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

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934" rel="noopener">ESR-REIT (EREIT SP)</a> to divest non-core industrial building for S$11.1m; 8% premium to book value (BUY; TP S$0.48/unit)</h3><ul><li>EREIT has entered into an agreement to divest an industrial building, 45 Changi South Avenue 2, for S$11.1m, a 7.8% premium to the property's independent valuation of S$10.3m</li><li>The net proceeds will be used to repay outstanding borrowings, finance upcoming asset enhancements and/or fund general working capital requirements. The divestment represents an opportunity for EREIT to divest one of their non-core assets at a premium to book value</li><li>The four-storey general industrial building has a GFA of 73,684sqft.</li></ul>Comments: Following the divestment of two assets in Apr21, EREIT continued to review its portfolio and divesting non-core assets. The multi-tenanted general industrial building contributed S$0.5m (or 0.2%) to EREIT’s FY20 Revenue and accounts for 0.7% of FY20 NAV. Assuming a 71.4% NPI margin (based on FY20 NPI Margin), the divestment yield would be 3.22%. The capital recycled into AEIs would lift future DPU (expected to return yield to cost of c.7-9%), if not maintained, should the proceeds are used to pare down debt (avg. cost of debt of 3.24%). The Sale Consideration also represents 33.7% higher than its purchase price of S$8.3m (acquired in 25Jul06). We have a BUY rating with TP of S$0.48/Unit.

SingaporeESR-REIT (EREIT SP) to divest non-core industrial building for S$11.1m; 8% premium to book value (BUY; TP S$0.48/unit)EREIT has entered into an agreement to divest an industrial building, 45 Changi South Avenue 2, for S$11.1m, a 7.8% premium to the property's independent valuation of S$10.3mThe net proceeds will be used to repay outstanding borrowings, finance upcoming asset enhancements and/or fund general working capital requirements. The divestment represents an opportunity for EREIT to divest one of their non-core assets at a premium to book valueThe four-storey general industrial building has a GFA of 73,684sqft.Comments: Following the divestment of two assets in Apr21, EREIT continued to review its portfolio and divesting non-core assets. The multi-tenanted general industrial building contributed S$0.5m (or 0.2%) to EREIT’s FY20 Revenue and accounts for 0.7% of FY20 NAV. Assuming a 71.4% NPI margin (based on FY20 NPI Margin), the divestment yield would be 3.22%. The capital recycled into AEIs would lift future DPU (expected to return yield to cost of c.7-9%), if not maintained, should the proceeds are used to pare down debt (avg. cost of debt of 3.24%). The Sale Consideration also represents 33.7% higher than its purchase price of S$8.3m (acquired in 25Jul06). We have a BUY rating with TP of S$0.48/Unit.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

RL Commercial REIT / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/rl-commercial-reit" target="_blank" data-smartkarma-citation="entities:33809:1" rel="noopener">RL Commercial REIT (1888938D PM)</a>/RLC REIT is the REIT platform of <a href="https://www.smartkarma.com/entities/robinsons-land-corp" target="_blank" data-smartkarma-citation="entities:8831:1" rel="noopener">Robinsons Land Co (RLC PM)</a>, one of the leading property developers in the Philippines. RLC REIT has set its final offer price at PHP6.45 per unit, which is 12% below the previous maximum price of PHP7.31 per unit.The official subscription period will run from 25 August to 3 September. The listing date is set for 14 September. RLC REIT’s listing will be quickly followed by the IPO of <a href="https://www.smartkarma.com/entities/megaworld-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:33806:1" rel="noopener">Megaworld Real Estate Investment Trust (MREIT PM)</a> – <a href="https://www.smartkarma.com/insights/megaworld-reit-mreit-ipo-at-the-front-of-the-back-office" target="_blank" data-smartkarma-citation="insights:55851" rel="noopener">Megaworld REIT (MREIT) IPO: At the Front of the Back Office</a>.<div class="content-highlight">In <a href="https://www.smartkarma.com/insights/rl-commerical-reit-ipo-initiation-a-big-one" target="_blank" data-smartkarma-citation="insights:56158" rel="noopener">RL Commerical REIT IPO Initiation: A Big One</a>, we noted that RLC REIT has attractive characteristics and will be the largest REIT as measured by market cap, asset size, and geographical spread to be listed on the PSE. Our valuation analysis suggests that the final IPO price is reasonable. </div>

RL Commercial REIT (1888938D PM)/RLC REIT is the REIT platform of Robinsons Land Co (RLC PM), one of the leading property developers in the Philippines. RLC REIT has set its final offer price at PHP6.45 per unit, which is 12% below the previous maximum price of PHP7.31 per unit.The official subscription period will run from 25 August to 3 September. The listing date is set for 14 September. RLC REIT’s listing will be quickly followed by the IPO of Megaworld Real Estate Investment Trust (MREIT PM) – Megaworld REIT (MREIT) IPO: At the Front of the Back Office.In RL Commerical REIT IPO Initiation: A Big One, we noted that RLC REIT has attractive characteristics and will be the largest REIT as measured by market cap, asset size, and geographical spread to be listed on the PSE. Our valuation analysis suggests that the final IPO price is reasonable. 

RL Commerical REIT IPO: Valuation Insights

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

RL Commercial REIT (RREIT), sponsored by Robinsons Land Corporation (RLC), aims to raise up to US$484m in its Philippines listing.  It will be a 100% secondary shares offering, where the Sponsor will be selling part of its stake. RREIT is a commercial REIT and its initial portfolio will consist of 14 PEZA-accredited commercial real estate properties located in CBDs across Metro Manila and key cities outside Metro Manila, namely, Naga, Tarlac, Cebu and Davao. We have looked at various aspects of the REIT in our previous notes:<ul>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/rl-commercial-reit-pre-ipo-motley-crew-of-assets-has-weathered-covid-well" target="_blank" rel="noopener">RL Commercial REIT Pre-IPO - Motley crew of assets has weathered COVID well</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/rl-commercial-reit-and-mreit-peer-comparison-one-is-much-better-shape" target="_blank" rel="noopener">RL Commercial REIT and MREIT peer comparison - One is in a much better shape</a></li>
</ul>In this note, we will comment on valuation and run the deal through our ECM framework.

RL Commercial REIT (RREIT), sponsored by Robinsons Land Corporation (RLC), aims to raise up to US$484m in its Philippines listing.  It will be a 100% secondary shares offering, where the Sponsor will be selling part of its stake. RREIT is a commercial REIT and its initial portfolio will consist of 14 PEZA-accredited commercial real estate properties located in CBDs across Metro Manila and key cities outside Metro Manila, namely, Naga, Tarlac, Cebu and Davao. We have looked at various aspects of the REIT in our previous notes:
RL Commercial REIT Pre-IPO - Motley crew of assets has weathered COVID well
RL Commercial REIT and MREIT peer comparison - One is in a much better shape
In this note, we will comment on valuation and run the deal through our ECM framework.

RL Commercial REIT IPO - Needs to Come at a Discount

RL Commercial REIT (RREIT), sponsored by Robinsons Land Corporation (RLC), aims to raise up to US$491m in its Philippines listing. In addition, MREIT, sponsored by Megaworld, aims to raise up to US$540m in its Philippines listing.  Both will be a 100% secondary shares offering. We have looked at both the REITs individually in our earlier notes:<ul>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/rl-commercial-reit-pre-ipo-motley-crew-of-assets-has-weathered-covid-well" target="_blank" rel="noopener">RL Commercial REIT Pre-IPO - Motley crew of assets has weathered COVID well</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/mreit-pre-ipo-mediocre-performance-convoluted-lease-low-asset-yield" target="_blank" rel="noopener">MREIT Pre-IPO - Mediocre performance, convoluted lease, low asset yield</a></li>
</ul>Apart from these two REITs we have also covered prior listings of the three currently listed REITs in the Philippines:<ul>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/filinvest-reit-ipo-almost-like-a-single-asset-reit-covid-hasn-t-been-kind" target="_blank" rel="noopener">Filinvest REIT IPO - Almost like a single asset REIT, COVID hasn’t been kind</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/ddpm-reit-pre-ipo-brand-new-assets-but-not-with-the-best-of-outlooks" target="_blank" rel="noopener">DDMP REIT Pre-IPO - Brand new assets but not with the best of outlooks</a></li>
<li dir="ltr" aria-level="1"><a href="https://www.smartkarma.com/insights/areit-pre-ipo-first-philippines-reit-listing-comes-with-its-peculiarities" target="_blank" rel="noopener">AREIT Pre-IPO - First REIT listing comes with its peculiarities</a></li>
</ul>In this note we will undertake a peer comparison across for the two listing candidates and the three currently listed REITs.

RL Commercial REIT (RREIT), sponsored by Robinsons Land Corporation (RLC), aims to raise up to US$491m in its Philippines listing. In addition, MREIT, sponsored by Megaworld, aims to raise up to US$540m in its Philippines listing.  Both will be a 100% secondary shares offering. We have looked at both the REITs individually in our earlier notes:
RL Commercial REIT Pre-IPO - Motley crew of assets has weathered COVID well
MREIT Pre-IPO - Mediocre performance, convoluted lease, low asset yield
Apart from these two REITs we have also covered prior listings of the three currently listed REITs in the Philippines:
Filinvest REIT IPO - Almost like a single asset REIT, COVID hasn’t been kind
DDMP REIT Pre-IPO - Brand new assets but not with the best of outlooks
AREIT Pre-IPO - First REIT listing comes with its peculiarities
In this note we will undertake a peer comparison across for the two listing candidates and the three currently listed REITs.

RL Commercial REIT and MREIT Peer Comparison - One Is Much Better Shape

<a href="https://www.smartkarma.com/entities/rl-commercial-reit" target="_blank" data-smartkarma-citation="entities:33809:1" rel="noopener">RL Commercial REIT (1888938D PM)</a>/RLC REIT is the REIT platform of <a href="https://www.smartkarma.com/entities/robinsons-land-corp" target="_blank" data-smartkarma-citation="entities:8831:1" rel="noopener">Robinsons Land Co (RLC PM)</a>, one of the leading property developers in the Philippines. RLC REIT has opened its books for an IPO in the Philippines to raise PHP24.4 billion ($483 million) through a secondary offering of 3.3 billion units (33.6% of outstanding units) at a maximum price of PHP7.31 per unit. The bookbuilding period will end on 20 August with pricing is set for 20 August. The official subscription period will run from 25 August to 3 September. RLC REIT’s portfolio consists of 14 commercial real estate assets across the Philippines with an aggregate Portfolio GLA of 425,315 sqm and an appraised value of PHP73,884 million ($1,522 million).RLC REIT’s IPO will the third REIT listing on the PSE after <a href="https://www.smartkarma.com/entities/areit-ayalaland-reit" target="_blank" data-smartkarma-citation="entities:28856:1" rel="noopener">Areit (AyalaLand REIT) (AREIT PM)</a>, <a href="https://www.smartkarma.com/entities/ddmp-reit" target="_blank" data-smartkarma-citation="entities:32154:1" rel="noopener">DDMP REIT (DDMPR PM)</a> and <a href="https://www.smartkarma.com/entities/filinvest-reit" target="_blank" data-smartkarma-citation="entities:33764:1" rel="noopener">Filinvest REIT (FILRT PM)</a>. RLC REIT’s listing will be quickly followed by the IPO of <a href="https://www.smartkarma.com/entities/megaworld-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:33806:1" rel="noopener">Megaworld Real Estate Investment Trust (MREIT PM)</a> – <a href="https://www.smartkarma.com/insights/megaworld-reit-mreit-ipo-at-the-front-of-the-back-office" target="_blank" data-smartkarma-citation="insights:55851" rel="noopener">Megaworld REIT (MREIT) IPO: At the Front of the Back Office</a>.<div class="content-highlight">On balance, we believe that RLC REIT has attractive characteristics and will be the largest REIT as measured by market cap, asset size, and geographical spread to be listed on the PSE. We will discuss valuation in our next note.</div>

RL Commercial REIT (1888938D PM)/RLC REIT is the REIT platform of Robinsons Land Co (RLC PM), one of the leading property developers in the Philippines. RLC REIT has opened its books for an IPO in the Philippines to raise PHP24.4 billion ($483 million) through a secondary offering of 3.3 billion units (33.6% of outstanding units) at a maximum price of PHP7.31 per unit. The bookbuilding period will end on 20 August with pricing is set for 20 August. The official subscription period will run from 25 August to 3 September. RLC REIT’s portfolio consists of 14 commercial real estate assets across the Philippines with an aggregate Portfolio GLA of 425,315 sqm and an appraised value of PHP73,884 million ($1,522 million).RLC REIT’s IPO will the third REIT listing on the PSE after Areit (AyalaLand REIT) (AREIT PM), DDMP REIT (DDMPR PM) and Filinvest REIT (FILRT PM). RLC REIT’s listing will be quickly followed by the IPO of Megaworld Real Estate Investment Trust (MREIT PM) – Megaworld REIT (MREIT) IPO: At the Front of the Back Office.On balance, we believe that RLC REIT has attractive characteristics and will be the largest REIT as measured by market cap, asset size, and geographical spread to be listed on the PSE. We will discuss valuation in our next note.

RL Commerical REIT IPO Initiation: A Big One

Philippines

AREIT, Inc. operates as a real estate investment trust. The Company owns and invests in income-producing commercial portfolio of office, retail, and hotel properties. AREIT serves clients in Philippines.

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Areit (AyalaLand REIT) (AREIT PM)

ASEAN Builder's Scoop (31Aug21)

EREIT non-core divestment continues; Park Hotel group losses CQ hotel mgmt; Mapletree expands UK student accommodation assets; AREIT growing AUM;...

SCCM Asia Research

RL Commerical REIT IPO: Valuation Insights

RLC REIT has set its final offer price at PHP6.45 per unit, which is 12% below the previous maximum price of PHP7.31 per unit. Our valuation...

Arun George

RL Commercial REIT IPO - Needs to Come at a Discount

RL Commercial REIT (RREIT), sponsored by Robinsons Land Corporation (RLC), aims to raise up to US$484m in its Philippines listing.

Sumeet Singh

RL Commercial REIT and MREIT Peer Comparison - One Is Much Better Shape

RL Commercial REIT (RREIT) aims to raise up to US$491m in its Philippines listing. In addition, MREIT, sponsored by Megaworld, aims to raise up to...

Sumeet Singh

RL Commerical REIT IPO Initiation: A Big One

RLC REIT has opened its books for a PSE IPO to $483 million. It has attractive characteristics and will be the largest PSE-listed REIT in terms of...

Arun George

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