Singapore and emerging market real estate

Royston Foo

Equity Bottom-Up

On Friday evening, <a href="https://www.smartkarma.com/entities/12891" target="_blank" data-smartkarma-citation="entities:12891:1">United Industrial Corp (UIC SP)</a> (“UIC”) announced that it has agreed to acquire the 24.27% interests in Marina Centre Holdings Pte Ltd (“MCH”) for an aggregate consideration of S$485,333,333.In connection with the MCH acquisition, MCH has also agreed to acquire 25.0% of the issued ordinary shares in Aquamarina Hotel Pte Ltd (“AHPL”) for an aggregate consideration of S$190.0 mil. AHPL owns the Marina Mandarin Singapore.The true transaction valuation of AHPL based on Price-to-RNAV will be 1.18x, lower than the accounting Price-to-NAV of 3.65x. The true transaction valuation of MCH based on Price-to-RNAV will be 0.77x, lower than the accounting Price-to-NAV of 1.18x.Marina Square falls within the Marina Centre area and meets the criteria for the SDI Scheme. In view of the challenges that the current Marina Square development faces as well as the opportunity to tap on the SDI Scheme to increase the plot ratio and extend the leasehold of the site, there are enough merits for UIC and UOL Group to consider redevelopment of Marina Square.The projected RNAV of UIC is approximately S$7,779 mil or S$5.43 per share. This translates to an undemanding Price-to-RNAV of 0.54x.Using Wheelock Properties’ privatization Price-to-RNAV as a reference, we assume a 0.75x to 0.80x Price-to-RNAV ratio for UIC. This will translate to a fair value of S$4.07 to S$4.34 per share.Investors should take note of the low free-float and trading volume in UIC shares.

On Friday evening, United Industrial Corp (UIC SP) (“UIC”) announced that it has agreed to acquire the 24.27% interests in Marina Centre Holdings Pte Ltd (“MCH”) for an aggregate consideration of S$485,333,333.In connection with the MCH acquisition, MCH has also agreed to acquire 25.0% of the issued ordinary shares in Aquamarina Hotel Pte Ltd (“AHPL”) for an aggregate consideration of S$190.0 mil. AHPL owns the Marina Mandarin Singapore.The true transaction valuation of AHPL based on Price-to-RNAV will be 1.18x, lower than the accounting Price-to-NAV of 3.65x. The true transaction valuation of MCH based on Price-to-RNAV will be 0.77x, lower than the accounting Price-to-NAV of 1.18x.Marina Square falls within the Marina Centre area and meets the criteria for the SDI Scheme. In view of the challenges that the current Marina Square development faces as well as the opportunity to tap on the SDI Scheme to increase the plot ratio and extend the leasehold of the site, there are enough merits for UIC and UOL Group to consider redevelopment of Marina Square.The projected RNAV of UIC is approximately S$7,779 mil or S$5.43 per share. This translates to an undemanding Price-to-RNAV of 0.54x.Using Wheelock Properties’ privatization Price-to-RNAV as a reference, we assume a 0.75x to 0.80x Price-to-RNAV ratio for UIC. This will translate to a fair value of S$4.07 to S$4.34 per share.Investors should take note of the low free-float and trading volume in UIC shares. 

Mandarin Oriental International (MAND SP)

UIC Ltd – Taking Full Control of Marina Square with UOL Group. Exciting Times Ahead.

Singapore Land Group

UIC Ltd – Taking Full Control of Marina Square with UOL Group. Exciting Times Ahead.