover.

Step-up rent built in



Debt Profile

Average SGD debt rate is 2.59% and there will be 180m to refinance in FY17. Based on the last issuance of $100m at 2.835%, likely the debt rate will go up.


Summary

1. If HP to vacate the space, it will depend on the management how fast it can re-lease the space as it is currently contribute about 17% of the gross rental income to the portfolio.
2. I am expecting interest rate increase should be minimal impact to the dividend, however it will reduce the dividend
3. If market is giving an offer due to the item 1 above, i will consider to add more.

*Currently vested with FCOT at the time of writing

Past post on Frasers Commercial Trust

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