Category Archives: Funds

S-Reits outperform peers for total returns in 2009

Posted on 11 Mar 2010 | Comments Off on S-Reits outperform peers for total returns in 2009

They posted returns of 85.6%; Asian Reits performed well as a region: study

REAL estate investment trusts (Reits) in Singapore have outperformed their counterparts in other major markets in terms of total returns in 2009, according to a report released yesterday.

Ernst & Young’s study showed that Reits Singapore and Hong Kong posted returns of 85.6 per cent and 64.5 per cent respectively in 2009.

Malaysia (38.6 per cent) and South Korea (28.4 per cent) also put up strong showings.

By contrast, total returns in the more mature Reit markets were much lower. Returns for Australian Reits were 10.4 per cent in 2009, while Japan’s Reits came in at 6.7 per cent. The largest single Reit market in the world, the United States, witnessed returns of 27.9 per cent.

‘Asian Reits performed well as a region because the Asian economies have generally been more resilient to the financial crisis, underpinned to some extent by China’s economic performance and favourable long-term growth outlook,’ said Liew Choon Wai, assurance partner and head of Singapore real estate for Ernst & Young.

The performance of each country’s Reit market appears to reflect the broader economic sentiment, he added: ‘For Singapore, the economy was seen as particularly vulnerable during the financial melt-down, and it was not surprising that we saw a plunge in Reit returns in 2008 to early 2009, which has subsequently rebounded strongly since March as financial markets stabilise.’

But only Singapore recorded a negative three-year rate of return – of minus 4.15 per cent – of the Asian countries outside of Japan. Rates of return for South Korea, Malaysia and Hong Kong are all in positive territory over the last three years. Japan, a mature economy, had a three-year rate of return of minus 19 per cent.

Ernst & Young also noted that since March 2009, many Reit markets around the world have seen significant increases in share prices and Reits have raised billions of dollars by going back to the stock market for secondary (or follow-on) equity offerings to reduce debt, recapitalise their balance sheets and prepare their businesses for the next wave of growth.

Source : Business Times – 11 Mar 2010

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M’sian property major sharpens S’pore thrust

Posted on 19 Nov 2009 | Comments Off on M’sian property major sharpens S’pore thrust

Starhill Global acquiring $571m of assets in big YTL revamp

YTL Corp, Malaysia’s biggest property group, is restructuring its RM8 billion (S$3.3 billion) property trust and hotel portfolio, which includes the Singapore-listed trust Starhill Global Reit.

Starhill Global Reit, which will focus on retail, will buy two malls in Kuala Lumpur from YTL’s Malaysia-listed trust Starhill Reit for $423.3 million.

The Singapore trust will also acquire the David Jones Building in Perth, Australia, for $148 million.

‘This exercise will restructure the RM8 billion in retail and hotel assets currently under our control into two distinct Reit portfolios – the hospitality Reit in Malaysia and the retail-centric Reit in Singapore, which will benefit both Reits in terms of pursuing growth and development strategies in a single, focused class of assets,’ said YTL managing director Francis Yeoh.

With the proposed acquisition of the three properties, Starhill Global Reit’s total portfolio size will grow to $2.5 billion. Its footprint will also be extended to Malaysia and Australia, diluting the geographic concentration risk. The trust’s portfolio now comprises 10 properties in Singapore, Japan and China valued at about $2 billion in total.

Starhill Global Reit also said in a separate announcement that it has terminated the master leases and property management agreements for seven properties in Japan to ‘mitigate tenant concentration risks’.

Dr Yeoh said that YTL’s long-term vision is for Starhill Global Reit to be the main YTL-linked vehicle for the ownership of prime retail and commercial properties.

On its part, Malaysia-listed Starhill Reit will instead focus on the hospitality business after selling the two malls. Hotel assets with the potential to be injected into the Reit include The Ritz-Carlton in Kuala Lumpur and The Majestic Malacca.

‘From the global standpoint, we see tremendous opportunities for Starhill Reit to acquire high-end assets in key international hot spots, including Bali, Saint Tropez, Phuket and other world-class destinations,’ said Dr Yeoh.

The two malls bought by Starhill Global Reit from Starhill Reit – Starhill Gallery and Lot 10 Shopping Centre – have a total net lettable area of 554,165 sq ft. They will be bought using an asset-backed securitisation structure.

Starhill Global Reit also said that Katagreen Development, a wholly-owned subsidiary of YTL Corp, will be the master lessee in both properties with a tenure. The master lease will incorporate a step-up rental feature every three years.

David Jones Building in Perth will be acquired from Centro, a real estate company based in Australia. David Jones, a department store, has a lease in the building until October 2032. It now occupies about 95 per cent of the total gross lettable area of the building and accounts for 75 per cent of the annual gross rental.

The proposed Australian acquisition is expected to be completed in January 2010 and will be funded by a combination of debt and proceeds raised from Starhill Global Reit’s recent rights issue.

Starhill Global Reit was formerly known as Macquarie Prime Reit, and was listed in 2005 with an initial portfolio that included stakes in Singapore malls Ngee Ann City and Wisma Atria.

The property trust’s name was then changed after YTL Corp in October 2008 took over the Macquarie Group’s 26 per cent stake in an all-cash deal worth $285 million.

YTL Corp has been expanding aggressively in Singapore. In 2008, it landed Singapore’s second largest generating company, the 3,100-megawatt PowerSeraya, for $3.8 billion.

Source : Business Times – 19 Nov 2009

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