CONSTRUCTION player Lum Chang Holdings on Monday said its wholly-owned subsidiary Lum Chang Building Contractors (LCBC) has secured a tender for an industrial project at Kallang Way, which is part of the Geylang planning area.

 

The contract, valued at about S$127.1 million, is to be executed with DBS Trustee as trustee of Mapletree Industrial Trust (MIT).

 

The project is scheduled to be completed over 21 months. Its scope of works includes the construction of two multi-user general industrial buildings.

 

The contract commencement date is slated for late November 2020.

 

In response to queries from The Business Times, MIT said that aside from the two buildings, there will be a third one at the new high-tech precinct. The construction contract for that is expected to be awarded later.

 

MIT announced in July last year that it would be redeveloping the flatted-factory cluster, Kolam Ayer 2 Cluster, along Kallang Way at a total project cost of about S$263 million.

 

The proposed project would include a seven-storey build-to-suit facility for a German medical device firm, which is set to account for about 24.4 per cent of the enlarged gross floor area, the real estate investment trust' s manager had said then.

 

For the two other blocks, the manager will target high value-added and knowledge-based businesses from the advanced manufacturing, information and communications technology sectors.

 

Upon completion of the redevelopment of the cluster, it will comprise the three high-tech buildings with a total gross floor area of about 865,600 square feet.

 

Lum Chang on Monday said that with the latest award, the total outstanding value of construction works yet to be reported as revenue for LCBC amounts to about S$1.9 billion

 

Earnings from the contract will be recognised progressively according to the stages of its completion, added the mainboard-listed company. The project is not expected to have a material financial impact on the Lum Chang group' s results for its current fiscal year ending June 30, 2021.

THE distribution per unit (DPU) of Mapletree Industrial Trust (MIT) fell to 3.10 Singapore cents for the second quarter ended Sept 30, from 3.13 cents a year ago.

 

This is despite distributable income rising 14.8 per cent to S$72.9 million on the back of higher net property income and distributions declared by joint ventures distributable income was, however, partially offset by higher manager' s management fees.

 

Gross revenue was up 1.5 per cent to S$103.4 million for the second quarter, from S$101.9 million a year ago net property income (NPI) grew 2.0 per cent to S$81.6 million from a year ago.

 

This was mainly driven by new revenue contribution from the 14 data centres in the US, but partly offset by the rental reliefs extended to tenants and the loss of revenue due to the redevelopment of the Kolam Ayer 2 Cluster.

 

The manager of MIT on Sept 1 completed the acquisition of the remaining 60 per cent interest in the 14 data centres in the US from its sponsor. The purchase consideration amounted to US$215.3 million.

 

The agreed property value of the data centres on a 60-per-cent basis was US$494 million, said MIT. Prior to this date, gross revenue and net property income did not include MIT' s 40 per cent interest in the data centres, it added.

 

The amount available for distribution increased 14.8 per cent year on year to S$72.9 million, from S$63.5 million. Distributions from joint ventures were higher as a result of the acquisition of the North America portfolio held under Mapletree Rosewood Data Centre Trust (MRDCT), which was completed in two phases in the second half of the FY19/20.

 

Property operating expenses, which consist of impairment allowance of trade receivables and depreciation, narrowed slightly to S$21.7 million, from S$21.9 million a year ago. This was mainly attributable to lower property maintenance expenses and marketing commission, which was partially offset by additional costs from the consolidation of data centres previously held under MRDCT, higher property tax and allowance for doubtful debts.

 

Average portfolio occupancy for Q2 rose to 92.3 per cent from 91.1 per cent in the preceding quarter. Data centres and stack-up/ramp-up buildings registered lower average occupancy rates the average occupancy rates of other property segments went up or were flat, compared to the preceding quarter.

 

The average rental rate of the Singapore portfolio fell further to S$2.03 per square foot per month (psf/month) in Q2 this year, from S$2.08 psf/month in Q1. All property segments, except the data centres in Singapore and light industrial buildings, registered lower average rental rates, mainly because of rental rebates.

 

As of Sept 30, MIT' s total borrowings outstanding increased quarter on quarter to S$2.03 billion, mainly due to consolidation of borrowings following the completion of the acquisition of the data centres in the US.

 

The aggregate leverage ratio was 38.1 per cent, down from 38.8 per cent as at June 30. MIT' s balance sheet remained " healthy" with more than S$400 million of committed facilities available, it said.

 

However, with 54 per cent of the Singapore portfolio - 40 per cent of its overall portfolio (by gross rental income) - comprising small and medium-sized enterprise (SME) tenants, the manager estimates that the rental reliefs extended to tenants would amount to about S$20 million.

 

This will affect MIT' s distributable income for FY20/21, it said. Rental reliefs of approximately S$7.1 million had been extended to tenants in the first and second quarter of the year, with additional rental reliefs expected to be given in FY20/21. The manager will not withhold any income in the second quarter despite the gradual stabilisation of the Covid-19 situation in Singapore, it said.

 

An advanced distribution of 0.03 Singapore cent per unit for July 1 had been paid to unitholders on July 28. Unitholders will receive a distribution of 3.07 cents per unit for the period from July 2 to Sept 30, after books closure on Nov 4.

 

In its business outlook, MIT said that its " large and diversified tenant base" with " low dependence on any single tenant or trade sector" will continue to underpin its portfolio resilience. The long leases in data centres in Singapore and North America, as well as build-to-suit projects will further strengthen the portfolio' s resilience, it added.

MAPLETREE Industrial Trust (MIT) is proposing to acquire a data centre and office in the US state of Virginia for between US$200.6 million and US$262.1 million, subject to the calibration of terms.

 

MIT' s manager said on Monday that it is targeting to complete the deal in the first quarter of 2021.

 

The real estate investment trust' s (Reit) wholly-owned subsidiary has entered into a sale, purchase and escrow agreement with an unrelated third-party vendor.

 

The property, sitting on freehold land, is fully leased on a triple net basis with a balance lease term of more than five years to a multinational company with " strong credit standing" , the manager said.

 

The purchase consideration was arrived after taking into account the independent valuations of the property. Cushman & Wakefield of North Carolina valued it at between US$205 million and US$266 million as at Aug 31, 2020, which are 2.2 per cent and 1.5 per cent higher than the purchase considerations respectively.

 

Including other fees and expenses, the total acquisition outlay for MIT is estimated to be between US$204.3 million and US$266.9 million. The manager intends to fund this using debt financing, proceeds from an equity fundraising and/or internal cash resources.

 

The manager said the proposed acquisition is in line with its long-term strategy of focusing on property segments with " future growth potential" .

 

The deal will also increase the Reit' s exposure to data centres - a resilient asset class with growth opportunities - while increasing its exposure to the US, said to be the world' s largest data-centre market, according to the MIT manager.

 

Among other things, the proposed acquisition is expected to provide income stability and will be accretive to its distribution per unit based on pro forma historical impact.

 

" Due to confidentiality reason, additional details relating to the proposed acquisition will be released in due course upon finalisation of the purchase consideration," the manager noted.

MAPLETREE Industrial Trust (MIT) has agreed to sell a data centre located at 26A Ayer Rajah Crescent, Singapore to Equinix Singapore at a proposed price of S$125 million. Equinix had exercised its purchase option that was within the 2015 lease agreement it had with MIT.

 

The sale price represents a 23.3 per cent premium over the development cost of S$101.4 million. The property contributed about 2.2 per cent to MIT' s portfolio gross revenue in the financial year ended March 31, 2020.

 

The data centre spans seven storeys and has a total gross floor area of about 384,800 square feet. Its 30-year land lease commenced on May 22, 2013.

 

The property is a build-to-suit data centre that was developed by MIT for Equinix. It is fully leased to Equinix.

 

The sale price takes into consideration the latest available valuation of S$125 million as at March 31, 2020 by Savills Valuation and Professional Services.

 

The divestment is expected to take place by the fourth quarter of 2020 and is subject to approval by JTC Corporation.

 

MAPLETREE Industrial Trust' s (MIT) distribution per unit (DPU) stood at 2.87 Singapore cents for the first quarter ended June 30, down from 3.1 cents a year ago.

 

This is despite distributable income rising 11.6 per cent to S$70.6 million on the back of higher net property income and distributions declared by joint ventures, partially offset by higher manager&rsquo s management fees.

 

In view of the uncertainty from the Covid-19 pandemic, tax-exempt income (distributions relating to joint ventures) amounting to S$7.1 million, equivalent to DPU of 0.32 Singapore cent, will be withheld. The group said this will provide it with greater flexibility to mitigate the impact of mandated rental reliefs for tenants.

 

MIT had also withheld tax-exempt income amounting to S$6.6 million in Q4 FY 2020 for the same reason. Had the tax-exempt income distributions been included for Q1 2021, the DPU would have been 3.19 Singapore cents.

 

The manager estimated that the rental reliefs extended to tenants would amount to about S$20 million, which will affect MIT&rsquo s distributable income for FY2021.

 

Net property income grew 0.9 per cent to S$78.7 million from a year ago. Gross revenue fell 0.5 per cent to S$99.1 million partly due to the rental rebates extended to tenants as part of the Covid-19 Assistance and Relief Programme.

 

Property operating expenses decreased 5.6 per cent to S$20.5 million. This was mainly due to lower property maintenance expenses, utilities, and marketing commission, which were partially offset by higher property tax and allowance for doubtful debts.

 

Share of joint ventures results surged to S$13.7 million from S$4.3 million due to the contribution from Mapletree Rosewood Data Centre Trust, a 50:50 joint venture between MIT and Mapletree Investments Pte Ltd. Mapletree Rosewood Data Centre Trust holds 10 powered shell data centres and an 80 per cent interest in three fully fitted hyperscale data centres in North America.

 

Average portfolio occupancy for Q1 decreased to 91.1 per cent from 91.5 per cent in the preceding quarter. All property segments recorded lower average occupancy rates. 

 

The average rental rate of the Singapore portfolio fell to S$2.08 per square foot per month (psf/month) in Q1 FY2021 from S$2.11 psf/mth in Q4 FY2020. All property segments except the data centres in Singapore and light industrial buildings registered lower average rental rates due mainly to rental rebates.

 

During the quarter, MIT raised S$410 million through a private placement that was about 8.2 times covered at the top end of the issue price range of S$2.80 per new unit. Gross proceeds from the private placement and acquisition fees in units will be used to fully fund the proposed acquisition of the remaining 60 per cent interest in the 14 data centres in the US at a purchase consideration of US$210.9 million.

 

Following the proposed acquisition, MIT&rsquo s data centre segment will comprise 39 per cent of MIT&rsquo s portfolio by assets under management.

 

As at June 30, the Reit&rsquo s aggregate leverage ratio was 38.8 per cent, slightly higher than 37.6 per cent as at March 31, 2020.

 

The manager said MIT&rsquo s large and diversified tenant base with low dependence on any single tenant or trade sector will continue to underpin its portfolio resilience. It added that the long leases in MIT&rsquo s data centres in Singapore and North America, as well as build-to-suit projects, will further strengthen the portfolio&rsquo s resilience.

 

A cumulative distribution of 2.9 Singapore cents per unit for the period of April 1, 2020 to July 1, 2020 will be paid on or around July 28. The cumulative distribution includes an advanced distribution for July 1 (the date immediately prior to the issuance of the new units in the private placement) of 0.03 cent per unit.