Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/aims-amp-capital-industrial" target="_blank" data-smartkarma-citation="entities:933" rel="noopener">AIMS APAC REIT (AAREIT SP)</a> to acquire Woolworths headquarters at 5.17% NPI yield; Accretive to DPU by 4.7%</h3><ul><li>AAREIT has acquired Woolworths headquarters for a purchase consideration of AUD463.25m (~S$454.0m) from Inmark Asset Management. The property is fully leased to Woolworths Group – Australia’s largest supermarket retailer, top 10 ASX listed companies. Woolworths HQ property is a corporate campus with a total site area of 90,010sqm and a total NLA of 44,972sqm. The current NLA provides for significant development potential to circa 180,000sqm based on the maximum allowable GFA. The purchase consideration of AUD463.25m excludes transaction costs of ~AUD31.0m. As such, the total acquisition cost is AUD494.25m (~S$484.4m)</li><li>The property has a long-term lease balance of 10 years and built-in rental escalation of 2.75% pa. Portfolio value will be enlarged by 26.6% to over S$2.28bn, while WALE will rise to 4.92 years. Portfolio occupancy will rise to 95.9% (from 95.7%) and master lease will represent 48% of total portfolio (from 38%)</li><li>The initial NPI yield is 5.17% and AAREIT plans to funding this acquisition through a combination of debt financing, recently issued S$250m perpetual securities, and potentially EFR. The funding structure utilising local debt financing (56%) and perpetual securities (44%) will bring aggregate leverage to 38.6% and result in DPU accretion of 4.7% on FY21 pro-forma basis. Upon settlement, the Manager has elected to receive the acquisition fee in AAREIT units</li><li>Following the completion of the proposed acquisition, AAREIT will have a total of 29 properties, of which 26 properties are located throughout Singapore (62%) and the remaining in Australia (38%).</li></ul>

SingaporeAIMS APAC REIT (AAREIT SP) to acquire Woolworths headquarters at 5.17% NPI yield; Accretive to DPU by 4.7%AAREIT has acquired Woolworths headquarters for a purchase consideration of AUD463.25m (~S$454.0m) from Inmark Asset Management. The property is fully leased to Woolworths Group – Australia’s largest supermarket retailer, top 10 ASX listed companies. Woolworths HQ property is a corporate campus with a total site area of 90,010sqm and a total NLA of 44,972sqm. The current NLA provides for significant development potential to circa 180,000sqm based on the maximum allowable GFA. The purchase consideration of AUD463.25m excludes transaction costs of ~AUD31.0m. As such, the total acquisition cost is AUD494.25m (~S$484.4m)The property has a long-term lease balance of 10 years and built-in rental escalation of 2.75% pa. Portfolio value will be enlarged by 26.6% to over S$2.28bn, while WALE will rise to 4.92 years. Portfolio occupancy will rise to 95.9% (from 95.7%) and master lease will represent 48% of total portfolio (from 38%)The initial NPI yield is 5.17% and AAREIT plans to funding this acquisition through a combination of debt financing, recently issued S$250m perpetual securities, and potentially EFR. The funding structure utilising local debt financing (56%) and perpetual securities (44%) will bring aggregate leverage to 38.6% and result in DPU accretion of 4.7% on FY21 pro-forma basis. Upon settlement, the Manager has elected to receive the acquisition fee in AAREIT unitsFollowing the completion of the proposed acquisition, AAREIT will have a total of 29 properties, of which 26 properties are located throughout Singapore (62%) and the remaining in Australia (38%).

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/city-developments-ltd" target="_blank" data-smartkarma-citation="entities:57" rel="noopener">City Developments (CIT SP)</a> sells Sincere stake for US$1; Raises stake in Shenzhen tech park</h3><ul><li>CIT has exited its investment in China-based Sincere Property Group for a consideration of US$1, while raising its stake in a technology park in Shenzhen. CIT has agreed to sell its 63.75% interest in HCP Chongqing Property Development (HCP Cayman) to an unrelated third party incorporated in the Republic of Seychelles. HCP Cayman holds an 80.01% equity interest in Sincere</li><li>The consideration was agreed upon after taking into account Sincere's current liquidity issues and its potential bankruptcy. For FY20, CIT had booked a S$1.78bn impairment for losses attributable to Sincere – effectively writing down 93% of its total investment in Sincere. Concurrently, CIT is increasing its stake in a company that owns 65% of Shenzhen Longgang Tusincere Tech Park. A Shenzhen Longgang District state-owned enterprise holds the remaining 35%</li></ul>

SingaporeCity Developments (CIT SP) sells Sincere stake for US$1; Raises stake in Shenzhen tech parkCIT has exited its investment in China-based Sincere Property Group for a consideration of US$1, while raising its stake in a technology park in Shenzhen. CIT has agreed to sell its 63.75% interest in HCP Chongqing Property Development (HCP Cayman) to an unrelated third party incorporated in the Republic of Seychelles. HCP Cayman holds an 80.01% equity interest in SincereThe consideration was agreed upon after taking into account Sincere's current liquidity issues and its potential bankruptcy. For FY20, CIT had booked a S$1.78bn impairment for losses attributable to Sincere – effectively writing down 93% of its total investment in Sincere. Concurrently, CIT is increasing its stake in a company that owns 65% of Shenzhen Longgang Tusincere Tech Park. A Shenzhen Longgang District state-owned enterprise holds the remaining 35%

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/ascott-residence-trust" target="_blank" data-smartkarma-citation="entities:6560" rel="noopener">Ascott Residence Trust (ART SP)</a> acquires student accommodation property in Texas for US$70m; 5.1% EBITDA yield</h3><ul><li>ART has entered into a conditional sale and purchase agreement to acquire a student accommodation property located in Texas, USA for US$70m (~S$93.8m). Based on the independent valuation, the property is valued at US$72.0m (~S$96.5m). The property is a freehold, off-campus facility with 1,005 beds and serves Texas Tech University and is 100% leased for the 2021 academic year. Texas Tech University has over 40,000 students</li><li>On a pro forma basis, the acquisition is expected to contribute additional EBITDA of US$3.6m (~S$4.8m), translating to an expected EBITDA yield of 5.1%, and increase distributable income by S$3.3m for FY20, translating to an increase in pro forma distribution per stapled security of ~1.5%</li><li>Completion is subject to and conditional upon, the fulfilment of the conditions precedent in the Sale and Purchase Agreement and is expected to take place on or around 21Sep. ART proposes to finance the total acquisition costs from the private placement to raise gross proceeds of ~S$150.0m and debt financing. Following completion of the acquisition, ART’s aggregate leverage would remain at 35.9%.</li></ul>

SingaporeAscott Residence Trust (ART SP) acquires student accommodation property in Texas for US$70m; 5.1% EBITDA yieldART has entered into a conditional sale and purchase agreement to acquire a student accommodation property located in Texas, USA for US$70m (~S$93.8m). Based on the independent valuation, the property is valued at US$72.0m (~S$96.5m). The property is a freehold, off-campus facility with 1,005 beds and serves Texas Tech University and is 100% leased for the 2021 academic year. Texas Tech University has over 40,000 studentsOn a pro forma basis, the acquisition is expected to contribute additional EBITDA of US$3.6m (~S$4.8m), translating to an expected EBITDA yield of 5.1%, and increase distributable income by S$3.3m for FY20, translating to an increase in pro forma distribution per stapled security of ~1.5%Completion is subject to and conditional upon, the fulfilment of the conditions precedent in the Sale and Purchase Agreement and is expected to take place on or around 21Sep. ART proposes to finance the total acquisition costs from the private placement to raise gross proceeds of ~S$150.0m and debt financing. Following completion of the acquisition, ART’s aggregate leverage would remain at 35.9%.

<h2>Singapore</h2><h3>Park Hotel Farrer Park relaunches under Holiday Inn brand</h3><p>The 300-room Park Hotel Farrer Park, owned by RB Capital and previously managed by Park Hotel Group, has been renamed Holiday Inn Singapore Little India. Its new manager, IHG Hotels &amp; Resorts, now manages three of RB Capital's Singapore hotels, totalling nearly 1,000 keys. The other two are Holiday Inn Express Clarke Quay, opened in 2014, and InterContinental Singapore Robertson Quay, opened in 2017. IHG operates 11 hotels in Singapore across a range of brands including Regent, InterContinental, Crowne Plaza, Hotel Indigo and Holiday Inn. There had been a few more years remaining on the management contract for Park Hotel Farrer Park, but due to the current situation with Park Hotel Management, RB Capital decided to sign on IHG to manage the property on a long-term basis.</p>

SingaporePark Hotel Farrer Park relaunches under Holiday Inn brandThe 300-room Park Hotel Farrer Park, owned by RB Capital and previously managed by Park Hotel Group, has been renamed Holiday Inn Singapore Little India. Its new manager, IHG Hotels &amp; Resorts, now manages three of RB Capital's Singapore hotels, totalling nearly 1,000 keys. The other two are Holiday Inn Express Clarke Quay, opened in 2014, and InterContinental Singapore Robertson Quay, opened in 2017. IHG operates 11 hotels in Singapore across a range of brands including Regent, InterContinental, Crowne Plaza, Hotel Indigo and Holiday Inn. There had been a few more years remaining on the management contract for Park Hotel Farrer Park, but due to the current situation with Park Hotel Management, RB Capital decided to sign on IHG to manage the property on a long-term basis.

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/aims-amp-capital-industrial" target="_blank" data-smartkarma-citation="entities:933" rel="noopener">AIMS APAC REIT (AAREIT SP)</a> issues S$250m 5.375% perpetual securities</h3><p>AAREIT has priced the S$250m perpetual securities at 5.375%. The Series 003 Perpetual Securities will be issued under the S$750m Multicurrency Debt Issuance programme, expected to be issued on 1Sep21. The net proceeds will be used for the general corporate purposes, finance general working capital, capital expenditure and investments and the partial or full refinancing of existing borrowings. AAREIT has an existing S$125m 5.65% perpetual securities issued in Aug20, bringing its total perps exposure to S$375m (a look-through debt+perps/asset to ~46%).</p><h3>Residential property volume, prices could continue rising for the rest of 2021</h3><p>Residential property demand and prices are expected to tick higher. OrangeTee noted that demand for public and private properties has been rising and listings for both new launches and resale flats are being snapped up on the same day. Buyers are more willing to spend on bigger but older flats due to work-from-home requirements. According to OrangeTee, more than 14,000 resale HDB flats changed hands in 1H21. Prices increased 6% over that period and are just 2% below the peak in 2Q13. Total HDB resales could hit 27,000-29,000 units this year (vs. 24,748 units in 2020 and 23,714 in 2019), while prices of resale flats may rise by 9-11% for the whole of 2021. Meanwhile, a total of 8,449 private homes, including new launches and resale units, were sold in 2Q21, up 4.3% QoQ. Overall home prices may rise by 6-9% this year, possibly driven by resale volumes.</p>

SingaporeAIMS APAC REIT (AAREIT SP) issues S$250m 5.375% perpetual securitiesAAREIT has priced the S$250m perpetual securities at 5.375%. The Series 003 Perpetual Securities will be issued under the S$750m Multicurrency Debt Issuance programme, expected to be issued on 1Sep21. The net proceeds will be used for the general corporate purposes, finance general working capital, capital expenditure and investments and the partial or full refinancing of existing borrowings. AAREIT has an existing S$125m 5.65% perpetual securities issued in Aug20, bringing its total perps exposure to S$375m (a look-through debt+perps/asset to ~46%).Residential property volume, prices could continue rising for the rest of 2021Residential property demand and prices are expected to tick higher. OrangeTee noted that demand for public and private properties has been rising and listings for both new launches and resale flats are being snapped up on the same day. Buyers are more willing to spend on bigger but older flats due to work-from-home requirements. According to OrangeTee, more than 14,000 resale HDB flats changed hands in 1H21. Prices increased 6% over that period and are just 2% below the peak in 2Q13. Total HDB resales could hit 27,000-29,000 units this year (vs. 24,748 units in 2020 and 23,714 in 2019), while prices of resale flats may rise by 9-11% for the whole of 2021. Meanwhile, a total of 8,449 private homes, including new launches and resale units, were sold in 2Q21, up 4.3% QoQ. Overall home prices may rise by 6-9% this year, possibly driven by resale volumes.

Singapore

AIMS APAC REIT is a real estate investment trust. The Trust's principal investment objective is owning and investing in a diversified portfolio of income-producing industrial real estate assets throughout Asia Pacific, including warehousing and logistics, manufacturing, business parks and hi-tech spaces.

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AIMS APAC REIT (AAREIT SP)

ASEAN Builder's Scoop (1Oct21)

AAREIT acquires Woolworths HQ, DPU accretive by +4.7%; Luxury condo prices climbing 5.2% YoY in 3Q21; Mapletree buys S$4bn US logistics assets; SC...

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ASEAN Builder's Scoop (13Sep21)

CIT sells Sincere stake, raises stake in Shenzhen tech park; Hoi Hup/Sunway JV acquires Flynn Park enbloc; TSH focuses in SG, Indo, AUS; MREIT...

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ASEAN Builder's Scoop (9Sep21)

ART acquires Texas student housing asset; AAREIT conducting due diligence on AUS asset; FRAG applies for delisting; LPKR increases FY21 mktg sales...

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ASEAN Builder's Scoop (8Sep21)

Park Hotel Farrer Park relaunched under IHG; AAREIT new CEO-designate; BSDE invests in DC business; WCTHG selling non-core assets; Phils Aug...

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ASEAN Builder's Scoop (24Aug21)

AAREIT issues S$250m perps; SG resi prices, volume continue rising; RCR offers IPO at 8% premium to NAV; CLI raises stake in reclamation firm MMDC;...

SCCM Asia Research

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