In today’s briefing:
- Kenedix Office/Resi/Commercial Three-Way Merger – Size Matters and Index Flows Do Too
- Kenedix Merger: Office, Residential, Retail & Index Implications
- Hailan (2278 HK): Yeung Bets On Shareholder Apathy
- Kenedix Office Investment (8972 JP): Merger with Kenedix Residential and Kenedix Retail REIT
- LINK REIT – the Largest REIT in Asia, Firmly on a Post-Covid Recovery with Attractive Valuation
Kenedix Office/Resi/Commercial Three-Way Merger – Size Matters and Index Flows Do Too
- Today after the close, Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) announced a three-way merger for Nov 1.
- Kenedix Office REIT (KDO) will be the surviving entity, and what is now three REITs of ¥150-250bn in size will become one diversified REIT of ¥630-650bn.
- That will trigger a size uplift and should also trigger index inclusion.
Kenedix Merger: Office, Residential, Retail & Index Implications
- Kenedix Office Investment Co, Kenedix Residential Investment and Kenedix Retail REIT have announced a three-way absorption merger to create Kenedix Realty Investment Corporation.
- The increased size and liquidity of the merged entity will put the stock on the radar of active investors and there could be a re-rating higher.
- There will be some passive flows into the merged entity at the time of merger implementation and this will help the stock outperform its peers.
Hailan (2278 HK): Yeung Bets On Shareholder Apathy
- Back on the 8 May, small-cap PRC property play Hailan Holdings (2278 HK) announced a voluntary Offer from Yueng Man, Hailan’s controlling shareholder.
- The Offer Price is HK$3.38/share, a miserly 5% premium to last close, and a 60% discount to the RNAV. The Composite Doc is now out.
- The key condition is Yueng getting 90% of disinterested shareholders to tender. That looks a stretch, yet minorities are disengaged. Not one has turned up at the last three AGMs.
Kenedix Office Investment (8972 JP): Merger with Kenedix Residential and Kenedix Retail REIT
- The merger ratio is 0.67 Kenedix Office Investment Co (8972 JP)/KDO units per Kenedix Residential Investment (3278 JP)/KDR unit and 0.84 KDO units per Kenedix Retail REIT (3453 JP)/KRR unit.
- The merger is sensible due to scale (the merged entity will be the third-largest J REIT by asset size), expansion opportunities and improved capital recycling.
- The merger requires approval from all three sets of unitholders. We think this is likely as the deal metrics are fair for all three sets of unitholders.
LINK REIT – the Largest REIT in Asia, Firmly on a Post-Covid Recovery with Attractive Valuation
- We conducted fundamental analysis on Link REIT, the largest REIT In Asia, who owns and operates retail assets, office buildings and logistics in the APAC region
- Link REIT has strong track record for capital management, we expect that to continue. In the LT, Link REIT is on the path to grow its fund management business
- Link REIT is currently trading at 0.64x P/B and 6% dividend yield, which is attractive from a historical perspective
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