I noticed that Cambridge has been under accumulation over the past few months with reputable Franklin Resources, Inc. (Franklin Templeton Investments) now holding over 8% of Cambridge REIT. Templeton is well known for picking up undervalued stocks.
Dividend Wise, it is pay 1.171 cent last quarter which annualized to 8.58% dividend yield based on current price of 54.5 cents
NTA was 61.9cents per cent based on Net Asset of 736.2 Million (based on 1st quarter 2012)
Currently trading at 12% discount to NTA
Tender for sales of Hillview Lam Soon building going to close on 28 June which is 9 days from today. It has a target price of S$330 million.This was acquired at $72.2 million in Mar 2007.
Assuming that it is able to sell Lam Soon at $330 million, the one-time profit from this transaction will be $330mil - $72mil = $257.8 million
The net asset after disposal of lam soon (provided it hit the target sales price) will be increased by 35% (257.8mil /736.2 mil) which means the new NTA per shares will be close to 83.5 cents.
This means that Cambridge will be trading at 35% discount to net asset as well as providing a dividend yield 8% even after taking into consideration of lost of rental income from Lam Soon as it contribute only S$5million (2011) out of the $80million revenue in 2011.
The cash will be a war chest that enable the management to do acquisition for higher quality and better yield assets.
* adding more today at 54.5cents in anticipation for the result of the tender closing on 28 June.
Thanks for highlighting this. I've never really analysed REITs before, but here are my comments anyway
From the 2011 AR
"Investment properties are accounted for as non-current assets, except if they meet the conditions to be classified as held for divestment (see Note 3.3 below). These properties are stated at initial cost on acquisition, and at valuation thereafter...Valuations are determined in accordance with the Trust Deed, which requires the investment properties to be valued by independent registered valuers in the following manner:
(i) in such manner and frequency required under the CIS code issued by MAS; and
(ii) at least once in each period of 12 months following the acquisition of each investment property."
If the properties are being revalued at least once yearly, I believe that means the asset won't be carried on the books at 72m. So I have doubts about that one-time gain of 257.8m and the 35% increase in net assets...
On the other hand, the 2011 annual report also states that valuation for this particular asset is at 90m. So does that mean a one-time gain of 240m? What's really puzzling is how can the valuation in 2011(90m) be so far off the fair value (expected tender price of 330m) when there's only a one-year difference...
Hope somebody here can clarify. Don't know if I misunderstood anything here...
[hr]
[erelation 19-06-2012]:
I noticed that Cambridge has been under accumulation over the past few months with reputable Franklin Resources, Inc. (Franklin Templeton Investments) now holding over 8% of Cambridge REIT. Templeton is well known for picking up undervalued stocks.
Dividend Wise, it is pay 1.171 cent last quarter which annualized to 8.58% dividend yield based on current price of 54.5 cents
NTA was 61.9cents per cent based on Net Asset of 736.2 Million (based on 1st quarter 2012)
Currently trading at 12% discount to NTA
Tender for sales of Hillview Lam Soon building going to close on 28 June which is 9 days from today. It has a target price of S$330 million.This was acquired at $72.2 million in Mar 2007.
Assuming that it is able to sell Lam Soon at $330 million, the one-time profit from this transaction will be $330mil - $72mil = $257.8 million
The net asset after disposal of lam soon (provided it hit the target sales price) will be increased by 35% (257.8mil /736.2 mil) which means the new NTA per shares will be close to 83.5 cents.
This means that Cambridge will be trading at 35% discount to net asset as well as providing a dividend yield 8% even after taking into consideration of lost of rental income from Lam Soon as it contribute only S$5million (2011) out of the $80million revenue in 2011.
The cash will be a war chest that enable the management to do acquisition for higher quality and better yield assets.
* adding more today at 54.5cents in anticipation for the result of the tender closing on 28 June.
Hi, Thank you for your comment. I think the different in valuation is because of zoning. Previous valuation was based on industrial usage but now based on residential usage with higher plot ratio. Loaded and sitting tight for close of tender. Longer term wise 8.5 per cent yield is good for holding. Regards erelation
NextInsight
a hub for serious investors
