Ascendas Reit

[sreitinvestor]

3Q 2010 results for A-Reit:
Key Points
* DPU for the quarter is 3.30 cents.
* Net Property Income increased 3.5% year-on-year to S$83.9million.
* Positive rental reversion of between 0.6% and 11.6% on lease renewals across most sub-sectors.
* Upgrade in corporate family rating to "A3" by Moody's Investors Services.
* Occupancy rate moderated slightly to 95.3% for the portfolio and 90.5% for the multi-tenanted buildings.
* The Manager has identified three asset enhancement opportunities within the portfolio to capitalize on underutilized plot ratio or to enhance the attractiveness of the properties.
o Redevelopment of 1 Senoko Avenue
o Asset Enhancement Planned for 10 Toh Guan Road
o Asset Enhancement for Techview
* These asset enhancement initiatives are expected to deliver a weighted average yield in excess of 8.5%.
* Diversified portfolio comprising 92 properties in Singapore with a total asset value of about S$4.9b.
* As at 30 September 2010, A-REIT's aggregate leverage was 34.3% with a weighted average cost of funding of 3.92% and an average term of debt maturity of 3.4 years. All of A-REIT's floating interest rate exposure is hedged into fixed rate for the next 2.9 years.
* The Transfer Books and Register of Unitholders will be closed at 5.00 pm on 26 Oct 2010 for the purpose of determining unitholders' entitlements to distribution.
* The distribution that will be paid on 26 Nov 2010.

[KopiKat]

Q1 Results

Press Release
Presentations
Financials

From their Presentations (pg 48),

Dedicated Manager
• One of three REITs where performance fee is linked to DPU growth
• Performance fees are payable to the Manager only if there is a y-o-y growth of at least 2.5% in the distribution per unit

Anyone knows who are the other 2 REITs?

[Nick]

Q1 Results

Press Release
Presentations
Financials

From their Presentations (pg 48),

Dedicated Manager
• One of three REITs where performance fee is linked to DPU growth
• Performance fees are payable to the Manager only if there is a y-o-y growth of at least 2.5% in the distribution per unit

Anyone knows who are the other 2 REITs?

AIMS AMP Industrial REIT AR 2012:

The Manager is also entitled to a performance fee of 0.1% per annum of the value of the Deposited Property, provided that growth in distribution per unit (“DPU”) in a given financial year (calculated before accounting for the performance fee in that financial year) relative to the DPU in the previous financial year exceeds 2.5%. The performance fee is 0.2% per annum if the growth in DPU in a given financial year relative to the DPU in the previous financial year exceeds 5.0%.

Sabana Shari'ah Compliant REIT AR 2011:

a performance fee equal to 0.5% per annum (or such lower percentage as maybe determined by the Manager in its absolute discretion) of the Net Property Income of the Trust or the relevant special purpose vehicles (“SPV”) in each financial year, payable on a yearly basis, provided the Trust achieves at least 10.0% in annual growth in distribution per Unit over the previous financial year (calculated after accounting for the performance fee (if any) for that financial year and after adjusting, at the discretion of the Manager, for any new Units arising from the conversion or exercise of any instruments convertible into Units which are outstanding at the time of calculation, and any rights or bonus issue, consolidation, subdivision or buy-back of Units).

[KopiKat]

Q1 Results

Press Release
Presentations
Financials

From their Presentations (pg 48),

Dedicated Manager
• One of three REITs where performance fee is linked to DPU growth
• Performance fees are payable to the Manager only if there is a y-o-y growth of at least 2.5% in the distribution per unit

Anyone knows who are the other 2 REITs?

AIMS AMP Industrial REIT AR 2012:

The Manager is also entitled to a performance fee of 0.1% per annum of the value of the Deposited Property, provided that growth in distribution per unit (“DPU”) in a given financial year (calculated before accounting for the performance fee in that financial year) relative to the DPU in the previous financial year exceeds 2.5%. The performance fee is 0.2% per annum if the growth in DPU in a given financial year relative to the DPU in the previous financial year exceeds 5.0%.

Sabana Shari'ah Compliant REIT AR 2011:

a performance fee equal to 0.5% per annum (or such lower percentage as maybe determined by the Manager in its absolute discretion) of the Net Property Income of the Trust or the relevant special purpose vehicles (“SPV”) in each financial year, payable on a yearly basis, provided the Trust achieves at least 10.0% in annual growth in distribution per Unit over the previous financial year (calculated after accounting for the performance fee (if any) for that financial year and after adjusting, at the discretion of the Manager, for any new Units arising from the conversion or exercise of any instruments convertible into Units which are outstanding at the time of calculation, and any rights or bonus issue, consolidation, subdivision or buy-back of Units).

Nick,

Thx! Will cut n paste to my ss for future ref!

[KopiKat]

Interesting...

DPU grew from 13.56ct to 14.05ct ie. 3.6% which meets the minimum 2.5%, thereby triggering a payout of Performance Fee of 0.31ct

This means,

DPU Growth = 0.49ct
Performance Fee = 0.31ct
Balance for Distribution to Unitholders = 0.49ct - 0.31ct = 0.18ct

Doesn't seem very fair to unitholders or am I missing something?

Reference : Financials (pg1) / Presentations (Pg9)

[shanrui_91]

Interesting...

DPU grew from 13.56ct to 14.05ct ie. 3.6% which meets the minimum 2.5%, thereby triggering a payout of Performance Fee of 0.31ct

This means,

DPU Growth = 0.49ct
Performance Fee = 0.31ct
Balance for Distribution to Unitholders = 0.49ct - 0.31ct = 0.18ct

Doesn't seem very fair to unitholders or am I missing something?

Reference : Financials (pg1) / Presentations (Pg9)

From what I have found, it seemed like those who used the dpu model got more fee than those used by ARA. For ARA reit, its usually 0.3% of asset and 3% of NPI.

For aimps, sabana and a-reit which used the dpu model, they charged 0.5% of asset as base fee. If we take ROA as 5%, then the 3% NPI performance fee earned by ARA is equivalent to 0.15% of asset. Not withstanding the higher base fee charged, they also got to earn extra performance fee for growing the dpu.

While a-reit has performed quite well, the other 2 may not have been based on their historical track record. Thus, dpu model should not have been viewed as the best model though it may generate a tiny incentive to align with shareholder.

I think the best management model for reit is still the internally-own manager model adopted by the Link Reit in HK and many reits in USA. What happen in USA was that the internally owned manager reit started to trade at a premium to those externally owned due to difference in performance delivered and it became the norm.Then again, principal-agent problem can still surface like all our non-reit public company.

[swakoo]

Interesting...

DPU grew from 13.56ct to 14.05ct ie. 3.6% which meets the minimum 2.5%, thereby triggering a payout of Performance Fee of 0.31ct

This means,

DPU Growth = 0.49ct
Performance Fee = 0.31ct
Balance for Distribution to Unitholders = 0.49ct - 0.31ct = 0.18ct

Doesn't seem very fair to unitholders or am I missing something?

Reference : Financials (pg1) / Presentations (Pg9)

From pg 7 of presentation:
amount avail for distribution last FY: $281.743 mil
amount avail for distribution this FY: $305.557 mil
increase: $23.814 mil
performance fee: $6.959 mil (29.2% of increase)
It looks fair from this perspective (ignoring the number of units).

I think the kink is that 160 mil units were placed out on 19 Mar 2013 and distorts the annualised dpu used in your calculations. Need some mathematical gymnastics to untangle to see if still fair - those vested may want to take the trouble?

[KopiKat]

Interesting...

DPU grew from 13.56ct to 14.05ct ie. 3.6% which meets the minimum 2.5%, thereby triggering a payout of Performance Fee of 0.31ct

This means,

DPU Growth = 0.49ct
Performance Fee = 0.31ct
Balance for Distribution to Unitholders = 0.49ct - 0.31ct = 0.18ct

Doesn't seem very fair to unitholders or am I missing something?

Reference : Financials (pg1) / Presentations (Pg9)

From pg 7 of presentation:
amount avail for distribution last FY: $281.743 mil
amount avail for distribution this FY: $305.557 mil
increase: $23.814 mil
performance fee: $6.959 mil (29.2% of increase)
It looks fair from this perspective (ignoring the number of units).

I think the kink is that 160 mil units were placed out on 19 Mar 2013 and distorts the annualised dpu used in your calculations. Need some mathematical gymnastics to untangle to see if still fair - those vested may want to take the trouble?

Ah... A conundrum challenge....

What I figured out is the total DPU is simply,

This FY DPU = 3.53ct (Q1) + 3.53ct (Q2) + 3.62ct (Q3) + 3.37ct (Q4 - before Performance Fee) = 14.05ct
Last FY DPU = 3.2ct (Q1) + 3.38ct (Q2) + 3.48ct (Q3) + 3.5ct (Q4) = 13.56ct

ie. the Quarterly DPU already factored in the Units in Issue at each point in time. The computed FY DPU figures are also the same as that shown in Pg 7 of Presentations.

So, from the perspective of a shareholder who'd been holding the shares since last FY and had not been given the chance to be placed any new shares, it doesn't seem very fair....

But, yes, from your perspective of using the absolute increase in amount available for distribution, it does appear more than fair...

The answer probably lies somewhere in between. But, as I'm not vested, I don't think I want to kill any more of my brain cells here...

PS. Perhaps they ought to have issued themselves new units in lieu of Performance Fee as a smokescreen...

[swakoo]

... thereby triggering a payout of Performance Fee of 0.31ct

Don't want to kill more of your brain cells (and mine too) but got to ask a stupid question - the performance fee of 0.31 ct per unit you calculated (by subtraction) is based on how many units?

[KopiKat]

... thereby triggering a payout of Performance Fee of 0.31ct

Don't want to kill more of your brain cells (and mine too) but got to ask a stupid question - the performance fee of 0.31 ct per unit you calculated (by subtraction) is based on how many units?

I managed to get a figure that's close if I used the no. of units from Q3 results (includes units to be issued for mgmt fee, if any),

ie. 2,239,184,937 units (didn't double check, taken from my ss)

If we divide Performance Fee = $6,959,000 by the above => 0.3108ct/unit