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13-06-2013, 12:32 AM
Hey guys,
Was looking closely at lippomall again when yield reach 7.5%. It seems like a reasonable yield and taking into consideration the following.
Pluit village mall settled the messy ligitation with carrefour, I am not sure how the out of court settlement terms are, but the trust is insured against such losses if I read correctly. Carrefour has a floor area of about 13000m2 before the issue starts, and carrefour keep to the same area, the occupancy rate at pluit village will improve to above 90% and contribute 3.8 million NPI in a year, which works out to be 0.001772195 cents. Not significant but the amount is like a buffer to protect against rise in fiance cost as a result of interest hike, which everyone is talking about.
Up till 2014, the only floating rate that LMIR is exposed to is for amount of 75 million at a rate of 4.3% They still have 425 million fund not drawn from their MTN. Assume they use it to retire the 147.5million bank loan, and the interest that have to pay become 6.3% (the highest trance of MTN notes is 5.875% due 2017) , the correspond increase in finance cost is only 3 million.
Their gearing is 24%, assume there is no acquisition and loan amount remain the same, but valuation of assets fall due to increase of interest rate, i run the scenario of a 10%, 20%, 30% and 40% drop in valuation, and the gearing become 27%, 30%, 34% and 40% respectively. in other words, valuation has to fall by more than 30% to hit gearing limit. If they get their company rated, the ceiling cap will become 60% then.
seem like the 7.5% yield is "quite safe" till 2015 at least.
Any thoughts??
Was looking closely at lippomall again when yield reach 7.5%. It seems like a reasonable yield and taking into consideration the following.
Pluit village mall settled the messy ligitation with carrefour, I am not sure how the out of court settlement terms are, but the trust is insured against such losses if I read correctly. Carrefour has a floor area of about 13000m2 before the issue starts, and carrefour keep to the same area, the occupancy rate at pluit village will improve to above 90% and contribute 3.8 million NPI in a year, which works out to be 0.001772195 cents. Not significant but the amount is like a buffer to protect against rise in fiance cost as a result of interest hike, which everyone is talking about.
Up till 2014, the only floating rate that LMIR is exposed to is for amount of 75 million at a rate of 4.3% They still have 425 million fund not drawn from their MTN. Assume they use it to retire the 147.5million bank loan, and the interest that have to pay become 6.3% (the highest trance of MTN notes is 5.875% due 2017) , the correspond increase in finance cost is only 3 million.
Their gearing is 24%, assume there is no acquisition and loan amount remain the same, but valuation of assets fall due to increase of interest rate, i run the scenario of a 10%, 20%, 30% and 40% drop in valuation, and the gearing become 27%, 30%, 34% and 40% respectively. in other words, valuation has to fall by more than 30% to hit gearing limit. If they get their company rated, the ceiling cap will become 60% then.
seem like the 7.5% yield is "quite safe" till 2015 at least.
Any thoughts??