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/eagle-hospitality-trust" target="_blank" data-smartkarma-citation="entities:28059" rel="noopener">Eagle Hospitality Trust (EAGLEHT SP)</a> five properties put on auction received qualified bids</h3>
<p>Five out of 15 properties put up for auction have received qualified bids in the second bid round for EAGLEHT Chapter 11 assets held on 20May. The DBS trustee said its Chapter 11 entities received qualified bids for Sheraton Denver Tech Center, Four Points by Sheraton San Jose Airport, Embassy Suites by Hilton Anaheim North, Doubletree by Hilton Salt Lake City Airport, and Hilton Atlanta Northeast. The auction resulted in a US$24.8m net increase in the aggregate consideration for EAGLEHT's auctioned properties. A stalking-horse bidder, Madison Phoenix LLC, an affiliate of Monarch Alternative Capital, emerged successful for its bid of nine non-auctioned properties with an aggregate purchase price of US$326.5m. This is in accordance with the terms of the stalking-horse agreement between entities of EAGLEHT and the bidder, which effectively sets an opening price or price floor to protect the company selling the assets at low bids. Properties remaining in EAGLEHT's portfolio upon approval of the sale would comprise Queen Mary Long Beach, Delta Woodbridge, Hilton Houston Galleria Area and Crowne Plaza Dallas Near Galleria-Addison.</p>

Singapore

Eagle Hospitality Trust (EAGLEHT SP) five properties put on auction received qualified bids
Five out of 15 properties put up for auction have received qualified bids in the second bid round for EAGLEHT Chapter 11 assets held on 20May. The DBS trustee said its Chapter 11 entities received qualified bids for Sheraton Denver Tech Center, Four Points by Sheraton San Jose Airport, Embassy Suites by Hilton Anaheim North, Doubletree by Hilton Salt Lake City Airport, and Hilton Atlanta Northeast. The auction resulted in a US$24.8m net increase in the aggregate consideration for EAGLEHT's auctioned properties. A stalking-horse bidder, Madison Phoenix LLC, an affiliate of Monarch Alternative Capital, emerged successful for its bid of nine non-auctioned properties with an aggregate purchase price of US$326.5m. This is in accordance with the terms of the stalking-horse agreement between entities of EAGLEHT and the bidder, which effectively sets an opening price or price floor to protect the company selling the assets at low bids. Properties remaining in EAGLEHT's portfolio upon approval of the sale would comprise Queen Mary Long Beach, Delta Woodbridge, Hilton Houston Galleria Area and Crowne Plaza Dallas Near Galleria-Addison.

ASEAN Builder's Scoop (25May21) - EAGLEHT Properties Received Qualified Bids

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/ec-world-reit" target="_blank" data-smartkarma-citation="entities:22842" rel="noopener">EC World Reit (ECWREIT SP)</a> renews second major lease in Hengde Logistics (BUY; TP S$0.80/unit)</h3><p>ECWREIT has renewed a second major lease of some 74,057sqm in relation to Hengde Logistics with China Tobacco Zhejiang Industrial. The second major lease (Phase 2 renewal) came after a successful renewal of 152,752sqm of space in Oct20 (Phase 1 renewal). During the Phase 2 renewal, China Tobacco committed to a lease term of 2.65 years to coincide with the expiry of the Phase 1 renewal. Both leases with China Tobacco will expire on 31Dec23. Although the renewal rental rate contracted for the Phase 2 renewal is 8.8% lower than the existing rental rate, the effective blended rental rate of Phase 1 renewal and Phase 2 renewal is 2.2% lower than the effective blended rental rate of the expiring China Tobacco leases at Hengde Logistics Phase 1 and Phase 2. Similar to the Phase 1 Renewal, China Tobacco informed that they will no longer require the warehouse management services for the Phase 2 Renewal due to their internal restructuring. ECWREIT expects the Phase 2 Renewal to reduce ECWREIT’s revenue by 0.8%.</p><p>Comments: The Phase 2 renewal rate at -8.8% came as a surprise with a high single-digit negative reversion, compared the positive reversion of +1.1% in its Phase 1 renewal. This also deviates from mgmt.’s earlier guidance of “similar renewal terms as Phase 1”, which we expect should be “flattish”. While pending further information on the rationale behind such renewal, on a “all-in” basis, we expect a ~3% decrease from FY20 Gross Revenue following its two renewals. We currently have a BUY rating and TP of S$0.80/unit, and will review our recommendations upon results release tomorrow.</p><h3><a href="https://www.smartkarma.com/entities/eagle-hospitality-trust" target="_blank" data-smartkarma-citation="entities:28059" rel="noopener">Eagle Hospitality Trust (EAGLEHT SP)</a> Dallas hotel sale falls through after missed deposit deadline</h3><p>EAGLEHT will not be going ahead with the planned sale of its property in Texas, as the buyer missed the deadline for a deposit. The sale and purchase agreement for Crowne Plaza Dallas Near Galleria-Addison (CPDG) was thus terminated on 4May. EAGLEHT’s wholly-owned subsidiary will hold on to initial deposits of US$1.45m in the aborted US$18.5m deal with buyer Lockwood Development Partners. Numerous EHT entities had filed for Chapter 11 bankruptcy in a Delaware court in 2021. But CPDG is not directly owned by a Chapter 11 entity, so it does not enjoy bankruptcy protection under Section 363 of the United States Bankruptcy Code. Amid the Chapter 11 entities’ limited ability to support CPDG, the decision was made to sell off CPDG, in the face of potential difficulty fetching a higher price in an auction, and the risk that a lender would foreclose on the property after mortgage loan defaults. But the EAGLEHT unit involved in the sale axed the agreement as the buyer did not meet the 3May deadline for an extra deposit of US$1.05m.</p><h3>One Bernam records 80 units sales (23% take-up rate) on its opening weekend</h3><p>MCC Group and Hao Yuan Investment said that over 80 units or 80% of the first phase of 100 units released at their JV project, One Bernam, were sold. This means ~23% out of a total of the 351units in the 99-year leasehold, mixed-use development, has been sold at ~S$2,650psf ASP. More than 90% of the units that were taken up were one- and two-bedroom units sized from 441-872sqft, priced upwards of S$1.017m. Most of the buyers are said to be Singapore citizens and Permanent Residents. In addition to the 351 residential units, One Bernam contains a two-storey retail podium of 15,726sqft, and one floor of serviced apartments with 13 keys. While one- and two-bedroom units make up 91% of the residences in the project, there are 29 three-bedroom apartments of 1,421sqft. There are also two units of three-bedroom penthouses with sizes of 1,744-1,948sqft, while the largest penthouse is 4,306sqft in size and contains five bedrooms. </p><h3>Biggest penthouse at Park Nova sold at S$5,838psf, a record for Orchard Boulevard area</h3><p>Park Nova, Shun Tak Holdings’ luxury condo in Singapore’s Orchard Boulevard-Tomlinson area, has recorded five units sales for well over $100m. The two biggest five-bedroom penthouses in the 54-unit luxury condo at 18 Tomlinson Road fetched S$34.438m and S$26.026m, respectively. The biggest penthouse of 5,899sqft garnered interest from more than one party and almost had to be sold via balloting. However, one party prevailed and emerged the eventual buyer at S$34.438m or S$5,838psf. The transaction price of S$26.026m for the second biggest penthouse of 4,499sqft, worked out to S$5,785psf. The third and smallest penthouse of 3,229sqft is also believed to have been sold for above S$17m.</p>

SingaporeEC World Reit (ECWREIT SP) renews second major lease in Hengde Logistics (BUY; TP S$0.80/unit)ECWREIT has renewed a second major lease of some 74,057sqm in relation to Hengde Logistics with China Tobacco Zhejiang Industrial. The second major lease (Phase 2 renewal) came after a successful renewal of 152,752sqm of space in Oct20 (Phase 1 renewal). During the Phase 2 renewal, China Tobacco committed to a lease term of 2.65 years to coincide with the expiry of the Phase 1 renewal. Both leases with China Tobacco will expire on 31Dec23. Although the renewal rental rate contracted for the Phase 2 renewal is 8.8% lower than the existing rental rate, the effective blended rental rate of Phase 1 renewal and Phase 2 renewal is 2.2% lower than the effective blended rental rate of the expiring China Tobacco leases at Hengde Logistics Phase 1 and Phase 2. Similar to the Phase 1 Renewal, China Tobacco informed that they will no longer require the warehouse management services for the Phase 2 Renewal due to their internal restructuring. ECWREIT expects the Phase 2 Renewal to reduce ECWREIT’s revenue by 0.8%.Comments: The Phase 2 renewal rate at -8.8% came as a surprise with a high single-digit negative reversion, compared the positive reversion of +1.1% in its Phase 1 renewal. This also deviates from mgmt.’s earlier guidance of “similar renewal terms as Phase 1”, which we expect should be “flattish”. While pending further information on the rationale behind such renewal, on a “all-in” basis, we expect a ~3% decrease from FY20 Gross Revenue following its two renewals. We currently have a BUY rating and TP of S$0.80/unit, and will review our recommendations upon results release tomorrow.Eagle Hospitality Trust (EAGLEHT SP) Dallas hotel sale falls through after missed deposit deadlineEAGLEHT will not be going ahead with the planned sale of its property in Texas, as the buyer missed the deadline for a deposit. The sale and purchase agreement for Crowne Plaza Dallas Near Galleria-Addison (CPDG) was thus terminated on 4May. EAGLEHT’s wholly-owned subsidiary will hold on to initial deposits of US$1.45m in the aborted US$18.5m deal with buyer Lockwood Development Partners. Numerous EHT entities had filed for Chapter 11 bankruptcy in a Delaware court in 2021. But CPDG is not directly owned by a Chapter 11 entity, so it does not enjoy bankruptcy protection under Section 363 of the United States Bankruptcy Code. Amid the Chapter 11 entities’ limited ability to support CPDG, the decision was made to sell off CPDG, in the face of potential difficulty fetching a higher price in an auction, and the risk that a lender would foreclose on the property after mortgage loan defaults. But the EAGLEHT unit involved in the sale axed the agreement as the buyer did not meet the 3May deadline for an extra deposit of US$1.05m.One Bernam records 80 units sales (23% take-up rate) on its opening weekendMCC Group and Hao Yuan Investment said that over 80 units or 80% of the first phase of 100 units released at their JV project, One Bernam, were sold. This means ~23% out of a total of the 351units in the 99-year leasehold, mixed-use development, has been sold at ~S$2,650psf ASP. More than 90% of the units that were taken up were one- and two-bedroom units sized from 441-872sqft, priced upwards of S$1.017m. Most of the buyers are said to be Singapore citizens and Permanent Residents. In addition to the 351 residential units, One Bernam contains a two-storey retail podium of 15,726sqft, and one floor of serviced apartments with 13 keys. While one- and two-bedroom units make up 91% of the residences in the project, there are 29 three-bedroom apartments of 1,421sqft. There are also two units of three-bedroom penthouses with sizes of 1,744-1,948sqft, while the largest penthouse is 4,306sqft in size and contains five bedrooms. Biggest penthouse at Park Nova sold at S$5,838psf, a record for Orchard Boulevard areaPark Nova, Shun Tak Holdings’ luxury condo in Singapore’s Orchard Boulevard-Tomlinson area, has recorded five units sales for well over $100m. The two biggest five-bedroom penthouses in the 54-unit luxury condo at 18 Tomlinson Road fetched S$34.438m and S$26.026m, respectively. The biggest penthouse of 5,899sqft garnered interest from more than one party and almost had to be sold via balloting. However, one party prevailed and emerged the eventual buyer at S$34.438m or S$5,838psf. The transaction price of S$26.026m for the second biggest penthouse of 4,499sqft, worked out to S$5,785psf. The third and smallest penthouse of 3,229sqft is also believed to have been sold for above S$17m.

ASEAN Builder's Scoop (10May21) - ECWREIT renews major Hengde logistics lease

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

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<p>In my insight <em><a href="https://skr.ma/5UGLq" target="_blank" rel="noopener">Virtual IPOs/Direct Listings: Uninhibited Price Discovery</a></em> on the 29 November last year, I mentioned a white paper on special purpose acquisition company (SPAC) may be issued by the SGX in the first half of the following year. </p>
<p>Last week the Business Times <a href="https://www.businesstimes.com.sg/companies-markets/sgx-looking-into-listing-of-special-purpose-acquisition-companies" target="_blank" rel="noopener">reported</a> that a consultation could be launched by the SGX as early as this quarter.</p>
<p>SPACs, or blank-check companies, racked up ~US$80bn in the US in 2020. Once listed and cashed-up, SPACs target investment acquisitions or mergers, providing an alternate back-door listing opportunity for companies. In effect, SPACs synthetically combines a credit instrument with equity upside. </p>
<p>SPACs are non-existent in Asia. SGX's expected consultation paper may herald a strategic push by the bourse to become Asia's SPAC hub. With some US-based SPACs packaging Southeast Asian assets, SGX's motives may well be one of "<em>if you can't beat them, join them</em>".</p>
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In my insight Virtual IPOs/Direct Listings: Uninhibited Price Discovery on the 29 November last year, I mentioned a white paper on special purpose acquisition company (SPAC) may be issued by the SGX in the first half of the following year. 
Last week the Business Times reported that a consultation could be launched by the SGX as early as this quarter.
SPACs, or blank-check companies, racked up ~US$80bn in the US in 2020. Once listed and cashed-up, SPACs target investment acquisitions or mergers, providing an alternate back-door listing opportunity for companies. In effect, SPACs synthetically combines a credit instrument with equity upside. 
SPACs are non-existent in Asia. SGX's expected consultation paper may herald a strategic push by the bourse to become Asia's SPAC hub. With some US-based SPACs packaging Southeast Asian assets, SGX's motives may well be one of "if you can't beat them, join them".


Singapore Exchange: Asia's Future SPAC Hub

Event-Driven

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<p>Singaporean property play <a href="https://www.smartkarma.com/entities/singhaiyi-group-ltd" target="_blank" data-smartkarma-citation="entities:19307:1" rel="noopener">SingHaiyi (SHG SP)</a> has announced a <a href="https://links.sgx.com/FileOpen/Offer_Announcement.ashx?App=Announcement&amp;FileID=689919" target="_blank" rel="noopener">voluntary conditional cash Offer</a> from Gordan and Celine Tang, who control 75.56% of shares out. </p>
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<p>The Offer Price of S$0.117/share is an 8.3% premium to last close and 0.78x P/NAV. The acceptance condition is 90%, including the Tang's stake, although the Tang's reserve the right to reduce this to 50%. Family members with 2.81% have given an irrecoverable to tender into the Offer taking the accumulated holding to 78.37%. Save for the acceptance condition, the Offer is unconditional in all other respects.</p>
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<p>This appears a relatively listless Offer premium, however, it pitches SingHaiyi around a multi-year high. The Offer has not been declared final.</p>
<p>The entire construct is reminiscent of the Offer from <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> for <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a> - <em><a href="https://skr.ma/SdJKh" target="_blank" rel="noopener">GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco</a></em> - which was successfully completed after terms were bumped. </p>
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<p>As always, more below the fold.</p>
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Singaporean property play SingHaiyi (SHG SP) has announced a voluntary conditional cash Offer from Gordan and Celine Tang, who control 75.56% of shares out. 


The Offer Price of S$0.117/share is an 8.3% premium to last close and 0.78x P/NAV. The acceptance condition is 90%, including the Tang's stake, although the Tang's reserve the right to reduce this to 50%. Family members with 2.81% have given an irrecoverable to tender into the Offer taking the accumulated holding to 78.37%. Save for the acceptance condition, the Offer is unconditional in all other respects.


This appears a relatively listless Offer premium, however, it pitches SingHaiyi around a multi-year high. The Offer has not been declared final.
The entire construct is reminiscent of the Offer from Guoco Group Ltd (53 HK) for GL Ltd (GLL SP) - GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco - which was successfully completed after terms were bumped. 


As always, more below the fold.


SingHaiyi Group (SHG SP): Tang's Conditional Offer

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.

Equity Bottom-Up

<p>In my previous insights on Singapore REITs I have spoken about a number of different sectors, however, I haven't spoken about the overseas focussed REITs, so far.</p>
<p>In this insight, I'll take a closer look at some of the Singapore listed EU/US focussed REITs.</p>
<p>Links to my previous REITs insights:</p>
<ul>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-what-s-been-cooking-this-year" target="_blank" rel="noopener">Singapore REITs - What’s Been Cooking This Year,</a> I spoke about how the REITs have performed this year and touched upon some of the factors that have been driving them. </li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-sgreits-retail-reits-share-price-has-been-more-resilient-than-it-should-be" target="_blank" rel="noopener">Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be,</a> I spoke about the factors that have been impacting retail REITs. </li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-office-reits-this-time-it-s-different" target="_blank" rel="noopener">Trade Ideas SG Office REITs - This Time It’s Different</a> I spoke about how the office REITs might fare better.</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-industrial-reits-bigger-names-have-been-holding-up-a-little-too-well" target="_blank" rel="noopener">Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well </a> I spoke about the industrial REITs</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-get-out-of-jail-free-card-for-the-tenants" target="_blank" rel="noopener">Singapore REITs - Get Out of Jail Free Card, for the Tenants</a> I spoke about how the recent changes announced by the government would benefit the smaller tenants more than the landlords.</li>
</ul>

In my previous insights on Singapore REITs I have spoken about a number of different sectors, however, I haven't spoken about the overseas focussed REITs, so far.
In this insight, I'll take a closer look at some of the Singapore listed EU/US focussed REITs.
Links to my previous REITs insights:


Singapore REITs - What’s Been Cooking This Year, I spoke about how the REITs have performed this year and touched upon some of the factors that have been driving them. 

Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be, I spoke about the factors that have been impacting retail REITs. 

Trade Ideas SG Office REITs - This Time It’s Different I spoke about how the office REITs might fare better.

Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well  I spoke about the industrial REITs

Singapore REITs - Get Out of Jail Free Card, for the Tenants I spoke about how the recent changes announced by the government would benefit the smaller tenants more than the landlords.


Trade Ideas SG EU/US Focus REITs - The Orphaned Lot Is Starting to Look Interesting

Singapore

Eagle Hospitality Trust is a hospitality stapled group that invests in a diversified portfolio of income-producing real estate, primarily full-service hotel properties, with an initial focus on the U.S.. Its initial portfolio included 18 hotel properties across 11 U.S. metropolitan statistical areas, totaling 5,420 rooms. The company was incorporated in 2019 and is headquartered in Singapore.

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Eagle Hospitality (EAGLEHT SP)

ASEAN Builder's Scoop (25May21) - EAGLEHT Properties Received Qualified Bids

EAGLEHT properties received qualified bids; CIT warns of cooling measures; UEMS 1Q21 net loss narrows; ECW achieved 70% FY21 sales target; Phuket...

SCCM Asia Research

ASEAN Builder's Scoop (10May21) - ECWREIT renews major Hengde logistics lease

ECWREIT renews major Hengde logistics lease; EAGLEHT Dallas hotel sales fell through; ALI recovering slowly but surely, RLC 1Q21 results weighed by...

SCCM Asia Research

Singapore Exchange: Asia's Future SPAC Hub

Often the disinclination to introduce change is due to an absence of public market sophistication or a deep ecosystem. The SGX should make amends...

David Blennerhassett

SingHaiyi Group (SHG SP): Tang's Conditional Offer

The Offer has not been declared final. I think there's probably enough here to get the deal over the line. I would not chase this much through...

David Blennerhassett

Trade Ideas SG EU/US Focus REITs - The Orphaned Lot Is Starting to Look Interesting

In my previous insights on Singapore REITs I have spoken about a number of different sectors, however, I haven't spoken about the overseas focussed...

Sumeet Singh

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