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Sunday, 23 February 2014

SRS - Closing status 21 February

Divested Soilbuild Reit 3 lots in this week as part of usual portfolio re-balancing for a small nett gain of $3.  Its 4Q2013 financial results has exceeded the forecast set out in its IPO prospectus, with most of the key drivers to the result performing better than expectation.  Revenue, property expenses and finance costs all recorded positive variances and contributed to an overall outperformance on the distributable income line.  Its share price as of this Friday was at $0.77 is currently below its NAV as of end Dec'13 of $0.80.  Earliest debt maturity is in year 2015, are equally spread out over three years (2015-2017).  It received a BBB- investment grade credit rating from Standard & Poor’s on Jan 22, and the management plans to raise its long term gearing target to between 35% and 40% from its current gearing of 29.3%, giving it an additional $75 million to $80 million in debt headroom for acquisitions. It plans to acquire industrial properties in Woodlands within FY2014.  Occupancy rate 99.9%.   17% of its net lettable area is due for renewal in 2014 and about 47% of that has been pre-committed, with the rest under negotiations.

Reduced Keppel Reit 5 lots in this week for $90 nett gain; total holding now at 2 lots.  In its recent 4Q2013 financial results and versus last year;  DPU stayed the same at 1.97 cents;  Property expenses gone up 26.8% due to higher repair and maintenance costs amounting close to $1 mil variance;  NPI higher by 13.9%;  Profit +76.1% due to higher NPI, higher interest income, profit from its related companies, higher net fair value gain in investment properties and lower amortization expenses; but offset by high borrowing costs and management fees as a results of the larger portfolio of assets under management.  As of end Qtr 4, its NAV was valued at $1.38 but Mr Market believes that it is worth much lesser with its Friday closing price at $1.155.  99.8% committed occupancy as at end Dec'13.  Seven out of eight buildings are 100% occupied.  88% of assets in Singapore and 12% of assets in Australia.  100% of Singapore properties located in the prime CBD.   Stronger performance from Ocean Financial Centre, Marina Bay Financial Centre Phase 1and One Raffles Quay, and additional income from newly acquired 8 Exhibition Street and Old Treasury Building.  It is considering to acquire one-thirf stake in Marina Bay Financial Centre Tower 3 at the right time.  And to fund future acquisitions, it could consider the possibility of divesting its older assets (possible candidates are Bugis Junction Towers  expiring Sep 2089, Prudential Tower expiring Jan 2095).  Leases expiring as a percentage of total portfolio NLA at 3.4% in year 2014 and 8.6% in year 2015.  Nearly 70% of the borrowings are at fixed interest rates.  All loan facilities outstanding in 2014 will be refinanced by loan facilities maturing in 2019.  Aggregate leverage at 42.1%.

Divested DBS Group 300 shares in this week for $106 nett gain.  For its 3Q13 financial results and versus year ago :- Net interest income +6% because loans +19% but the impact was partially offset by lower loan spreads and yields on investment securities; Non-interest income +11% because trade and transaction services, wealth management and treasury cross-selling contributed to the increase; Expenses +5% as staff and other operating costs were higher.  Net profit was flat as the increase in total income was offset by higher general and specific allowances, in line with faster loan growth. Non-performing loan rate at 1.2%. 

Portfolio walk since previous posting :-

+$5,194 Total Returns as of 7 Feb

+$199 Nett gain on sales of DBS, Soilbuild Reit, Keppel Reit
+$614 Unrealised positions improved

+$6,007 Total Returns as of 21 Feb

previous posting :- SRS - Closing status 7 Feb

Remarks :- Profits locked in to-date $12,938 / year 2014 $336

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