Posts: 122
Threads: 4
Joined: Dec 2014
Reputation:
0
http://btd.sg/1CWcsTc
CapitaMall Trust Q4 DPU up 5.1% to 2.86 cents
By Cai Haoxiang haoxiang@sph.com.sg @HaoxiangCaiBT
23 Jan7:49 AM
CAPITAMALL Trust, the largest listed mall owner in Singapore, reported a distribution per unit (DPU) of 2.86 cents for its fourth quarter ended Dec 31, 2014, 5.1 per cent higher than 2.72 cents a year ago....
Posts: 692
Threads: 1
Joined: Dec 2010
Reputation:
7
Compare CMT (FY2014) and FCT (FY Sep-2014) data:
1. FCT has higher DPU (11.187 cents versus 10.84 cents)
2. FCT has lower gearing (29.3% versus 33.8%)
3. FCT has higher interest cover (6.17x versus 4.5x)
4. FCT has lower cost of debt (2.508% versus 3.5%)
5. FCT has higher occupancy (98.9% versus 98.8%)
But looking at the prices today, CMT is $2.25 whereas FCT is $2.00. What is driving the preference for CMT 
Posts: 339
Threads: 29
Joined: Mar 2014
Reputation:
12
I think CMT is more bluechip-ish compared to FCT, if you consider the market cap, sponsor, funding ability etc.
CMT has 10+ malls, so better diversification.
And I think overall, CMT's malls are better located and looks more attractive. (Personal opinion as a normal shopper)
(vested in both)
Posts: 393
Threads: 5
Joined: May 2013
Reputation:
10
(23-01-2015, 01:08 PM)egghead Wrote: Compare CMT (FY2014) and FCT (FY Sep-2014) data:
1. FCT has higher DPU (11.187 cents versus 10.84 cents)
2. FCT has lower gearing (29.3% versus 33.8%)
3. FCT has higher interest cover (6.17x versus 4.5x)
4. FCT has lower cost of debt (2.508% versus 3.5%)
5. FCT has higher occupancy (98.9% versus 98.8%)
But looking at the prices today, CMT is $2.25 whereas FCT is $2.00. What is driving the preference for CMT Hi egghead, the stock price of the company cannot be compared apple to apple. Appropriate measurements for stock within same industry would be PE ratio. However sonce both of mentioned are Reit/trust, a suitable simple measurement would be price to book ratio.
Sent from my D5503 using Tapatalk
Posts: 692
Threads: 1
Joined: Dec 2010
Reputation:
7
The fact that CMT is more "blue chip" (i.e. bigger cap, being one of STI component, etc) did not escape me. Also, I forgot to mention that even on NAV per share basis, FCT is also higher than CMT. I am just wondering if the CMT premium over FCT is excessive.
Posts: 2,340
Threads: 27
Joined: Jul 2012
Reputation:
43
24-01-2015, 01:10 PM
(This post was last modified: 24-01-2015, 05:17 PM by CY09.)
Hi,
While it is indeed true Fraser centrepoint and CMT are comparable, there are few difference. CMT has a certain element of office space in its reit portfolio. This offers a degree of diversification against the retail sector which I am not optimistic of.
Secondly, the freehold property of CMT is plaza Sing while FCPT is Anchorpoint. This makes a lot of dif as the freehold property of CMT draws more traffic than Anchorpoint. Many valuers fail to recognize the value of freehold properties in Singapore as they like to only mark up (adjust) a small premium (about 15%) over a 99 year lease. In my opinion, this is a very short term view, because property values here tend to plummet once their leases are less than 40 years.
Otherwise, not much separates them in other aspects such as the mix of good/average shopping malls, leasing and property tenure in their portfolio. Nonetheless, I will not advise investor of my age (20+) to own REITS and use it as retirement vehicle; the model is not good because REITS only pay the interest for their loans and roll over the principals. Yet they keep only 10% of cashflow, while distributing 90% as dividends. And when REITS portfolio tenures drop to 40 years or less (around year 2050-2060), banks will not lend as much going by the metric of Loan to Value ratio, hence capital raising is the likely option. The second trouble will be in 2085-2095 when they have to renew their leases.
Note: Both REITS can elect not to renew any of their 60 or 99 year leases. Then CMT portfoilo will only be Plaza Sing and Sembawang Shopping Centre while FCPT will be only Anchorpoint
To Egghead: One minor point FCPT DPU was high because FCT distributed 100% of income available for distribution while CMT distributed 90%. If we are to pro rate to 90%, FCPT will be lower (10.068 vs 10.84).
Posts: 1,767
Threads: 14
Joined: Jan 2011
Reputation:
15
After 70 to 80 years of say 5% distribution of growing rental base, the return is many times over the property.
The capital raised support the continuity of the reits with new or re-developed property therefore new lease life.
Wouldn't this be sustainable ?
Posts: 2,340
Threads: 27
Joined: Jul 2012
Reputation:
43
24-01-2015, 05:17 PM
(This post was last modified: 24-01-2015, 05:34 PM by CY09.)
Hi Cory,
Yes you are right it is sustainable. A property (initally financed with 70% equity, 30% debt) at 5% distribution with growing rental base, (Assumptions:3% rental growth, the unitholder reinvests his annual dividends into the same asset and the debt is repaid at end of the 81st year), the unithholder will reap returns about 102 times of his initial equity injection over 81 years. However, that will be about 5.8% compounded annual returns for the REIT unitholder. The model is sutainable ( I may be too strong in my words) but comparing such returns against the index, one will notice the returns are not great
Posts: 854
Threads: 10
Joined: Sep 2010
Reputation:
14
(23-01-2015, 09:46 PM)thor666 Wrote: (23-01-2015, 01:08 PM)egghead Wrote: Compare CMT (FY2014) and FCT (FY Sep-2014) data:
1. FCT has higher DPU (11.187 cents versus 10.84 cents)
2. FCT has lower gearing (29.3% versus 33.8%)
3. FCT has higher interest cover (6.17x versus 4.5x)
4. FCT has lower cost of debt (2.508% versus 3.5%)
5. FCT has higher occupancy (98.9% versus 98.8%)
But looking at the prices today, CMT is $2.25 whereas FCT is $2.00. What is driving the preference for CMT Hi egghead, the stock price of the company cannot be compared apple to apple. Appropriate measurements for stock within same industry would be PE ratio. However sonce both of mentioned are Reit/trust, a suitable simple measurement would be price to book ratio.
Sent from my D5503 using Tapatalk
i actually think his evaluation metrics are valid. no doubt some of them vary year to year.
price to book is a problematic evaluation considering valuation is subjective isn't it. think if this sponsor want to stuff this mall into the reit, so the valuation report is 'rigged' so that the mall looks good to stuff. valuation is also based on discount rate, which is another subjective measure.
Posts: 393
Threads: 5
Joined: May 2013
Reputation:
10
Drizzt.. His other metrics are ok. Only the price comparison is challenging as it does not take into account the size of each trust, eg trust a is $1*100total shares, while trust b is $1.10*10000total shares.
As for pe or pb.. As you correctly identified, it can be manipulated to look good via various means. In depth study of each stock is required, and I am actually inclined to the idea that reits and trusts can be much more difficult to evaluate as compared to say, a company simply selling equipment
Sent from my D5503 using Tapatalk
|
Homepage
PR Newswire
