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>WeWork closes operations at <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> California property; Discussion over lease obligations ongoing</h3><p>PRIME is in discussions with tenant WeWork on the resolution of the latter's lease obligations at Tower 1 at Emeryville, a Class-A office property in California, after WeWork decided to close its co-working operation at the building. WeWork occupies 56,977sqft of space within the real estate investment trust's 3.89m sqft portfolio. The co-working operator also contributes about 2.5% of PRIME’s cash rental income as at 30Jun. WeWork previously approached the REIT with a proposal to restructure its lease. 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.</p>

SingaporeWeWork closes operations at Prime US REIT (PRIME SP) California property; Discussion over lease obligations ongoingPRIME is in discussions with tenant WeWork on the resolution of the latter's lease obligations at Tower 1 at Emeryville, a Class-A office property in California, after WeWork decided to close its co-working operation at the building. WeWork occupies 56,977sqft of space within the real estate investment trust's 3.89m sqft portfolio. The co-working operator also contributes about 2.5% of PRIME’s cash rental income as at 30Jun. WeWork previously approached the REIT with a proposal to restructure its lease. 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.

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<div><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
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<h2>Prime US REIT</h2>
<h3>Bottoming out expected at year-end</h3>
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<li>1H21 NPI and distributable income met expectations, at 46% of our FY21e estimates. Despite higher rental reversions and income contributions from Park Tower, NPI declined 2.3% YoY due to lower portfolio occupancy and transient parking income.</li>
<li>Two new properties were acquired in new markets with longer WALEs and higher occupancies than portfolio. We expect greater resilience and earnings visibility from an enlarged portfolio.</li>
<li>Maintain ACCUMULATE and DDM target price of US$0.94 (COE 9.5%). FY21e/FY22e DPUs lowered by 10.5%/0.7% to reflect lower carpark income and softer leasing, offset by reversions and rental income from new acquisitions. Catalysts include improved leasing and a greater return to office.</li>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/239/292/original/image_26413117951635860729874.png?1635860733" class="editor-image img-responsive" data-smartkarma-image-id="239292"></figure>
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<p><strong>The Positives</strong><br><strong>+ Positive reversions.</strong> Prime signed 52,349 sq ft of leases in 2Q21 at positive rental reversions of 10.5%. Excluding short-term lease extensions of 9,931 sq ft, rental reversions were 13.3%. This could be credited to leases signed at 101 South Hanley and Tower 909, where expiring rents are 11-13.5% below market. Positive rent reversions are expected going into 3Q, as portfolio rents are below asking rents by 6.4%.</p>
<p><strong>+ Acquisitions enhance resilience.</strong> As of 23 July, Prime completed the acquisition of two new properties: Sorrento Towers in San Diego and One Town Center in Florida. San Diego is one of the top 10 tech cities in the US, where demand from the biotechnology, biopharmaceutical, international trade, high-tech and defence sectors is strong. South Florida is one of the top 10 states for population in-migration thanks to its favourable tax climate and quality of life. These acquisitions introduce Prime to two new markets and increase its exposure to key industry sectors. They have also extended its portfolio WALE from 4.4 to 4.6 years. Occupancy at both properties is above portfolio occupancy of 91.7%, at 98.2% and 94.7% respectively. This improves earnings visibility. The acquisitions were funded by debt and equity. Proforma DPU could be lifted by an estimated 2.4% after acquisition, based on FY20 figures.</p>
<p><strong>The Negative</strong><br><strong>- Lower portfolio occupancy and carpark income vis-à-vis a year ago.</strong> Despite its positive rental reversions and contributions from Park Tower acquired on 24 February 2020, 1H21 gross revenue climbed only 2.6% YoY. This is due to lower portfolio occupancy of 91.7% as compared to 93% a year ago, as well as reduced transient parking income which historically comprised mid to high single digits of Prime’s topline. Property expenses also increased 25.4% YoY with new expenses from Park Tower. As such, NPI and distributable income fell 2.3%/1.3% YoY. DPU declined 5.4% YoY from a larger unit base.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.






Prime US REIT
Bottoming out expected at year-end





1H21 NPI and distributable income met expectations, at 46% of our FY21e estimates. Despite higher rental reversions and income contributions from Park Tower, NPI declined 2.3% YoY due to lower portfolio occupancy and transient parking income.
Two new properties were acquired in new markets with longer WALEs and higher occupancies than portfolio. We expect greater resilience and earnings visibility from an enlarged portfolio.
Maintain ACCUMULATE and DDM target price of US$0.94 (COE 9.5%). FY21e/FY22e DPUs lowered by 10.5%/0.7% to reflect lower carpark income and softer leasing, offset by reversions and rental income from new acquisitions. Catalysts include improved leasing and a greater return to office.






The Positives + Positive reversions. Prime signed 52,349 sq ft of leases in 2Q21 at positive rental reversions of 10.5%. Excluding short-term lease extensions of 9,931 sq ft, rental reversions were 13.3%. This could be credited to leases signed at 101 South Hanley and Tower 909, where expiring rents are 11-13.5% below market. Positive rent reversions are expected going into 3Q, as portfolio rents are below asking rents by 6.4%.
+ Acquisitions enhance resilience. As of 23 July, Prime completed the acquisition of two new properties: Sorrento Towers in San Diego and One Town Center in Florida. San Diego is one of the top 10 tech cities in the US, where demand from the biotechnology, biopharmaceutical, international trade, high-tech and defence sectors is strong. South Florida is one of the top 10 states for population in-migration thanks to its favourable tax climate and quality of life. These acquisitions introduce Prime to two new markets and increase its exposure to key industry sectors. They have also extended its portfolio WALE from 4.4 to 4.6 years. Occupancy at both properties is above portfolio occupancy of 91.7%, at 98.2% and 94.7% respectively. This improves earnings visibility. The acquisitions were funded by debt and equity. Proforma DPU could be lifted by an estimated 2.4% after acquisition, based on FY20 figures.
The Negative - Lower portfolio occupancy and carpark income vis-à-vis a year ago. Despite its positive rental reversions and contributions from Park Tower acquired on 24 February 2020, 1H21 gross revenue climbed only 2.6% YoY. This is due to lower portfolio occupancy of 91.7% as compared to 93% a year ago, as well as reduced transient parking income which historically comprised mid to high single digits of Prime’s topline. Property expenses also increased 25.4% YoY with new expenses from Park Tower. As such, NPI and distributable income fell 2.3%/1.3% YoY. DPU declined 5.4% YoY from a larger unit base.














(Non-SGX Report): Prime US REIT: Bottoming Out Expected at Year-End

<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: 141.25pt; height: 14.35pt;"><p> </p></td><td style="width: 141.2pt; height: 14.35pt;"><p>PRIME</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>KORE</p></td></tr><tr><td style="width: 141.25pt; height: 14.85pt;"><p>Period</p></td><td style="width: 141.2pt; height: 14.85pt;"><p>1H21</p></td><td style="width: 141.2pt; height: 14.85pt;"><p>1H21</p></td></tr><tr><td style="width: 141.25pt; height: 14.9pt;"><p>Gross Revenue (S$m)</p></td><td style="width: 141.2pt; height: 14.9pt;"><p>72.1 (+1.2% YoY)</p></td><td style="width: 141.2pt; height: 14.9pt;"><p>68.38 (-3% YoY)</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>NPI (S$m)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>46.3 (-2.3% YoY)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>40.58 (-3.1% YoY)</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>DPU (S$ c)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>3.33 (-5.4% YoY)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>3.16 (+1.9% YoY)</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>NAV per Unit (S$)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>0.86</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>0.82</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>P/B (x)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>0.98</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>0.95</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>Occupancy (%)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>91.7</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>90.5</p></td></tr><tr><td style="width: 141.25pt; height: 7.2pt;"><p>Reversion (%)</p></td><td style="width: 141.2pt; height: 7.2pt;"><p>10.5</p></td><td style="width: 141.2pt; height: 7.2pt;"><p>5.4</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>Gearing (%)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>34.4</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>37.1</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>Cost of Debt (%)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>3.2</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>2.82</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>1 Yr Fwd Yield (%)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>8.45</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>7.77</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>Debt Hedged (%)</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>86%</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>84.7</p></td></tr><tr><td style="width: 141.25pt; height: 14.35pt;"><p>Target Price</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>N/A</p></td><td style="width: 141.2pt; height: 14.35pt;"><p>N/A</p></td></tr><tr><td style="width: 141.25pt; height: 14.85pt;"><p>Rating</p></td><td style="width: 141.2pt; height: 14.85pt;"><p>N/A</p></td><td style="width: 141.2pt; height: 14.85pt;"><p>N/A</p></td></tr></tbody></table>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) PRIMEKOREPeriod1H211H21Gross Revenue (S$m)72.1 (+1.2% YoY)68.38 (-3% YoY)NPI (S$m)46.3 (-2.3% YoY)40.58 (-3.1% YoY)DPU (S$ c)3.33 (-5.4% YoY)3.16 (+1.9% YoY)NAV per Unit (S$)0.860.82P/B (x)0.980.95Occupancy (%)91.790.5Reversion (%)10.55.4Gearing (%)34.437.1Cost of Debt (%)3.22.821 Yr Fwd Yield (%)8.457.77Debt Hedged (%)86%84.7Target PriceN/AN/ARatingN/AN/A

ASEAN Builder's Scoop (04Aug21) - PRIME High Opex Offset Robust Reversions

<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: 146.859px; height: 12px;"><p> </p></td><td style="width: 143.312px; height: 12px;"><p>AREIT</p></td><td style="width: 147.344px; height: 12px;"><p>MINT</p></td><td style="width: 145.031px; height: 12px;"><p>AAREIT</p></td><td style="width: 143.453px; height: 12px;"><p>EREIT</p></td></tr><tr><td style="width: 146.859px; height: 13px;"><p>Period</p></td><td style="width: 143.312px; height: 13px;"><p>1H21</p></td><td style="width: 147.344px; height: 13px;"><p>1Q22</p></td><td style="width: 145.031px; height: 13px;"><p>1Q22</p></td><td style="width: 143.453px; height: 13px;"><p>2Q21</p></td></tr><tr><td style="width: 146.859px; height: 13px;"><p>Gross Revenue (S$ m)</p></td><td style="width: 143.312px; height: 13px;"><p>586.0 (+12.4% YoY)</p></td><td style="width: 147.344px; height: 13px;"><p>128.1 (+29.2% YoY)</p></td><td style="width: 145.031px; height: 13px;"><p>31.8 (+16.8% YoY)</p></td><td style="width: 143.453px; height: 13px;"><p>59.5 (+6.25% YoY)</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>NPI (S$ m)</p></td><td style="width: 143.312px; height: 12px;"><p>445.6 (+14.8% YoY)</p></td><td style="width: 147.344px; height: 12px;"><p>104.7 (+33.1% YoY)</p></td><td style="width: 145.031px; height: 12px;"><p>23.1 (+23.9% YoY)</p></td><td style="width: 143.453px; height: 12px;"><p>42.9 (+9.4% YoY)</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>DPU (S$ c)</p></td><td style="width: 143.312px; height: 12px;"><p>7.66 (+5.4% YoY)</p></td><td style="width: 147.344px; height: 12px;"><p>3.35 (+16.7% YoY)</p></td><td style="width: 145.031px; height: 12px;"><p>2.25 (+12.5% YoY)</p></td><td style="width: 143.453px; height: 12px;"><p>0.754 (13.9% YoY)</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>NAV per Unit (S$)</p></td><td style="width: 143.312px; height: 12px;"><p>2.27</p></td><td style="width: 147.344px; height: 12px;"><p>1.75</p></td><td style="width: 145.031px; height: 12px;"><p>1.35</p></td><td style="width: 143.453px; height: 12px;"><p>0.398</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>P/B (x)</p></td><td style="width: 143.312px; height: 12px;"><p>1.37</p></td><td style="width: 147.344px; height: 12px;"><p>1.65</p></td><td style="width: 145.031px; height: 12px;"><p>1.15</p></td><td style="width: 143.453px; height: 12px;"><p>1.1</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>Occupancy (%)</p></td><td style="width: 143.312px; height: 12px;"><p>91.3</p></td><td style="width: 147.344px; height: 12px;"><p>94.3 (Overall); 97.8 (North American); 93.4 (Singapore)</p></td><td style="width: 145.031px; height: 12px;"><p>95.7</p></td><td style="width: 143.453px; height: 12px;"><p>91.7</p></td></tr><tr><td style="width: 146.859px; height: 6px;"><p>Reversion (%)</p></td><td style="width: 143.312px; height: 6px;"><p>6.4</p></td><td style="width: 147.344px; height: 6px;"><p>Not Disclosed</p></td><td style="width: 145.031px; height: 6px;"><p>Not disclosed</p></td><td style="width: 143.453px; height: 6px;"><p>-0.2</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>Gearing (%)</p></td><td style="width: 143.312px; height: 12px;"><p>37.6</p></td><td style="width: 147.344px; height: 12px;"><p>31</p></td><td style="width: 145.031px; height: 12px;"><p>34.3</p></td><td style="width: 143.453px; height: 12px;"><p>42.9</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>Cost of Debt (%)</p></td><td style="width: 143.312px; height: 12px;"><p>2.4</p></td><td style="width: 147.344px; height: 12px;"><p>2.7</p></td><td style="width: 145.031px; height: 12px;"><p>2.8</p></td><td style="width: 143.453px; height: 12px;"><p>3.24</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>1 Yr Fwd Yield (%)</p></td><td style="width: 143.312px; height: 12px;"><p>5.06</p></td><td style="width: 147.344px; height: 12px;"><p>4.69</p></td><td style="width: 145.031px; height: 12px;"><p>6.1</p></td><td style="width: 143.453px; height: 12px;"><p>7.05</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>Debt Hedged (%)</p></td><td style="width: 143.312px; height: 12px;"><p>75.2</p></td><td style="width: 147.344px; height: 12px;"><p>95.8</p></td><td style="width: 145.031px; height: 12px;"><p>77.2</p></td><td style="width: 143.453px; height: 12px;"><p>75</p></td></tr><tr><td style="width: 146.859px; height: 12px;"><p>Target Price</p></td><td style="width: 143.312px; height: 12px;"><p>Under Review</p></td><td style="width: 147.344px; height: 12px;"><p>N/A</p></td><td style="width: 145.031px; height: 12px;"><p>Under Review</p></td><td style="width: 143.453px; height: 12px;"><p>N/A</p></td></tr><tr><td style="width: 146.859px; height: 13px;"><p>Rating</p></td><td style="width: 143.312px; height: 13px;"><p>Under Review</p></td><td style="width: 147.344px; height: 13px;"><p>N/A</p></td><td style="width: 145.031px; height: 13px;"><p>Under Review</p></td><td style="width: 143.453px; height: 13px;"><p>Under Review</p></td></tr></tbody></table>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) AREITMINTAAREITEREITPeriod1H211Q221Q222Q21Gross Revenue (S$ m)586.0 (+12.4% YoY)128.1 (+29.2% YoY)31.8 (+16.8% YoY)59.5 (+6.25% YoY)NPI (S$ m)445.6 (+14.8% YoY)104.7 (+33.1% YoY)23.1 (+23.9% YoY)42.9 (+9.4% YoY)DPU (S$ c)7.66 (+5.4% YoY)3.35 (+16.7% YoY)2.25 (+12.5% YoY)0.754 (13.9% YoY)NAV per Unit (S$)2.271.751.350.398P/B (x)1.371.651.151.1Occupancy (%)91.394.3 (Overall); 97.8 (North American); 93.4 (Singapore)95.791.7Reversion (%)6.4Not DisclosedNot disclosed-0.2Gearing (%)37.63134.342.9Cost of Debt (%)2.42.72.83.241 Yr Fwd Yield (%)5.064.696.17.05Debt Hedged (%)75.295.877.275Target PriceUnder ReviewN/AUnder ReviewN/ARatingUnder ReviewN/AUnder ReviewUnder Review

ASEAN Builder's Scoop (03Aug21) - AREIT Boosted by DPU-Accretive Acq

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a>/SPH announced a privatisation offer from <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>. Keppel is taking private SPH through via a scheme of arrangement. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>, the total consideration is S$2.099 per SPH share, which is a 39.9% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review) and an 11.6% premium to the share price of S$1.88 on 30 July 2021 (last trading day). </p><p>The privatisation proposal is the culmination of the SPH’s strategic review to unlock shareholder value. Keppel's offer was the best offer from several proposals evaluated, according to SPH management. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Post completion of the media business restructuring (requires approval at the EGM in Aug-Sep), SPH would be released from NPPA restrictions including the 5% shareholding cap restriction. Due to the impending lifting of the 5% shareholding cap, the SPH Board's preference was an offer for the whole SPH, to ensure the emergence of a controlling shareholder.</p><div class="content-highlight"><p>The key conditions for the successful privatisation are the completion of the media business restructuring, regulatory approval, SPH and Keppel shareholder approval. The modest premium/discount to historical long-term multiples and share prices is unlikely to excite long-term SPH shareholders. The offer price is largely designed to appeal to SPH shareholders lacking patience for SPH to unlock value through capital recycling (such as a listing of PBSA assets, disposal of investments), a post-COVID-19 recovery particularly in its property businesses and improving earnings quality through diversifying into defensive assets. Overall, while the implied offer price is not a knockout bid, it is ok in the context of our SoTP valuation (post-media business restructuring). </p></div>

Singapore Press Holdings (SPH SP)/SPH announced a privatisation offer from Keppel Corp (KEP SP). Keppel is taking private SPH through via a scheme of arrangement. The transaction involves Keppel offering S$0.668 cash per SPH share and 0.596 Keppel REIT units per SPH share along with SPH distributing-in-specie 0.782 SPH REIT units per SPH share. Based on the last close price of Keppel REIT (KREIT SP) and SPH REIT (SPHREIT SP), the total consideration is S$2.099 per SPH share, which is a 39.9% premium to the share price of S$1.50 on 30 March 2021 (announcement of SPH’s strategic review) and an 11.6% premium to the share price of S$1.88 on 30 July 2021 (last trading day). The privatisation proposal is the culmination of the SPH’s strategic review to unlock shareholder value. Keppel's offer was the best offer from several proposals evaluated, according to SPH management. The strategic review commenced with the announcement of the media business restructuring announced on 6 May. Post completion of the media business restructuring (requires approval at the EGM in Aug-Sep), SPH would be released from NPPA restrictions including the 5% shareholding cap restriction. Due to the impending lifting of the 5% shareholding cap, the SPH Board's preference was an offer for the whole SPH, to ensure the emergence of a controlling shareholder.The key conditions for the successful privatisation are the completion of the media business restructuring, regulatory approval, SPH and Keppel shareholder approval. The modest premium/discount to historical long-term multiples and share prices is unlikely to excite long-term SPH shareholders. The offer price is largely designed to appeal to SPH shareholders lacking patience for SPH to unlock value through capital recycling (such as a listing of PBSA assets, disposal of investments), a post-COVID-19 recovery particularly in its property businesses and improving earnings quality through diversifying into defensive assets. Overall, while the implied offer price is not a knockout bid, it is ok in the context of our SoTP valuation (post-media business restructuring). 

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Prime US REIT (PRIME SP)

ASEAN Builder's Scoop (14Sep21)

PRIME in-talks over WeWork lease; Parc Greenwich EC sold 65% at wkd launch; Aug21 new home sales fell 24% MoM; MEG launching 3 Luzon townships;...

SCCM Asia Research

(Non-SGX Report): Prime US REIT: Bottoming Out Expected at Year-End

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (04Aug21) - PRIME High Opex Offset Robust Reversions

PRIME high opex offset robust reversions; CERT maiden UK logistics acq; OUE 1H21 earnings reversed from a loss; ALI 1H21 NI +34% YoY on low base,...

SCCM Asia Research

ASEAN Builder's Scoop (03Aug21) - AREIT Boosted by DPU-Accretive Acq

AREIT boosted by DPU-accretive acq; KEP-SPH better yield for SPH holders; SMPH 1H21 supported by resi biz; DD launches buyback program; LPKR strong...

SCCM Asia Research

SPH’s Privatisation by Keppel

SPH announced a privatisation offer from Keppel for a total consideration is S$2.099 per share. While the implied offer price is not a knockout...

Arun George

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