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>SREITs results in a glance (see detailed spreadsheet and calendar attached)</h3><table class="table table-striped"><tbody><tr><td style="width: 363.047px; height: 14px;"><p> </p></td><td style="width: 362.953px; height: 14px;"><p>ELITE (GBP)</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>Period</p></td><td style="width: 362.953px; height: 14px;"><p>1H21</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>Gross Revenue (S$ m)</p></td><td style="width: 362.953px; height: 14px;"><p>15.9 (+37.7% vs forecast)</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>NPI (S$ m)</p></td><td style="width: 362.953px; height: 14px;"><p>15.4 (+37% vs forecast)</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>DPU (S$ c)</p></td><td style="width: 362.953px; height: 14px;"><p>2.63 (+8.7% vs forecast)</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>NAV per Unit (S$)</p></td><td style="width: 362.953px; height: 14px;"><p>0.62</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>P/B (x)</p></td><td style="width: 362.953px; height: 14px;"><p>1.08</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>Occupancy (%)</p></td><td style="width: 362.953px; height: 14px;"><p>100</p></td></tr><tr><td style="width: 363.047px; height: 7px;"><p>Reversion (%)</p></td><td style="width: 362.953px; height: 7px;"><p>Not Disclosed</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>Gearing (%)</p></td><td style="width: 362.953px; height: 14px;"><p>42.1</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>Cost of Debt (%)</p></td><td style="width: 362.953px; height: 14px;"><p>1.9</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>1 Yr Fwd Yield (%)</p></td><td style="width: 362.953px; height: 14px;"><p>7.41</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>Debt Hedged (%)</p></td><td style="width: 362.953px; height: 14px;"><p>63</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>Target Price</p></td><td style="width: 362.953px; height: 14px;"><p>N/A</p></td></tr><tr><td style="width: 363.047px; height: 14px;"><p>Rating</p></td><td style="width: 362.953px; height: 14px;"><p>N/A</p></td></tr></tbody></table>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) ELITE (GBP)Period1H21Gross Revenue (S$ m)15.9 (+37.7% vs forecast)NPI (S$ m)15.4 (+37% vs forecast)DPU (S$ c)2.63 (+8.7% vs forecast)NAV per Unit (S$)0.62P/B (x)1.08Occupancy (%)100Reversion (%)Not DisclosedGearing (%)42.1Cost of Debt (%)1.91 Yr Fwd Yield (%)7.41Debt Hedged (%)63Target PriceN/ARatingN/A

ASEAN Builder's Scoop (02Jul21) - ELITE >7% GBP Yield with Min Collection Risks

<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> will not support Sincere Property’s financial obligations; Remaining exposure at S$126m</h3><p>CIT was made aware of the bankruptcy claim filed by Beijing Yi He Mercury Investment Co Ltd against Sincere Property on 5Jul. CIT reiterated that it has ring-fenced its current financial exposure to its investment in Sincere Property and will not support the continuing financial obligations of Sincere Property. In Feb21, CIT booked a substantial impairment loss of S$1.78bn on its investment in China-based Sincere, which dragged the group into a net loss of S$1.92bn in 2H20. CIT's remaining exposure amounts to only S$126m as at 31Dec20.</p>

SingaporeCity Developments (CIT SP) will not support Sincere Property’s financial obligations; Remaining exposure at S$126mCIT was made aware of the bankruptcy claim filed by Beijing Yi He Mercury Investment Co Ltd against Sincere Property on 5Jul. CIT reiterated that it has ring-fenced its current financial exposure to its investment in Sincere Property and will not support the continuing financial obligations of Sincere Property. In Feb21, CIT booked a substantial impairment loss of S$1.78bn on its investment in China-based Sincere, which dragged the group into a net loss of S$1.92bn in 2H20. CIT's remaining exposure amounts to only S$126m as at 31Dec20.

ASEAN Builder's Scoop (9Jul21) - CIT Remaining Exposure S$126m at Sincere Property

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/suntec-reit" target="_blank" data-smartkarma-citation="entities:151" rel="noopener">Suntec REIT (SUN SP)</a> to divest office strata units for S$197m; Acquire London building for GBP353m (S$667.2m)</h3><ul><li>SUN is divesting a portfolio of strata units at Suntec City Office for S$197m and acquiring a Grade-A office building located in the heart of city of London for GBP353m (S$667.2m). The Suntec City Office units are being divested at an 8.9% premium over the independent valuation of S$180.9m for the 78,491sqft of space, with a net gain on divestment of S$13.9m. The net property income yield was 3.1%</li><li>The London property is the Minster Building, an 11-storey Grade-A office development with ancillary retail built in 1990 and refurbished in 2018. It has a NPI yield of 4.5% (based on passing income as at 31Mar21 divided by the total acquisition outlay) and a long WALE of 12.3 years. The building has a committed occupancy of 96.7% with the office component being 96.2% leased to quality office tenants from diversified sectors, and WALE of 11.3 years. The retail component has a committed occupancy of 100% and a WALE of 19.6 years. The property has a two-year income guarantee for vacant spaces and retail leases, and an approximately one-year income guarantee for the co-working lease</li><li>Post these transactions, AUM will grow from S$11.5bn to S$11.7bn across 10 properties in Singapore (70.7% of AUM), Australia (16.8% of AUM) and the United Kingdom (12.5% of AUM). SUN continues to be anchored by office sector, which will contribute more than 85% of total income. The office portfolio WALE will be lengthened to 5.55 years, while the retail portfolio WALE will be extended to 3.18 years</li><li>On a FY20 pro-forma basis, after considering the proceeds from divestments of ~S$280.0m (9 Penang Road and SC Office strata units), GBP175.0m (~S$330.8m) of GBP-denominated loan at an indicative interest rate of 2.7% pa, and ~ S$70.0m perpetual securities at fixed rate coupon of 4.25% pa, this transaction is expected to be +3.6% DPU accretive and +0.7% NAV accretive to unitholders. Gearing will decrease to 43.8% from 44.3% as at 31Dec20 on a pro-forma basis. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/216/078/original/image003+%282%29.png?1625017360" class="editor-image img-responsive" data-smartkarma-image-id="216078"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/216/081/original/image004.png?1625017400" class="editor-image img-responsive" data-smartkarma-image-id="216081"></figure></section></section></li></ul>

SingaporeSuntec REIT (SUN SP) to divest office strata units for S$197m; Acquire London building for GBP353m (S$667.2m)SUN is divesting a portfolio of strata units at Suntec City Office for S$197m and acquiring a Grade-A office building located in the heart of city of London for GBP353m (S$667.2m). The Suntec City Office units are being divested at an 8.9% premium over the independent valuation of S$180.9m for the 78,491sqft of space, with a net gain on divestment of S$13.9m. The net property income yield was 3.1%The London property is the Minster Building, an 11-storey Grade-A office development with ancillary retail built in 1990 and refurbished in 2018. It has a NPI yield of 4.5% (based on passing income as at 31Mar21 divided by the total acquisition outlay) and a long WALE of 12.3 years. The building has a committed occupancy of 96.7% with the office component being 96.2% leased to quality office tenants from diversified sectors, and WALE of 11.3 years. The retail component has a committed occupancy of 100% and a WALE of 19.6 years. The property has a two-year income guarantee for vacant spaces and retail leases, and an approximately one-year income guarantee for the co-working leasePost these transactions, AUM will grow from S$11.5bn to S$11.7bn across 10 properties in Singapore (70.7% of AUM), Australia (16.8% of AUM) and the United Kingdom (12.5% of AUM). SUN continues to be anchored by office sector, which will contribute more than 85% of total income. The office portfolio WALE will be lengthened to 5.55 years, while the retail portfolio WALE will be extended to 3.18 yearsOn a FY20 pro-forma basis, after considering the proceeds from divestments of ~S$280.0m (9 Penang Road and SC Office strata units), GBP175.0m (~S$330.8m) of GBP-denominated loan at an indicative interest rate of 2.7% pa, and ~ S$70.0m perpetual securities at fixed rate coupon of 4.25% pa, this transaction is expected to be +3.6% DPU accretive and +0.7% NAV accretive to unitholders. Gearing will decrease to 43.8% from 44.3% as at 31Dec20 on a pro-forma basis. 

ASEAN Builder's Scoop (30Jun21) - SUN Busy Year with +3.6% DPU Accretion Deals

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/yanlord-land-group-ltd" target="_blank" data-smartkarma-citation="entities:14152" rel="noopener">Yanlord Land (YLLG SP)</a> enters into a JV agreement with Ho Bee Land (HOBEE SP) to develop a residential site in Tianjin</h3><p>YLLG together with Ho Bee Land  (HOBEE SP) jointly entered into a co-operation agreement to develop a residential site located in Hongqiao District, Tianjin, the PRC.  The land parcel with a total site area of ~53,200sqm, located at XiangDongNan Road in Hongqiao District, Tianjin, was acquired by YLLG through public land auction for a total consideration of ~RMB1.5bn. Upon completion of the transaction, YLLG and HOBEE shall hold 51% and 49% effective interest in the development, respectively. YLLG and HOBEE plan to jointly develop the site and transform it into a new high-end residential development with ancillary community retail space and educational facilities with a total GFA of ~117,100sqm.</p>

SingaporeYanlord Land (YLLG SP) enters into a JV agreement with Ho Bee Land (HOBEE SP) to develop a residential site in TianjinYLLG together with Ho Bee Land  (HOBEE SP) jointly entered into a co-operation agreement to develop a residential site located in Hongqiao District, Tianjin, the PRC.  The land parcel with a total site area of ~53,200sqm, located at XiangDongNan Road in Hongqiao District, Tianjin, was acquired by YLLG through public land auction for a total consideration of ~RMB1.5bn. Upon completion of the transaction, YLLG and HOBEE shall hold 51% and 49% effective interest in the development, respectively. YLLG and HOBEE plan to jointly develop the site and transform it into a new high-end residential development with ancillary community retail space and educational facilities with a total GFA of ~117,100sqm.

ASEAN Builder's Scoop (29Jun21) - YLLG/HOBEE in JV for Tianjin Project

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/prime-us-reit" target="_blank" data-smartkarma-citation="entities:28144" rel="noopener">Prime US REIT (PRIME SP)</a> in talks with WeWork on proposed lease restructuring</h3><ul><li>Co-working space operator WeWork has approached PRIME with a proposal to restructure its lease at the latter's Class-A office property in California, and discussions are ongoing. The tenant occupies 56,977sqft within Tower I at Emeryville, out of the building's NLA of 222,606sqft. The tenant contributes less than 2.5% of PRIME's cash rental income as at end-Mar. It added that the tenant has been current on its rental obligations till mid-Jun21, and the lease terms are currently under evaluation</li><li>PRIME has called on the tenant to continue to meet its rental obligations, and also called upon the existing security package for the payment of such obligations. PRIME's security in relation to that WeWork lease consists of a combination of protections. If the counterparty honours its obligations, such protections will cover the tenant's monthly lease obligations through as much as end-2022. PRIME does not expect the matter to have any impact on the distribution per unit of PRIME for FY21, in light of the security. Based on the independent valuation sought, this will not materially affect the value of PRIME's portfolio as compared to the portfolio appraisal conducted as at last Dec.</li></ul>

SingaporePrime US REIT (PRIME SP) in talks with WeWork on proposed lease restructuringCo-working space operator WeWork has approached PRIME with a proposal to restructure its lease at the latter's Class-A office property in California, and discussions are ongoing. The tenant occupies 56,977sqft within Tower I at Emeryville, out of the building's NLA of 222,606sqft. The tenant contributes less than 2.5% of PRIME's cash rental income as at end-Mar. It added that the tenant has been current on its rental obligations till mid-Jun21, and the lease terms are currently under evaluationPRIME has called on the tenant to continue to meet its rental obligations, and also called upon the existing security package for the payment of such obligations. PRIME's security in relation to that WeWork lease consists of a combination of protections. If the counterparty honours its obligations, such protections will cover the tenant's monthly lease obligations through as much as end-2022. PRIME does not expect the matter to have any impact on the distribution per unit of PRIME for FY21, in light of the security. Based on the independent valuation sought, this will not materially affect the value of PRIME's portfolio as compared to the portfolio appraisal conducted as at last Dec.

ASEAN Builder's Scoop (18Jun21) - PRIME/WeWork Lease Restructuring

Singapore

Eagle Hospitality Trust is a hospitality stapled group; owns 18 hotels across the U.S..

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Eagle Hospitality Trust (EAGLEHT SP)

ASEAN Builder's Scoop (02Jul21) - ELITE >7% GBP Yield with Min Collection Risks

ELITE >7% GBP yield with min collection risks; EAGLEHT Dalls hotel sold at lower price; GLP sees frothy valuations in most markets; DILD 1H21 mktg...

SCCM Asia Research

ASEAN Builder's Scoop (9Jul21) - CIT Remaining Exposure S$126m at Sincere Property

CIT remaining exposure S$126m at Sincere Property; HDB resale prices ~1.7% away from peak; DD/JFC first and largest industrial REIT in Phils; LPKR...

SCCM Asia Research

ASEAN Builder's Scoop (30Jun21) - SUN Busy Year with +3.6% DPU Accretion Deals

SUN busy year with +3.6% DPU accretion deals; QC exemptions rule refined; The Working Capitol debt restructuring; Manila 1Q21 office demand muted;...

SCCM Asia Research

ASEAN Builder's Scoop (29Jun21) - YLLG/HOBEE in JV for Tianjin Project

YLLG/HOBEE in JV for Tianjin project; Developers get 6mo relief extension; SSREIT rejects EGM request to remove a Director; EAGLEHT close to...

SCCM Asia Research

ASEAN Builder's Scoop (18Jun21) - PRIME/WeWork Lease Restructuring

PRIME/WeWork lease restructuring; Park Hotel Mgmt winding up; IOIPG bidding for Marina View plot; LPCK mktg sales on track for FY21; BKK office...

SCCM Asia Research

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