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Post Info TOPIC: Prime REIT
tfwee


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DBS Group has decreased it holding in MMP from 5.04% to 4.96%

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Morgan Stanley  has increased the holding of MMP from 10.010 % To 11.023% through purchased from open market.

Date of Change of Interest: 06 July 2007
Date of Notice to listed REIT: 10 July 2007

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Morgan Stanley  has increased the holding of MMP from 9.106 % To 10.010 % through purchased from open market.

Date of Change of Interest: 25 June 2007
Date of Notice to listed REIT: 27 June 2007

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Temasek Holding has increased the holding of MMP from 4.99% to 5.04% through purchased from open market.

Date of Change of Interest: 14 June 2007
Date of Notice to listed REIT: 20 June 2007

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Extracted from MMP Annoucement website. Click Here for the report

COMPLETION OF ACQUISITION OF PORTFOLIO OF SIX PROPERTIES IN TOKYO

Further to the announcement of 10 April 2007, Macquarie Pacific Star Prime REIT Management Limited, as Manager of Macquarie MEAG Prime Real Estate Investment Trust (MMP REIT) is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited, as Trustee of MMP REIT, has today completed the acquisition of a portfolio of six properties in Tokyo, Japan, (the Fund Creation Portfolio) for a total purchase price of ¥8,727 million. The purchase price and other acquisition costs of the Fund Creation Portfolio have been fully funded by debt.

The Fund Creation Portfolio was acquired from: Yugen Kaisha Triton Property and Fund Creation Co., Ltd. (Fund Creation); and Yugen Kaisha Kereos Property and Fund Creation respectively.

Fund Creation has been appointed as the local asset manager of the Fund Creation Portfolio for a period of one year from 30 May 2007, with the option for MMP REIT or its nominee to extend that appointment by another year.

With the completion of this acquisition, MMP REITs portfolio comprises eight assets located in Singapore and Japan, valued in aggregate at approximately S$1.6 billion.



-- Edited by tfwee at 09:10, 2007-05-31

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MOODYS AFFIRMS Baa1 CORPORATE FAMILY RATING FOR MMP REIT

SINGAPORE, 15 May 2007 Macquarie Pacific Star Prime REIT Management Limited (Macquarie Pacific Star), the Manager of Macquarie MEAG Prime Real Estate Investment Trust (MMP REIT), is pleased to announce that Moodys Investors Service (Moodys) has issued an announcement dated 14 May 2007 affirming MMP REITs Baa1 corporate family rating with a stable outlook. MMP REIT was first assigned this rating in July 2006.

According to Moodys, MMP REITs operational and financial performance in 1Q2007 was in line with its expectations. MMP REITs leverage at 25% as at end 2006 was also well managed. Moodys noted that MMP REITs new acquisitions in Tokyo (Japan) and Chengdu (China) will provide economies of scale and diversify its existing portfolio. Moodys also drew comfort from MMP REITs affiliation with the Macquarie Bank Group, which it believed would facilitate MMP REITs access to capital markets in refinancing future asset acquisitions. Mr Franklin Heng, Chief Executive Officer of Macquarie Pacific Star, said: The affirmation of the Baa1 rating for MMP REIT by Moodys reiterates the high quality of MMP REITs portfolio, which we are building up with new acquisitions in the region. The positive rating endorses our proactive asset management and multi-pronged investment strategy.

MMP REITs gearing will increase to 35% with additional debt funding for both its recent Tokyo and Chengdu acquisitions. Moodys affirmed rating will give us greater financial muscle to make more attractive acquisitions, and allows us more flexibility in our debt capital management and larger operational scope in managing our funding requirements and costs.


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Macquarie Pacific Star Prime REIT Management Limited has sold 5000 units on 30 April 2007 and 903631 units on 2 May 2007. It stake in MMP share has reduced from 0.10425% to 0.00853%


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ISSUE OF UNITS TO THE MANAGER IN PAYMENT OF MANAGEMENT FEES

Macquarie Pacific Star Prime REIT Management Limited ( Macquarie Pacific Star ), the Manager of Macquarie MEAG Prime Real Estate Investment Trust ( MMP REIT ), wishes to announce that 907,893 new units in MMP REIT ( Units ) were issued to Macquarie Pacific Star on 24 April 2007.

The Units were issued at an issue price of S$1.2427 per Unit, as payment of 60% of the base fee component of the management fee to Macquarie Pacific Star (the  Base Fee ) for the period from 1 January 2007 to 31 March 2007.

The Base Fee is defined in the trust deed constituting MMP REIT (the  Trust Deed ) as 0.5% per annum of the value of the trust property. In accordance with the Trust Deed, the issue price was determined based on the weighted average traded price for a unit for all trades done on the Singapore Exchange Securities Trading Limited ( SGX-ST ) in the ordinary course of trading on the SGX-ST for 10 business days immediately preceding the date of issue of the Units to Macquarie Pacific Star.

The mode of paying 60% of the Base Fee in Units was disclosed in the section entitled  The Manager and Corporate Governance  on page 186 of the prospectus dated 13 September 2005, issued in connection with the initial public offering of the Units.

Following the above issue of Units, the total number of Units in issue is 949,283,592, of which Macquarie Pacific Star s holding is 989,592.


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Media release

MMP REIT ACQUIRES 50% OF PRIME RETAIL PROPERTY IN CHENGDU, WITH FIRST RIGHT OF REFUSAL TO PIPELINE IN CHINA

HIGHLIGHTS

  • Yield-accretive acquisition
  • Minimum net income yield of 8% expected
  • Strategic partnership with prominent property developer in China
  • First right of refusal to pipeline of opportunities in China, including two other high quality retail properties in Chengdu

SINGAPORE, 23 April 2007 Macquarie Pacific Star Prime REIT Management Limited (Macquarie Pacific Star), the Manager of Macquarie MEAG Prime Real Estate Investment Trust (MMP REIT), is pleased to announce that MMP REIT has today entered into a conditional agreement to indirectly acquire a 50% interest in a prime retail property in Chengdu for RMB150 million (approximately S$30 million1), marking its entry into Chinas real estate market.

The property, known as Renhe Spring Department Store (the Property), is strategically located in the Wuhou District of Chengdu, the capital of Sichuan Province, the second most populous province in China. The Property has a gross floor area (GFA) of approximately 101,000 square feet and is owned by the Renhe Spring Group. The chairman of the Renhe Spring Group, Mr Chen Liren, is a prominent property developer and operator of prime retail and residential properties, with a significant land bank in Sichuan Province.

Aside from the Property, MMP REIT has also been granted first right of refusal to Mr Chens pipeline of opportunities in China, and in particular, to another two prime retail properties in Chengdu with combined GFA of more than 1 million square feet.

Mr Franklin Heng, Chief Executive Officer of Macquarie Pacific Star, said, This is a significant milestone for MMP REIT. It marks MMP REITs first foray into China, the worlds fastest growing economy, and into one of its fast rising, second-tier cities.

This transaction marks the beginning of an important and strategic partnership with Mr Chen Liren and the Renhe Spring Group. Mr Chen shares MMP REITs philosophy on what it takes to build and manage a portfolio of top quality retail properties in strategic cities across China.

The Property is part of a mixed-use development that includes a Grade A office tower. It currently houses premium brands such as Burberry, Prada, Dunhill, Ermenegildo Zegna, Givenchy, Gucci, Hugo Boss and Montblanc. The purchase price of RMB150 million (based on MMP REITs 50% indirect stake) is 11.8% below Savills valuation of the Property of RMB340 million (or S$68 million) as at 31 December 2006, which was independently commissioned by MMP REIT.

following completion of the acquisition. The transaction will be yield-accretive to MMP REITsThe Property is currently in its third year of operation. Between 2005 and 2006, the Property enjoyed approximately 23% of year-on-year retail sales growth and for the year 2006, its sales were RMB263 million (S$53 million). The expected minimum net income yield for the Property is 8% per annum, as this is the net profit guarantee committed to MMP REIT for the first two years distribution per unit (DPU) and the pro forma financial effect of the acquisition on DPU for the financial year ended 31 December 2006 would have been an additional 0.089 Singapore cents per unit, representing an initial yield accretion of 1.5%.

HSBC Institutional Trust Services (Singapore) Limited, as Trustee of MMP REIT, entered into a conditional sale and purchase agreement in respect of the acquisition, and subject to satisfaction of the relevant conditions precedent, completion is expected to take place on or about the end of June 2007.

Acquisition highlights

Mr Heng said the first right of refusal to Mr Chens pipeline of opportunities will give MMP REIT a concrete platform on which to build a critical mass of prime retail properties in China. He added, The quality of the Property is consistent with MMP REITs prime assets of Ngee Ann City and Wisma Atria. It is fairly new, has a first-rate retail design with very high quality building finishes. This acquisition will diversify MMP REITs portfolio and further enhance its tenant base through direct relationships with a significant number of the worlds leading retail brands outside of Singapore.

On Macquarie Pacific Stars ongoing acquisition efforts, Mr Heng commented, This acquisition is the result of dedicated sourcing efforts in the key target markets of China, Japan, Malaysia and Singapore.

Funding

MMP REIT intends to fund this acquisition through borrowings. With the completion of MMP REITs recent acquisitions in Japan, gearing would have increased from 25.5% as at end March 2007 to 34.0%. With this acquisition, gearing will edge up marginally to 35.2%, reserving capacity and flexibility for future acquisitions to be funded by debt or equity (as appropriate).

General description of the Property

The Property is a well-designed five storey building of premium quality with GFA of approximately 101,000 square feet. It began operations in 2004 and has been fully occupied since. It enjoys maximum visibility and accessibility from its strategic location at the junction of two major arterial roads in an upmarket residential and commercial centre of Chengdu. The Property will be linked to Chengdus new Metro system in the near future by an adjacent station which is
currently under construction.

Please refer to the presentation for more information on the Property. More information on the Renhe Spring Group can be found on www.rhspring.com


-- Edited by tfwee at 23:48, 2007-04-23

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Key Point of 1Q07 Result of MMP:

  • 1Q 2007 gross revenue exceeded 1Q 2006 by 4.1% due to higher rental rates from renewals and new leases
  • Increase in non-tax deductibles due to the goodwill payment and depreciation charge for the installation of the new escalators at WAGearing will increase to 34% with 100% debt funding for the Japan acquisitions
  • Capacity for up to $340 million worth of acquisitions without raising additional equity


-- Edited by tfwee at 10:56, 2007-04-24

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Notice of Books Closure and Distribution Payment Date

NOTICE IS HEREBY GIVEN THAT the Transfer Books and Register of Unitholders of Macquarie MEAG Prime Real Estate Investment Trust (MMP REIT) will be closed on Wednesday, 2 May 2007, at 5.00 p.m. (the Books Closure Date) to determine Unitholders entitlements to MMP REITs distributable income of 1.47 cents per unit in MMP REIT (Unit) for the period of 1 January 2007 to 31 March 2007 (the Distribution).

Holders of Units (Unitholders) whose securities accounts with The Central Depository (Pte) Limited (CDP) are credited with the Units as at 5.00 p.m. on the Books Closure Date will be entitled to the Distribution to be paid on Wednesday, 30 May 2007.


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DATE OF RELEASE OF MMP REITS FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED 31 MARCH 2007

Macquarie Pacific Star Prime REIT Management Limited, the Manager of Macquarie MEAG Prime Real Estate Investment Trust (MMP REIT), wishes to announce that it will release MMP REITs financial statements for the quarter ended 31 March 2007 on Monday, 23 April 2007, after market close.

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12-Apr-2007

First Acquisitions since listing

MMP REIT has done its first acquisitions since listing on the 20th Sept 05. MMP has entered into three separate conditional sale and purchase agreements to acquire seven properties in Tokyo, Japan for a total purchase price of approximately S$182.5m. This represents a discount of 1.5% to the appraised value of approximately S$185.4m. Properties under management will increase by 12% to S$1683m.

Minimal DPU Impact. The pro forma financial effect of the acquisitions on DPU for the FY06 would be an additional 0.108 cts per unit, representing an initial yield accretion of 1.9%. The Manager will finance the acquisitions wholly with debt. Upon completion of the acquisitions, the gearing ratio of MMP REIT is expected to increase from 25.6% to 34.0%. The date of completion may be extended until 31 May 2007. This translates to an additional DPU of 0.04 cts for FY07F, representing a yield accretion of 0.7%. We estimated that a distribution income of approximately S$1.0m would be contributed annually from the acquisitions. This works out to be only 1.8% of FY06 distribution income. Hence, we feel that the acquisitions will not have much impact to MMP DPU. This is mainly due to the low opportunity cost in Japan.

Acquisitions Information. The properties are acquired with an initial yield of approximately 4%. Local asset manager from Japan will manage the properties, with the management fee contributed by MMPs property managers fee. Profit will be taxed under Japan by approximately 12%. Average lease term for tenant is estimated to be 5.7 years. Four of the properties are under master lease. Rental rate are expected to be stable without increment during the lease term. Japan property recovering. We believe that Japan property market will rebound after 15 years of decline, backed by the recovering economy and low cost of debt. In addition, the strong demand from investment funds is also pushing up the property prices in capital city like Tokyo. We also expect Japanese yen to appreciate limiting any currency risk involved.

Valuation and recommendation. Although the DPU impact is not great, we feel that this acquisition will benefit MMP in long term. We feel that this will be a good start, and applause to MMPs first acquisitions. We expect to see more acquisitions in future. We also believe that MMPs orchard properties will continue to appreciate, increasing MMPs NAV by at least 10% this year.

With a WACC of 7.2% and a growth rate of 3.0%, we arrive at the fair value of S$1.37 for MMP. This translates to a 4.2% dividend yield and a price to net asset value of 1.1x for FY07. It represents an average spread of 1.5% as compared to the risk free rate of 2.7%. We upgrade MMP to a Buy with a 9.6% return.

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11-Apr-2007

Not just one but seven

Finally, not one but seven. After listing in Sept 2005, MMP has finally delivered acquisitions to drive yield accretion. And for MMPs debut deal, it is not just one, but a basket of seven properties for S$182.5m at property yield of 4-4.2%, located in various prime areas of Tokyo which is spread across Roppongi, Shibuya-ku, Minato-ku and Meguro-ku. Six of the assets (Fund Creation portfolio) are completed assets with income generation, most with 100% occupancy, while the remaining asset (FLEG America-Bashi Building) is a retail/office building in the Shibuya-ku area currently under construction and expected to complete in Sept 07. Completion of the acquisition of the Fund Creation portfolio is expected to complete by May and FLEG America-Bashi Building on a completion basis.

Yield accretion fully funded by debt. With current gearing of 25.6% preacquisition, MMP has considerable debt capacity to pursue yield enhancing transactions. We expect MMP to fund its debut acquisitions fully by lower cost of borrowing in Japan, and estimate about 0.1 cents DPU accretion on full income contribution from these assets.

Time to bridge the gap. With a first acquisition from Japanese real estate developer FLEG International, this could mark the first of more acquisitions to be sourced from Japan as part of a possible indirect 3rd party pipeline. Moving forward, should MMP rack in more acquisitions and illustrate the Reit managers deal sourcing capability, we could see further yield compression for MMP and narrow the yield gap between MMP and other retail S-Reits which are trading at a comparative premium backed by developers.

Maintaining Buy, TP S$ 1.34. We have factored in the above acquisitions into our DCF calculations and arrive at fair value of S$ 1.34. At 5.1% distribution yield compared to other retail S-Reits currently trading at 3.5%, this suggest room for further upside with yield compression. Hence, we maintain our BUY call for MMP REIT, and target price of S$ 1.34 based on DCF valuation. Downside risk is limited due to resilient prime retail rents and office market upswing.

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Extracted from DMG & Partners

Maiden Acquisition

MM Prime REIT has made its maiden acquisition of seven properties, predominantly for retail purposes, in Tokyo for about S$182.5m. The acquisitions will anchor MMP with a strategic foothold in Japan. Based on pro forma NPBT of S$0.7m from the properties these assets could add 0.108 cents to DPU, to be felt from FY08. We are maintaining our FY07 forecast of 5.8 cents, translating to a yield of 4.8%. Maintain BUY with a price target of S$1.28.

Acquired seven properties in Tokyo. MMP has entered an agreement with Yugen Kaisha Triton Property and Fund Creation Co. Ltd to acquire six completed retail properties under the  Fund Creation  portfolio located in prime areas of Tokyo, Japan for S$110.4m. Currently these properties are enjoying close to 100% occupancy.

The 7th property, the FLEG America-Bashi Building, is a seven-storey retail-cum-office development located in the Ebisu area, which is expected to be completed in September this year. This property will be acquired for S$72.1m from FLEG International   a major Japanese retail leasing group and a growing real estate developer.

Full impact to be felt from FY08. The acquisitions will be yield accretive to MMP's distribution per unit (DPU). The pro forma financial effect would be an additional NPBT of S$0.7m or 0.108 cents per unit, representing an initial yield accretion of 1.8%. As completion of transaction is expected at end May 07, the boost to income would be felt from FY08.

Capacity for expansion. The acquisition would be funded by debt, thus further enhancing to bottomline post acquisition. MMP would have a gearing ratio of 34.0%, up from 26.5% previously. This leaves the group with significant funding capacity for new purchases.

Maintain FY07 forecast. We are maintaining our FY07 forecast of 5.8 cents, translating to a yield of 4.8%. Maintain BUY with price target of S$1.28.


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Income and geographical diversification

The Acquisitions are expected to improve the income diversification of MMP REIT, thereby reducing the reliance by MMP REIT on income streams from any single property. The Acquisitions are also in line with MMP REITs regional growth strategy and will allow MMP REIT to diversify its portfolio of assets geographically beyond Singapore. The Fund Creation Portfolio and the FLEG America-Bashi Building will represent, in aggregate, 11.0% of MMP REITs enlarged asset base.

METHOD OF FINANCING AND FINANCIAL EFFECTS OF THE ACQUISITIONS

The Manager will finance the Acquisitions wholly with debt. Upon completion of the Acquisitions, the aggregate leverage of MMP REIT is expected to be approximately 34.0% of the deposited property of MMP REIT.


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MMP REIT ACQUIRES SEVEN PROPERTIES IN TOKYO FOR S$182.5 MILLION

Rising retail and real estate markets in Japan underpin yield-accretive acquisitions

Deal marks entry into the worlds second largest economy

SINGAPORE, 10 April 2007 Macquarie MEAG Prime Real Estate Investment Trust (MMP REIT) has today entered into conditional sale and purchase agreements to buy seven properties located in the prime areas of Tokyo for a total purchase price of approximately ¥14.4 billion1 (S$182.5 million).

Macquarie Pacific Star Prime REIT Management Limited (Macquarie Pacific Star), the Manager of MMP REIT, said the yield-accretive acquisitions of predominantly retail properties comes amid a recovery in Japans economy and real estate market. According to government data announced in March 2007, Japanese land prices posted a general rise for the first time in 16 years. Commercial property prices, in particular, increased by an average 2.3% in 2006 compared to the previous year.

The seven properties are situated in the sought-after areas of Roppongi, Shibuya-ku, Minato-ku and Meguro-ku. Six are completed, income-producing buildings (Fund Creation Portfolio), predominantly for retail purposes, with a majority of these buildings enjoying close to 100.0% occupancy. The seventh property, the FLEG America-Bashi Building, is a seven-storey retail-cum-office development in the Ebsiu area of Shibuya-ku and is currently under construction and due for completion in September 2007.

The total purchase price of the Fund Creation Portfolio is approximately ¥8.7 billion (S$110.4 million) and will be acquired from related entities of Fund Creation Co., Ltd (Fund Creation), under two conditional sale and purchase agreements signed today. Fund Creation, listed on the JASDAQ since October 2006, provides asset management and financial brokerage services, and has a current market capitalisation of approximately ¥48.3 billion (S$611.0 million).

The FLEG America-Bashi Building (with a purchase price of approximately ¥5.7 billion or S$72.1 million) will be acquired, on a completed basis, from F.L.E.G. International Co., Ltd. (FLEG International), a major Japanese retail leasing group and a growing real estate developer with over 14 years of experience and more than 100 properties under its management. FLEG Internationals sales turnover increased from approximately ¥14.9 billion (S$188.4 million) in 2004 to approximately ¥25.6 billion (S$323.8 million) in 2006.

Fund Creation and FLEG International will provide local asset and property management services to the Fund Creation Portfolio and the FLEG America-Bashi Building respectively, under the terms of the respective asset and property management agreements to be signed prior to or upon the completion of the acquisitions.

Acquisition highlights

Mr Franklin Heng, Chief Executive Officer of Macquarie Pacific Star, said: We are delighted to have secured a portfolio of quality properties in sought-after areas in Tokyo. Japan is the second largest retail market in the world after the United States and we believe we are witnessing the beginning of a sustained recovery in consumer spending and in property prices and rents.

This marks the start of our Japan and regional strategy and with these acquisitions, we look forward to developing long-term relationships with some of the key players in the Japanese real estate industry. We are actively pursuing other acquisitions opportunities in Japan and elsewhere and are optimistic that we will be making further acquisitions in the foreseeable future.

Mr Heng noted that the portfolio of properties being acquired would enable MMP REIT to enjoy stable, recurring income and at the same time, benefit from the upside of a rising market.

The Fund Creation Portfolio comprises relatively new properties which are of high quality building specifications, and rented to tenants of good credit standing. Mr Heng said: The acquisitions will provide stable earnings and geographical diversification for MMP REIT and increase income distribution to unitholders.

This is the first regional acquisition for the investment trust since its listing on the Singapore Stock Exchange in September 2005. The acquisitions will be yield accretive to MMP REITs distribution per unit (DPU) and the pro forma financial effect of the acquisitions on DPU for the financial year ended 31 December 2006 would be an additional 0.108 Singapore cents per unit, representing an initial yield accretion of 1.8%.

The acquisition of the Fund Creation Portfolio is expected to close no later than May 2007 and the FLEG America-Bashi Building by end September 2007. Given the ample debt capacity of MMP REIT (gearing of 25.6% as at end December 2006) and the relatively lower cost of borrowing in Japanese Yen, Macquarie Pacific Star intends to fund the acquisitions entirely by debt.

The market values of the seven properties, assessed independently by Tokyo Asset Research Co., Ltd. as at 30 March 2007, are approximately 1.5% higher than their respective purchase prices; the market value of the Fund Creation Portfolio was about ¥8.9 billion (S$112.0 million) while that of the FLEG America-Bashi Building was about ¥5.8 billion (S$73.4 million).

More details on the seven properties can be found in the accompanying presentation.





-- Edited by tfwee at 21:58, 2007-04-10

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Morgan Stanley Investment has increased the holding of MMP from 8.111% to 9.106% through purchased from open market

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Macquarie Pacific Star Prime REIT Management Limited, the Manager of Macquarie MEAG Prime Real Estate Investment Trust (“MMP REIT”), has been informed that Mapletree Logistics Trust, Allco Commercial Real Estate Investment Trust, Frasers Centrepoint Trust, CDL Hospitality Trusts and Cambridge Industrial Trust have been added to the FTSE Global Equity Index Series and the Benchmark Index (as defined in the prospectus of MMP REIT
dated 13 September 2005) on 19 March 2007. The Benchmark Index (which has been named "Macquarie Singapore REIT Index") is compiled and calculated independently by FTSE Group (“FTSE”).

The Singapore-listed real estate investment trusts currently included in the FTSE Global Equity Index Series and the Macquarie Singapore REIT Index are as follow:
1. Allco Commercial Real Estate Investment Trust;
2. Ascendas Real Estate Investment Trust;
3. Cambridge Industrial Trust;
4. CapitaCommercial Trust;
5. CapitaMall Trust;
6. CDL Hospitality Trusts;
7. Fortune Real Estate Investment Trust;
8. Frasers Centrepoint Trust;
9. K-REIT Asia;
10. Mapletree Logistics Trust; and
11. Suntec Real Estate Investment Trust.

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MMP REIT SGX Announcement: Notice of a Change in the Percentage of a Substantial Shareholder's Interest - Macquarie Bank

Macquarie Bank has increased the shareholding of MMP from 23.16% to 24.30% through on market transactions on 1 of March 2007. Please refer to the link for more information.

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Macquarie Bank Limited has increase its holding from 20.13% to 22.79% from on market transaction on 1 of Feb 2007.
Macquarie Bank Limited has increased its holding from 22.79% to 23.16% from on market transaction on 2 of Feb 2007

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Extracts fm SGX Announcement today,

CLARIFICATION OF VARIOUS REUTERS’ REPORTS DATED 5 FEBRUARY 2007

Macquarie Pacific Star Prime REIT Management Limited (“Macquarie Pacific Star”), the Manager of Macquarie MEAG Prime Real Estate Investment Trust (“MMP REIT”), wishes to clarify statements made in various Reuters reports dated 5 February 2007.

Macquarie Pacific Star is always evaluating suitable acquisition opportunities for MMP REIT, so as to diversify its portfolio and create value for unitholders. The opportunities that Macquarie Pacific Star evaluates could range in value from “US$10 million to US$1 billion” as quoted by Reuters, depending on the nature of the opportunities presented, and there is no certainty or assurance that any discussions or negotiations Macquarie Pacific Star engages in always leads to definitive agreements between the parties. In the event of any material developments in this respect, Macquarie Pacific Star would issue the appropriate announcements in compliance with the listing rules of the Singapore Exchange Securities Trading Limited.



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Morgan Stanley continues to buy. Extracts fm SGX announcement,

From 5.932% (84,469,094) To 6.000% (85,435,094). Units were purchased through a series of transactions from 30/10/2006 through 01/02/2007.

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BT, February 5, 2007, 4.02 pm (Singapore time)

Macquarie Reit in talks to buy assets worth US$1b

SINGAPORE - Singapore's Macquarie MEAG Prime Real Estate Investment Trust (Reit) said on Monday that it is in talks to buy assets worth over US$1 billion in total, and expects to make the first deal since its 2005 listing by June.

The trust -- controlled by Australia's Macquarie Bank and MEAG, the asset management arm of German reinsurer Munich Re ERGG.DE -- is also in talks to take a stake in a non-Singaporean property trust.

The deals would be the first acquisitions for Macquarie MEAG which listed two years ago with just two office-mall complexes in its portfolio. These two properties are now valued at $1.5 billion (US$78.5 million).

'We are confident we can announce something by the first half,' Franklin Heng, chief executive officer of Macquarie Pacific Star Prime Reit Management told Reuters in an interview. Mr Heng said the trust was in talks to buy properties in Malaysia, Japan and China, ranging in value from US$10 million to US$1 billion. 'I've got different balls in the air for each country. But (our first acquisition) is very unlikely to be in Singapore,' he said.

The trust has a current gearing of about 26 per cent but this could be raised to 45 per cent as the trust plans to borrow about $530 million from banks to fund its acquisitions. 'Our long-term optimal gearing ratio is between 40-45 per cent but there's no stopping us to leverage us to 50-55 per cent if we find the right deal. But if that happens, I will put in a bridging loan and issue new equity to bring the gearing back down,' he said.

He added that the trust would focus on growth outside of Singapore because competition for commercial assets in the city-state was intense. -- REUTERS

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Extracts fm OCBC report dated 24-Jan-07,

A laggard play

Flattish growth. Macquarie MEAG Prime REIT's (MMP) 4Q06 came in within expectation. Top-line came in at S$22.6m, improving 1% QoQ, with NPI (Net Property Income) at S$17.2m (-1% QoQ). However, distributable
income per unit (DPU) was better at 1.47 cents, improving 2% QoQ. The lower NPI was attributed to higher property expenses (mainly depreciation) as the result of the installation of escalators linking Wisma Atria basement to Orchard road. This is a non-tax item and is distributed back to unitholders, hence the higher DPU.

Organic growth to come from office. Presently, MMP's retail space enjoys fairly high rentals and will see very little space up for renewal in 2007. So we do not anticipate this segment to be the growth driver. However, on the office segment we expect about 182,000 sq ft (about 70% of office space) of leases to come up for renewal over the next 2 years. More importantly, these expiring leases have a rental rates averaging at only about S$5 psf/mth, whilst present market rates are closer to S$8 psf/mth. So we can expect about a 60% rise in rates for these spaces. This higher rate in turn will translate to an increase in revenue of about S$3.0m p.a. over the next 2 years. In light of the good reversions, we have adjusted our FY07 and FY08 DPU forecasts from 5.90 cents and 6.02 cents to 6.12 cents and 6.37 cents respectively.

Where are the acquisitions? In so far as acquisition is concerned, MMP has been fairly disappointing. In the current results announcement again, there was no news of potential acquisitions. Relative to all its S-REITs
peers, MMP stands out as one of the few REITs not to have bought anything since IPO. On a positive note, MMP has recently beefed up its investment team and is targeting acquisitions in China, Japan, Malaysia and Singapore.
We remain hopeful of some positive developments soon.

Maintain Buy with higher revised fair value. Since our valuation upgrade in December, MMP has done exceedingly well, rising by about 17% over the last month. However, even at present trading range, its price to book of about 1.0 times remains very low relative to its peers' P/B of 1.4-1.8 times. We thus remain positive on MMP and see it as one of the lowest-risk REITs with low expectation of growth. We see these traits as defensive and thus maintain our BUY rating and with a revised fair value of S$1.32 (from S$1.22) on the back of higher office valuations.

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RE: Prime REIT
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MMP REIT REPORTS RECORD QUARTERLY DPU, UP 11.4% FROM IPO PROJECTION; NAV RISES 18.4% ON HIGHER PROPERTY VALUATIONS

HIGHLIGHTS
• 4Q 2006 DPU of 1.47 cents is the highest quarterly distribution, 2.1% up from 3Q 2006 and 11.4% more than IPO projection
• Valuation of properties rises 12.9% to S$1,498 million; NAV per unit increases by 18.4% to S$1.16
• 86,000 sq ft of below-market rentals of office expiries and Wisma Atria asset enhancements to drive existing portfolio growth in 2007

SINGAPORE, 23 January 2007 – Macquarie Pacific Star Prime REIT Management Limited (Macquarie Pacific Star), the Manager of SGX-listed Macquarie MEAG Prime Real Estate Investment Trust (MMP REIT), said today MMP REIT’s fourth quarter (4Q 2006) Distribution Per Unit (DPU) is the highest so far, while an increase in the valuations of its properties raised Net Asset Value per unit (NAV) by 18.4%. For the period 1 October to 31 December 2006, MMP REIT reported DPU of 1.47 cents, up 2.1% from last quarter and 11.4% higher than IPO projection.

The record distribution to Unitholders came on the back of higher net property income of S$17.2 million, 2.7% better than the S$16.7 million projected in the IPO prospectus. Gross revenue rose 2.0% to S$22.6 million.

Franklin Heng, Chief Executive Officer, Macquarie Pacific Star, said, “We are very pleased that MMP REIT has once again outperformed IPO projections to deliver increased returns to unitholders. The strong results in 4Q 2006 were largely attributable to higher rental income from Ngee Ann City and Wisma Atria properties, particularly the office portfolios.

 

“For the full year of 2006, we have delivered DPU of 5.79 cents, 10.3% higher than the 5.25 cents projected for the same period, and 3.4% better than 2005. Moreover, Unitholders will enjoy the highest quarterly distribution to date, notwithstanding earlier concerns over the impact of the temporary closure of the Orchard MRT linkway to Wisma Atria.”

After the temporary closure of the Orchard MRT linkway on 30 September 2006, shopper traffic at Wisma Atria dropped by 47% in October compared to September. However, shopper traffic quickly recovered in November with an 84% increase in December compared to November. This was due in particular to the new escalators being installed ahead of schedule in early December. The escalators, strategically located between the new GAP flagship store at Wisma Atria and the Orchard MRT station, provide direct access to the basement from the street level.

Mr Heng added: “We remain confident that the escalators, in addition to various marketing campaigns we put in place, will be able to direct more shopper traffic back to the mall, particularly to the basement. We will continue to monitor and review our initiatives to ensure that they remain effective.” Overall, the office portfolio performed exceptionally well with occupancy reaching a new post IPO-high of close to 98% as at end December 2006 and recent leases being locked in above S$8 psf/pm3. Retail portfolio occupancy remained strong at 100% as at end December 2006. The overall portfolio occupancy edged up to a new post IPO-high of 99.0% at end December 2006, reflecting buoyant demand amid tight supply.
NAV was S$1.16 per unit as at 31 December 2006, an increase of 18.4% from S$0.98 per unit as at 30 September 2006. The valuation of MMP REIT’s two properties increased by 12.9% from S$1,327 million in December 2005 to S$1,498 million as at 31 December 2006, resulting in a revaluation surplus of S$171 million.

 

Portfolio growth strategies


Commenting on the office strategy, Mr Heng said: “No surprise that the office sector is a star performer. We continue to be very upbeat in our outlook for this sector with strong demand and limited supply of good office space along Orchard Road continuing to drive growth. “With about 86,000 square feet of office space expiring in 2007 at below market rents (average of S$5 psf/pm), we expect MMP REIT to ride on the momentum of the office rental upswing.”

On the retail strategy, Mr Heng said the key was to reinforce Wisma Atria as a preferred fashion destination. The strategy includes ongoing efforts to reconfigure the mall’s trade mix with more fashion-related tenants, as well as strengthening the retail mix by level, introducing more step-rent structures, and increasing the turnover rent contribution. The basement level’s “casual lifestyle” positioning will be enhanced by remixing tenancies. This will also complement Isetan Departmental Store’s recent upgrade and remix of their basement level, which will provide shoppers with a seamless shopping experience. A food and beverage unit on Level 1 will be sub-divided to increase the retail offerings on that
floor and units on Level 2 will be reconfigured to create more shops with Orchard Road frontage. MMP REIT expects to reap incremental rent of about S$1 million from the reconfiguration and tenancy remixing efforts at Wisma Atria in 2007.

The proportion of Wisma Atria retail leases with base rent plus turnover rent continued to increase, from 44% at end September 2006 to 47% at end December 20064. Turnover rent accounted for 1.6% of Wisma Atria retail gross rental revenue in 2006. This is in line with MMP REIT’s strategy of maintaining a stable base rent and growing its revenue streams from higher retailer sales. More step-rent structures will also be introduced to deliver incremental base growth over the lease term.

Mr Heng commented that MMP REIT is likely to maximise its existing debt capacity to fund acquisitions as debt is currently still more cost effective than equity. MMP REIT’s gearing was reduced from 28.8% at end September 2006 to 25.6% at end December 2006 due to the revaluation of its properties. Assuming a consolidated gearing of 45%, MMP REIT could potentially fund up to S$530 million of acquisitions entirely with debt, without the need to raise fresh equity. Macquarie Pacific Star believes that an appropriate long term sustainable gearing level for MMP REIT would be 40-45%. Mr Heng also noted that in 2007, higher office rentals, retail asset enhancements and repositioning, and regional acquisitions, are expected to drive MMP REIT’s growth.



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KK


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MMP - DBSVickers
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Extracts fm DBSVickers report dated 15-Jan-07,

Stable retail growth

Consistent distribution backed by resilient rents. MMP has been consistently delivering distributions of 1.44 cents per unit quarterly. Management has dispelled concerns of the tunnel closure on basement retail rents as basement space leases are still being transacted at above S$60 levels.

Competition not an issue. New malls such as Orchard Turn, Orchard Central and Somerset Central are coming up, bringing on additional 1.2m sf of retail supply by FY09, yet there is still room to grow for retail stock in Singapore. With retail space per capita of about 7 sf, Singapore trails behind HK’s 11 sf and Japan’s 12 sf, according to Knight Frank.

Revaluation expected on the back of strong physical market. Office space in Orchard Road is enjoying positive spillover demand from tight office vacancy in prime office space at about 2.7% currently. MMP is already looking at S$8 rentals for some of its office space. With about 16% of MMP’s assets exposed to office, upward revaluation is likely given that its office portfolio is currently only valued at 900 psf. Upward revaluation will potentially enhance debt capacity and NAV.

Is the wait finally over? MMP has been lagging behind other REITs in terms of acquisitions since listing in Sept 05. Management is targeting to deliver an acquisition by 1H07, after which a certain degree of yield compression may set in. Currently MMP is trading at 5% yield compared to retail S-REITs trading at 4%.

Maintain BUY, TP S$1.29. Forward yield of 5% is supported by limited downside from retail rents from the two prime retail assets in Orchard Road. With prime retail rents growing by 4.5% in FY06, we expect retail rents to continue rising for the next three years. We have raised our retail rental growth assumptions from 2% to 5% for FY07 to FY09 and DPU estimates in the range of 3.6%-4.6%. Therefore we have accordingly raised our DCF derived target price of S$1.29. Maintain Buy.



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KK


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MMP
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Morgan Stanley continues to buy. Extracts fm SGX announcement,
From 7.044 % (66,730,000) To 8.111 % (76,839,208). Units were purchased through a series of transactions from 27/12/2006 through 09/01/2007.

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KK


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Date:
MMP - DBSvickers
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Extracts fm DBSVickers report dated 8-Jan-07,

Sound fundamentals backed by government initiatives. In the past five years, Orchard Road prime retail rents have been steadfastly stable despite the economic downturns posed by SARS and Sept 11. The Singapore Government has also unveiled extensive initiatives to revitalise Orchard Road into a world-class attraction. According to Knight Frank, retail space per capita is about 7 sf for Singapore which trails behind the 11 sf for HK and 12 sf for Japan. Therefore, despite new malls coming onstream in the medium term with the likes of Orchard Turn and Orchard Central, there is still room to grow for retail stock in Singapore.

Orchard Road’s high occupancy and stable rental rates. The Orchard Road retail property scene is characterised by the consistently high occupancy levels, high prime rental rates, and limited supply of new retail space in the near term. Strategically located, well-managed retail malls tend to provide consistent long-term growth and are resistant to downturns. Prime retail space continues to be much sought after as occupancy levels in the Orchard area continue to be high. MMP’s assets enjoy 100% or close to 100% occupancy levels. According to CBRE, prime rents in the main Orchard Road has reached S$34.50, growing 4.5% YoY. Note that rental rates held steady despite the recent recession and SARS scare in 2002-2003.

Maintain BUY, TP S$1.22. Forward yield of 5% is supported by limited downside from retail rents from the two prime retail assets in prime Orchard Road. We are maintaining our Buy recommendation for MMP with a target price of S$1.22 based on DCF valuation. Potential catalysts include asset reflation for Orchard retail assets as well as M&A restructuring when the Singapore REIT Takeover Code is implemented which may boost M&A activity in the Singapore REIT industry.



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KK


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Date:
MMP
Permalink  

Morgan Stanley continues to buy. Extracts fm SGX announcement,

Units were purchased through a series of transactions from 19/12/2006 through 26/12/2006. From 6.070 % (57,507,000)  To 7.044 % (66,730,000)

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