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Singapore stock market and companies daily report (Courage Marine, CIT) (September 17, 2012)

Contributed by Shares Investment

Hospitality Sector Could Face Growth Pressures In 2H12
Despite robust growth in 1H12, the local hospitality industry could continue to see growth in 2H12, albeit at a slower pace. However, previous fears that the eurozone crisis could splutter growth in tourism were largely unfounded as key indicators continued to grow in the local hospitality industry. CBRE Hotels, citing the Singapore Tourism Board said that visitor arrivals from January to May 2012 totalled approximately 5.92 million with hotel occupancy rates averaged around 88 percent through the five months. An earlier report from the research firm also found that Singapore’s average daily rate stood at US$230, second in Asia only to Hong Kong (US$248). Revenue per available room (RevPAR), a key performance indicator, increased 1.6 percent to $249. However DBS Research’s Derek Tan expects growth in the industry to moderate, pointing out that hoteliers have turned more conservation. Tan understands that “some hoteliers are seeing limited opportunities to raise rates as much as they will like to see”.
Significance: While 2H12 might see a bump in demand due to the Singapore Grand Prix in September, the slowdown in Asian economies should not be completely discounted. Consumer sentiments and the current surge in visitor arrivals could hit a snag if macroeconomic conditions slump further.

Courage Marine To Acquire 10% Stake In Santarli Realty
In an attempt to diversify its income streams, vessel charterer, Courage Marine intends to acquire a 10 percent stake in Santarli Realty from Santarli Corporation. As payment for the stake, Courage Marine has, through its subsidiary, Courage Marine Overseas, extend and supply a shareholder’s loan of up to $54 million to Santarli Realty. Santarli Realty is a special purpose vehicle incorporated for the purpose of the Pheng Geck project. The project involves the acquisition and development of a land site at Pheng Geck Avenue. The total cost to be incurred with regards to the project is estimated to be about $176.5 million, which will be partially funded by the shareholders’ loan and the rest through bank loans. Courage Marine’s board believes that Santarli has the “requisite experience, expertise and resources to manage the Pheng Geck project successfully”.
Significance: Courage Marine has been under intense pressure to seek new avenues for growth as its main growth driver, vessel chartering in China has been increasingly weak. In view of this, the company opined that diversification into property development would help to reduce its dependence on freight income.

Cambridge Industrial Trust Acquires Properties Worth $56.3m
Cambridge Industrial Trust (CIT) has announced that its trustee, RBC Investment Services Trust has entered into agreements to acquire two properties for $56.3 million. CIT will acquire a light industrial building at 30 Marsiling Industrial Estate from Beyonics International for $39 million and another property at 11 Woodlands Walk for $17.3 million. Both properties have leaseback arrangements with their current tenants. Chris Calvert, chief executive officer of CIT’s manager said that the acquisitions are replacement assets for “two of its existing properties which are in the process of being compulsory acquired”. Calvert also mentioned that the acquisitions were in line with its objectives of “acquiring investment grade assets, designed to continually improve the quality of CIT’s property portfolio”.
Significance: The acquisition of the Marsiling and Woodlands properties are seen as high quality industrial assets which will strengthen the Trust’s presence in Northern Singapore. The leaseback agreements also ensure diversified and recurring income streams for the trust.