This week’s highlights take a look at acquisitions made by a blue-chip transport conglomerate, a REIT with overseas assets, as well as the latest full-year earnings (perhaps, the last) from Singapore’s media giant.
ComfortDelGro Corporation Ltd (SGX: C52)
ComfortDelGro, or CDG, is a land transport conglomerate that owns a fleet of around 40,000 buses, taxis and rental vehicles.
The group operates in seven countries, namely Singapore, Malaysia, Australia, China, Ireland, Vietnam and the UK.
This week, CDG announced that its wholly-owned subsidiary in Australia, Forest Coach Lines Pty Ltd, acquired the assets of a school bus business comprising five buses.
The transport business operates in Narrabi, New South Wales, and the total consideration amounted to around S$1.96 million.
With this acquisition, Forest Coach’s bus operations will expand to 21 buses, while CDG’s total Australian bus fleet will increase to near 2,500.
This purchase will increase the scope of ComfortDelGro Corporation Australia’s (CDC) operation and help to deepen its presence in the New South Wales region.
CDC currently operates in six states and territories in Australia — New South Wales, Victoria, the Australian Capital Territory, Queensland, the Northern Territory, and Western Australia.
Singapore Press Holdings Limited (SGX: T39)
Singapore Press Holdings, or SPH, is a media organisation that publishes newspapers, magazines and books in both print and digital editions.
The group also owns a 65% stake in SPH REIT (SGX: SK6U) and owns and manages a portfolio of purpose-built student accommodation assets (PBSA) in the UK and Germany.
SPH recently reported its full fiscal 2021 (FY2021) earnings for the period ended 31 August 2021.
It could be the media company’s last report in its current form.
Total revenue for the year inched up 2.4% year on year to S$475.1 million from higher rental income from its PBSA and retail and commercial portfolios, helped by lower rental reliefs granted.
With the absence of impairment charges of S$17.5 million this year, total costs fell by 21.6% year on year to S$268.4 million.
As a result, operating profit surged by 69.8% year on year to S$206.7 million.
SPH enjoyed a fair value gain of S$66.6 million from the increase in valuation for its investment properties, resulting in the group booking a net profit of S$92.9 million, reversing the S$83.7 million loss chalked up in the previous fiscal year.
The group declared a final dividend of S$0.03, tripling the amount declared and paid out last year.
For FY2021, the total dividend came up to S$0.06, translating to a trailing yield of 3%.
In September, shareholders had approved for its media business to be transferred to a non-profit company.
This transfer is expected to be completed in December this year.
This condition was a necessary one for Keppel Corporation Limited’s (SGX: BN4) proposed acquisition of SPH.
Should this transaction be approved, SPH will be privatised and delisted.
United Hampshire US REIT (SGX: ODBU)
United Hampshire US REIT, or UHREIT, invests in a diversified portfolio of grocery-anchored and necessity-based retail properties in the US.
As of 30 June 2021, UHREIT’s portfolio comprises 22 mostly freehold grocery and necessity properties and self-storage facilities worth around US$587.1 million.
The REIT announced its maiden acquisition since its IPO of two predominantly grocery-anchored properties for around US$78.25 million.
The properties Penrose Plaza and Colonial Square are located in Pennsylvania and Virginia, respectively, and extend UHREIT’s foray into the US Eastern seaboard.
As of 30 September 2021, the former has a committed occupancy of 94.1% and a weighted average lease expiry (WALE) of 9.2 years while the latter asset’s committed occupancy is at 99.1% with a WALE of 6.6 years.
If these REIT terms sound confusing, here is a quick guide to familiarise yourself.
This acquisition also increases UHREIT’s exposure to eight US states, up from six previously, and no single state’s contribution exceeds 30%.
The REIT’s top 10 tenants’ contribution to base rental income also decreases from 66.2% to 61%.
More importantly, UHREIT’s first-ever acquisition will help to bump up its distribution per unit (DPU) by 1.75% to US$0.0489 while increasing the portfolio’s value by 13.3% to US$665.4 million.
UHREIT has reported that essential retailers such as grocery stores and home improvement outlets continue to thrive despite the ongoing pandemic and amid the increased popularity of e-commerce.
Therefore, the REIT’s rental income should remain steady and so will its DPU.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
