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

SCCM Asia Research

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

Laos Real estate / Thematic (Sector/Industry)

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/capitaland-china-trust" target="_blank" data-smartkarma-citation="entities:8859" rel="noopener">CapitaLand China Trust (CLCT SP)</a> maiden acquisition of four prime logistics properties; DPU accretive by +3.5%</h3><ul><li>CLCT has proposed to acquire a portfolio of four prime logistics assets in Shanghai, Kunshan, Wuhan and Chengdu, which are key logistics hubs in China. This marks CLCT’s first foray into China’s logistics sector and increases its exposure to new economy asset classes, following CLCT’s maiden purchase of a portfolio of five business park properties. The acquisition is based on an aggregate agreed property value of RMB1,683.4m (~S$350.7m), representing a discount of ~0.6% to the aggregate valuation by an independent valuer. CLCT’s total cost is estimated at ~S$297.7m</li><li>The portfolio of four modern logistics properties has a total GFA of 265,259sqm, with a committed occupancy of 96.3% and WALE of 2.1 years as at 31Aug21. Three of the properties were completed between 2016-18, while the fourth was completed in 2010. Classification of tenant base by GRI includes logistics and warehouse (57%), E-commerce (37%) and others (6%). More than 80% of the leases have rental escalations in place, with a step-up ranging from 3-5% per annum</li><li>The transaction implies NPI yield of 5.0% (including rent support and rent-free reimbursement). CLCT intends to finance the acquisition through a 60% debt and 40% EFR (raising of up to ~S$120m), which will be DPU accretive by +3.5% on a 31Dec21 pro forma basis. This transaction is expected to be completed by end of 2021. Post transaction gearing will be 38.2% (from 35.9%)</li><li>Post-acquisition, the proportion of new economy assets in CLCT’s enlarged portfolio will rise to 21.4% from 15.3% by asset value. AUM will increase by 8.0% to S$4,729.2m. Given the longer land tenure of China’s logistics properties at 50 years at inception compared with retail assets at 40 years at inception, the remaining weighted average land tenure expiry of CLCT’s enlarged portfolio will positively extend by 1.94 years post-acquisition</li><li>Under its five-year acquisition growth roadmap, CLCT plans to achieve a balanced portfolio mix of 40% in commercial/integrated developments, 30% in retail properties and 30% in new economy assets (including business parks, logistics and data centers) by 2026.</li></ul>

SingaporeCapitaLand China Trust (CLCT SP) maiden acquisition of four prime logistics properties; DPU accretive by +3.5%CLCT has proposed to acquire a portfolio of four prime logistics assets in Shanghai, Kunshan, Wuhan and Chengdu, which are key logistics hubs in China. This marks CLCT’s first foray into China’s logistics sector and increases its exposure to new economy asset classes, following CLCT’s maiden purchase of a portfolio of five business park properties. The acquisition is based on an aggregate agreed property value of RMB1,683.4m (~S$350.7m), representing a discount of ~0.6% to the aggregate valuation by an independent valuer. CLCT’s total cost is estimated at ~S$297.7mThe portfolio of four modern logistics properties has a total GFA of 265,259sqm, with a committed occupancy of 96.3% and WALE of 2.1 years as at 31Aug21. Three of the properties were completed between 2016-18, while the fourth was completed in 2010. Classification of tenant base by GRI includes logistics and warehouse (57%), E-commerce (37%) and others (6%). More than 80% of the leases have rental escalations in place, with a step-up ranging from 3-5% per annumThe transaction implies NPI yield of 5.0% (including rent support and rent-free reimbursement). CLCT intends to finance the acquisition through a 60% debt and 40% EFR (raising of up to ~S$120m), which will be DPU accretive by +3.5% on a 31Dec21 pro forma basis. This transaction is expected to be completed by end of 2021. Post transaction gearing will be 38.2% (from 35.9%)Post-acquisition, the proportion of new economy assets in CLCT’s enlarged portfolio will rise to 21.4% from 15.3% by asset value. AUM will increase by 8.0% to S$4,729.2m. Given the longer land tenure of China’s logistics properties at 50 years at inception compared with retail assets at 40 years at inception, the remaining weighted average land tenure expiry of CLCT’s enlarged portfolio will positively extend by 1.94 years post-acquisitionUnder its five-year acquisition growth roadmap, CLCT plans to achieve a balanced portfolio mix of 40% in commercial/integrated developments, 30% in retail properties and 30% in new economy assets (including business parks, logistics and data centers) by 2026.

ASEAN Builder's Scoop (12Oct21)