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)

Singapore Real estate / Thematic (Sector/Industry)

<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. 

Frasers Property Thailand Industrial REIT (FTREIT TB)

Frasers Property Thailand Industrial REIT

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