Friday, July 12, 2013

SPH REIT : Initial Highlights (UOBKH)

SPH REIT : Initial Highlights
Good morning, SPH REIT filed their preliminary prospectus yesterday evening. Below are some initial highlights from the prospectus.

ISSUE STATISTICS 

Offer Size: 308.884m new shares 
(assuming over-allotment is not exercised) 
  Public Tranche – 83.982m shares
 
  Placement Tranche –224.902m shares
 
Offering Price: S$0.85 – S$0.90
 
NAV per share (post IPO): S$0.89
 
Market Cap (post-IPO): S$2,250.9m (based on Maximum Offer Price S$0.90)
Lead Manager: Credit Suisse, DBS, OCBC Bank
 
Co-leads: CIMB, Nomura
 


Key Highlights:
 

Portfolio:
 Paragon (81%), an upscale retail mall and medical suite/office property on Orchard Road (99-year leasehold carved from freehold title) and Clementi Mall (19%), a mid-market suburban mall in Clementi that is connected to the Clementi MRT (99-year leasehold). 

ROFR: Right of First Refusal (ROFR)
 over sponsor’s (SPH) income-producing retail properties.  Initial ROFR property is The Seletar Mall, which is due to complete in December 2014. 

Cornerstone Investors:
 Great Eastern Life, Hong Leong Asset Management, Morgan Stanley Investment Management, Newton Investment Management and Norges Bank. 

Income support:
 Initial income support to ensure Clementi Mall achieves a Net Property Income (NPI) of S$31m annually through an initial top-up of S$20m.  Projected income support of S$4.7m in FY14 represents 18% of NPI for Clementi Mall or about 3% of SPH REIT’s FY14 NPI. 

Projected Initial/Forward Yields:
 5.6%-5.8% in FY2013 and 5.8-6.0% in FY2014.   

Management:
 CEO : Ms Susan Leng – Former GM of Capitol Investment Holdings, which won the tender to redevelop Capitol Theatre, Capitol Building  and Stamford House into an integrated mixed-use development.  From 1997-2004, Ms Leng was the GM at O290, an indirect wholly-owned subsidiary of the sponsor, where she was responsible for the profitability and growth of Paragon. 

Initial Gearing:
 27.3% - 31.3%.  This compares with average 34% for retail S-REITs. 

Summary of Initial Portfolio:

Initial Portfolio summary as at 
28 February 2013
Paragon
Clementi 
Mall
Initial 
Portfolio
Property Type
Retail and
medical
suite/office
Retail
Retail and
medical
suite/office
GFA (sq ft)
1,017,707
289,877
1,307,584
NLA (sq ft)
706,690
192,089
898,779
Number of tenants
285
146
431
Committed Occupancy (%)
100.0
100.0
100.0
2012 annual retail sales (S$m)(2)
738
228
966
Sales per sq ft retail NLA per month (S$)
130
114
125
Projection Year FY2014 Net Property
Income (S$m)
120.4
31.0
151.4
Average independent valuation (S$m)
2,500.0
570.5
3,070.5
Net Property Income yield (%)
4.8
5.4
4.9




Source:  SPH REIT prospectus


Initial Yield:
Based on offering price of S$0.90-0.85
2HFY13F
FY2014F
DPU (S cents)
2.46
5.10
With income support  (%)
5.58% (S$0.90)
5.79% (S$0.85)
5.79% (S$0.90)
6.00% (S$0.85)
Without income support (%)
5.35% (S$0.90)
5.54% (S$0.85)
5.58% (S$0.90)
5.78% (S$0.85)




Source:  SPH REIT prospectus


Sources and Use of Funds:
Sources
S$m
Applications
S$m
Offering
310.1
Acquisition of the properties
3,070.5
Consideration Units
1,602.4
Transaction costs
29.6
Cornerstone Units
213.4
Plant and equipment
0.8
Loan Facility
975.0


Total
3,100.8
Total
3,100.8




Source:  SPH REIT prospectus


Principal Unitholders Upon Completion of the Offering



Source:  SPH REIT prospectus, UOB Kay Hian


Peer Comparison

Source: Bloomberg, UOB Kay Hian, SPH REIT prospectus


Source/Extract/Excerpts/来源/转贴/摘录: UOB Kay Hian
Publish date: 11/07/13

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