Saizen REIT Acquires Cosmo Reveur Sangenjaya
Saizen Real Estate Investment Trust (Saizen REIT) announced the acquisition of Cosmo Reveur Sangenjaya (CRS) in Tokyo by its TK operator Yugen Kaisha Kokkei for a cash consideration of approximately 590 million yen ($9.4 million). CRS comprises of eight residential units and is a walking distance away from the Tokyo Den-en-toshi Line. The building is operating at an occupancy level of 87 percent and generates annual revenue and net property income of 38.6 million yen ($0.6 million) and 28.3 million yen ($0.5 million) respectively. Saizen REIT’s re-leveraging efforts since July 2011 have raised new loan proceeds which provide it with the ability to increase distributable income via property acquisitions. Upon completion of the acquisition, the trust will have the full ownership of the block and the full title of the freehold land.
Significance: The acquisition, representing Saizen REIT’s third property investment in Tokyo, is deemed to be yield accretive with CRS’ current net operating income yield of about 4.8 percent. Furthermore, it is expected that yields of properties in Tokyo would rise, with potential for capital gains and rental appreciation over the medium term.
CapitaLand’s 1H12 Financial Performance Trends Up
CapitaLand achieved an 11.2 percent increase in its 1H12 revenue to $1,503.6 million while earnings went up marginally by 3.7 percent to $519.1 million, driven by higher contribution from development projects in Singapore and Australia, increased shopping mall revenue and fee-based income. For the quarter ended 30 June, revenue was up 16.5 percent to $862.5 million led by strong residential sales momentum, which saw 202 units and 812 units sold in Singapore and China respectively. Earnings for the quarter, however, dipped 3.3 percent to $385.9 million as operating expenses rose sharply in the period. Going forward, Singapore and China will remain as CapitaLand’s key markets for new investments as the underlying fundamentals of the housing sector in the two markets remain sound, driven by new home formation, rising urbanisation and growing wealth creation.
Significance: With the buying sentiment in China gradually improving as residential transaction volume hit a 17-month record high in June, and retail sales to grow around 16 to 17 percent this year, the growing domestic demand will be beneficial to CapitaLand’s China operations as it plans the launch of more projects.
Sunpower Secures Rmb55.1m Contract
China-based heat transfer technology specialist, Sunpower Group has signed a Rmb55.1 million contract via its subsidiary, Nanjing Shengnuo Heat Pipe, to provide four sets of waste heat boiler systems to Shanghai-listed steel producer, Xining Special Steel Company. The energy-recycling systems will be used to recover the waste heat of the flue gas released from the steelmaking electric furnace and the iron and steel sintering, whereby the steam generated from the high-temperature flue gas will be piped back as energy to other production lines. Notably, this contract win follows several landmark project wins with China’s major steel producers. Just recently, it secured a Rmb48.9 million contract to supply two coupling reactors for Sinopec Group’s Hubei fertiliser plant in 2013.
Significance: This contract, which will be partially delivered in 2012, is expected to have a positive impact on its FY12 financial performance. Going forward, with the Chinese government’s stringent regulations on emission reduction for steel industry, there will likely be higher demand for waste heat recovery-systems.