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>Commercial properties set for big change; Long-term reduction in supply likely</h3><ul><li>Offices in the CBD, especially older buildings, need to evolve. Both the Central Business District Incentive (CBDI) Scheme and Strategic Development Incentive (SDI) Scheme were introduced to incentivise the redevelopment of older buildings to more productive mixed-use developments. Under the CBDI scheme, qualifying properties are allowed to intensify their GFA by 25-30%, depending on the proposed land use. Meanwhile, the SDI is intended to redevelop precincts in strategic areas across Singapore, such as Orchard Road, the CBD and Marina Centre</li><li>Since the circuit-breaker period, URA has received nine outline applications under the CBDI Scheme, of which six have been given in-principle approval. Three outline applications under the SDI Scheme were also given in-principle approval. The take-up of these schemes are also likely to result in the long-term reduction of office stock in the CBD, which plays a part in the government's decentralisation strategy to have more offices located outside the city centre, CBRE said.</li></ul><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/216/388/original/image018.png?1625188834" class="editor-image img-responsive" data-smartkarma-image-id="216388"></figure></section>

Singapore Commercial properties set for big change; Long-term reduction in supply likelyOffices in the CBD, especially older buildings, need to evolve. Both the Central Business District Incentive (CBDI) Scheme and Strategic Development Incentive (SDI) Scheme were introduced to incentivise the redevelopment of older buildings to more productive mixed-use developments. Under the CBDI scheme, qualifying properties are allowed to intensify their GFA by 25-30%, depending on the proposed land use. Meanwhile, the SDI is intended to redevelop precincts in strategic areas across Singapore, such as Orchard Road, the CBD and Marina CentreSince the circuit-breaker period, URA has received nine outline applications under the CBDI Scheme, of which six have been given in-principle approval. Three outline applications under the SDI Scheme were also given in-principle approval. The take-up of these schemes are also likely to result in the long-term reduction of office stock in the CBD, which plays a part in the government's decentralisation strategy to have more offices located outside the city centre, CBRE said.

ASEAN Builder's Scoop (2Jul21) - CBD Office Reduction in LT Supply

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/prime-us-reit" target="_blank" data-smartkarma-citation="entities:28144" rel="noopener">Prime US REIT (PRIME SP)</a> to acquire two properties in California and Florida; DPU accretive by +2.4% but -1.2% NAV dilutive</h3><ul><li>PRIME, through KBS Realty Advisors, has entered into a purchase agreement with Sorrento Towers North to acquire Sorrento Towers (located at 5355 &amp; 5375 Mira Sorrento Place, San Diego, California) and a purchase agreement with CP OTC to acquire the property One Town Center (located at One Town Center, Boca Raton, Florida). Sorrento Towers is a freehold property comprised of two, seven-story, Class-A office towers and sits above a three-level podium garage with an occupancy rate of 95.6%, NLA of 296,327sqft and WALE By NLA of 6.6 years. One Town Center is a freehold 10-storey Class-A office tower and a five-storey attached parking garage with an occupancy rate of 94.7%, NLA of 191,294sqft and WALE by NLA of 6.2 years</li><li>The aggregate purchase consideration payable for the Acquisitions is US$245.5m, comprising US$146.0m for Sorrento Towers and US$99.5m for One Tower Center. Sorrento Towers would be acquired at valuation, whilst One Town Center will be acquired at a discount of 2.5% of its appraised value, representing an aggregate discount of 1%. The estimated total cost for the acquisitions is US$247.71m, including fees, which will be funded by a combination of loans and a private placement of new units (to raise gross proceeds of at least US$80.0m)</li><li>The Acquisitions will expand the REIT’s footprint in two new target markets, San Diego and Boca Raton. Post-acquisitions, no single market will contribute more than 11.7% of PRIME’s enlarged portfolio Cash Rental Income. In aggregate, the acquisitions have a long WALE of 6.5 years by NLA and 6.6 years by Cash Rental Income, with minimal proportion of leases expiring before 2025</li><li>100% of the leases at Sorrento Towers and One Town Center, based on Cash Rental Income for the month of Mar21, offers visible organic growth having a built-in rental escalation with a weighted average built-in escalation rate of c.3% pa. Moreover, both Sorrento Towers and One Town Center have positive office market dynamics with in-place rents that are currently below market</li><li>At the purchase price, the implied capitalisation rate for Sorrento Towers and One Town Center is approximately 5.3% and 5.8%, respectively. On a pro-forma 1Q21 basis, the WALE of the enlarged portfolio will increase to 4.5 years by NLA and 4.6 years by Cash Rental Income. On a pro-forma FY20 basis, the acquisitions are expected to be +2.4% DPU accretive, but -1.2% NAVPU dilutive. Gearing will increase to 39.1% from 33.8% as at 31Mar21 on a pro-forma basis.</li></ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/214/962/original/image003+%282%29.png?1624498042" class="editor-image img-responsive" data-smartkarma-image-id="214962"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/214/963/original/image004.png?1624498057" class="editor-image img-responsive" data-smartkarma-image-id="214963"></figure></section>

SingaporePrime US REIT (PRIME SP) to acquire two properties in California and Florida; DPU accretive by +2.4% but -1.2% NAV dilutivePRIME, through KBS Realty Advisors, has entered into a purchase agreement with Sorrento Towers North to acquire Sorrento Towers (located at 5355 &amp; 5375 Mira Sorrento Place, San Diego, California) and a purchase agreement with CP OTC to acquire the property One Town Center (located at One Town Center, Boca Raton, Florida). Sorrento Towers is a freehold property comprised of two, seven-story, Class-A office towers and sits above a three-level podium garage with an occupancy rate of 95.6%, NLA of 296,327sqft and WALE By NLA of 6.6 years. One Town Center is a freehold 10-storey Class-A office tower and a five-storey attached parking garage with an occupancy rate of 94.7%, NLA of 191,294sqft and WALE by NLA of 6.2 yearsThe aggregate purchase consideration payable for the Acquisitions is US$245.5m, comprising US$146.0m for Sorrento Towers and US$99.5m for One Tower Center. Sorrento Towers would be acquired at valuation, whilst One Town Center will be acquired at a discount of 2.5% of its appraised value, representing an aggregate discount of 1%. The estimated total cost for the acquisitions is US$247.71m, including fees, which will be funded by a combination of loans and a private placement of new units (to raise gross proceeds of at least US$80.0m)The Acquisitions will expand the REIT’s footprint in two new target markets, San Diego and Boca Raton. Post-acquisitions, no single market will contribute more than 11.7% of PRIME’s enlarged portfolio Cash Rental Income. In aggregate, the acquisitions have a long WALE of 6.5 years by NLA and 6.6 years by Cash Rental Income, with minimal proportion of leases expiring before 2025100% of the leases at Sorrento Towers and One Town Center, based on Cash Rental Income for the month of Mar21, offers visible organic growth having a built-in rental escalation with a weighted average built-in escalation rate of c.3% pa. Moreover, both Sorrento Towers and One Town Center have positive office market dynamics with in-place rents that are currently below marketAt the purchase price, the implied capitalisation rate for Sorrento Towers and One Town Center is approximately 5.3% and 5.8%, respectively. On a pro-forma 1Q21 basis, the WALE of the enlarged portfolio will increase to 4.5 years by NLA and 4.6 years by Cash Rental Income. On a pro-forma FY20 basis, the acquisitions are expected to be +2.4% DPU accretive, but -1.2% NAVPU dilutive. Gearing will increase to 39.1% from 33.8% as at 31Mar21 on a pro-forma basis.

ASEAN Builder's Scoop (24Jun21) - PRIME Acquires US Offices

<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> expands into AUS, buys SG logistics asset for ~S$180m</h3><ul><li>EREIT is looking to raise about S$150m via a private placement and preferential offering to fund its S$119.2m acquisition of a Tanjong Penjuru logistics facility, as well as asset enhancement initiatives for properties in Tai Seng and Ang Mo Kio. The real estate investment trust has also obtained a S$68.5m unsecured loan to finance the acquisition of a 10% interest in a GIC-majority-owned Australian logistics investment for AUD60.5m (S$62.4m). The investment indirectly holds 33 income-producing properties, two land parcels for future development and two properties, which are currently under development</li><li>GIC holds an 80% stake in the fund, while ESR Queensland Hold Trust, holds the remaining 20%. The private fund is managed by an indirect subsidiary of ESR Cayman, the REIT’s sponsor. The fund's portfolio comprises properties in five Australia states – New South Wales, Victoria, Queensland, South Australia and Western Australia. These have a total land area of about 1.3m sqm, an occupancy rate of 95.9% and a WALE of 4.87 years as at 31Mar. The Australian acquisition will cost an estimated AUD64.9m, comprising the AUD60.5m purchase price and S$2.5m in fees to be incurred in connection with the deal. This whole amount will be financed fully through debt. The Australia acquisition is expected to be completed in May21</li><li>The Singapore acquisition, meanwhile, saw EREIT's trustee entering into a put and call option agreement with seller Montview Investments for 46A Tanjong Penjuru, a five-storey modern ramp-up logistics facility within the Jurong Industrial Estate. The proposed acquisition will cost EREIT about S$124.7m, comprising a S$112m purchase consideration, an estimated S$7.6m upfront land premium payable to JTC for the balance of the first 30-year lease term, S$3.6m in stamp duties, and S$1.5m in other transaction costs</li><li>EREIT is proposing a private placement of between 195.3-201.6m units to institutional investors and other investors at an issue price of between S$37.2-38.4c, to raise at least S$75m. The private placement is subject to an upsize option which brings the amount raised to a maximum of S$100m. EREIT's also plans to undertake a non-renounceable preferential offering of new units to raise no more than S$50m. The preferential offering will not be underwritten. Details of the offering have not been determined as at the date of the announcement but the manager stated the issue price of the offering may differ from the private placement's issue price</li><li>About S$71.8m, or nearly half, of the gross proceeds from the fundraising exercise will partially finance the Tanjong Penjuru acquisition. Some S$43.5m will be used to partially finance the asset enhancement initiatives (AEIs) of two industrial buildings at 16 Tai Seng Street and 7000 Ang Mo Kio Avenue 5, which will cost about S$25.9-53.3m, respectively. EREIT will use around S$31m of gross proceeds to repay existing indebtedness, while S$3.8m will be used to pay for estimated fees and expenses incurred in connection with the equity fundraising.</li></ul><p>Comments: While the overall investments and debt repayment offers a low single-digit 1.0-2.3% accretion to FY20 DPU and -1.5% dilution to FY20 NAV, we are positive on the two investments given their complementary potential upside from AEI/development. The SG asset, 46A Tanjong Penjuru, will enhance EREIT’s exposure in the resilient and highly sought-after quality logistics assets, while the strategic investment on the AU Fund demonstrates EREIT’s ability to access Sponsor’s pipeline of assets. The acquisition at a Fund NAV cap rate of 5.5% (vs. the current market range of 4+%) signals Sponsor’s commitment and support to grow EREIT. Despite having only a minor stake, it allows EREIT to be privy to the portfolio performance, thus offering an edge in acquisition opportunities. On the other hand, the continuous AEI/development efforts with 7% yield to cost would provide EREIT a stable organic growth. We have a BUY rating and TP of S$0.47/unit.</p>

SingaporeESR-REIT (EREIT SP) expands into AUS, buys SG logistics asset for ~S$180mEREIT is looking to raise about S$150m via a private placement and preferential offering to fund its S$119.2m acquisition of a Tanjong Penjuru logistics facility, as well as asset enhancement initiatives for properties in Tai Seng and Ang Mo Kio. The real estate investment trust has also obtained a S$68.5m unsecured loan to finance the acquisition of a 10% interest in a GIC-majority-owned Australian logistics investment for AUD60.5m (S$62.4m). The investment indirectly holds 33 income-producing properties, two land parcels for future development and two properties, which are currently under developmentGIC holds an 80% stake in the fund, while ESR Queensland Hold Trust, holds the remaining 20%. The private fund is managed by an indirect subsidiary of ESR Cayman, the REIT’s sponsor. The fund's portfolio comprises properties in five Australia states – New South Wales, Victoria, Queensland, South Australia and Western Australia. These have a total land area of about 1.3m sqm, an occupancy rate of 95.9% and a WALE of 4.87 years as at 31Mar. The Australian acquisition will cost an estimated AUD64.9m, comprising the AUD60.5m purchase price and S$2.5m in fees to be incurred in connection with the deal. This whole amount will be financed fully through debt. The Australia acquisition is expected to be completed in May21The Singapore acquisition, meanwhile, saw EREIT's trustee entering into a put and call option agreement with seller Montview Investments for 46A Tanjong Penjuru, a five-storey modern ramp-up logistics facility within the Jurong Industrial Estate. The proposed acquisition will cost EREIT about S$124.7m, comprising a S$112m purchase consideration, an estimated S$7.6m upfront land premium payable to JTC for the balance of the first 30-year lease term, S$3.6m in stamp duties, and S$1.5m in other transaction costsEREIT is proposing a private placement of between 195.3-201.6m units to institutional investors and other investors at an issue price of between S$37.2-38.4c, to raise at least S$75m. The private placement is subject to an upsize option which brings the amount raised to a maximum of S$100m. EREIT's also plans to undertake a non-renounceable preferential offering of new units to raise no more than S$50m. The preferential offering will not be underwritten. Details of the offering have not been determined as at the date of the announcement but the manager stated the issue price of the offering may differ from the private placement's issue priceAbout S$71.8m, or nearly half, of the gross proceeds from the fundraising exercise will partially finance the Tanjong Penjuru acquisition. Some S$43.5m will be used to partially finance the asset enhancement initiatives (AEIs) of two industrial buildings at 16 Tai Seng Street and 7000 Ang Mo Kio Avenue 5, which will cost about S$25.9-53.3m, respectively. EREIT will use around S$31m of gross proceeds to repay existing indebtedness, while S$3.8m will be used to pay for estimated fees and expenses incurred in connection with the equity fundraising.Comments: While the overall investments and debt repayment offers a low single-digit 1.0-2.3% accretion to FY20 DPU and -1.5% dilution to FY20 NAV, we are positive on the two investments given their complementary potential upside from AEI/development. The SG asset, 46A Tanjong Penjuru, will enhance EREIT’s exposure in the resilient and highly sought-after quality logistics assets, while the strategic investment on the AU Fund demonstrates EREIT’s ability to access Sponsor’s pipeline of assets. The acquisition at a Fund NAV cap rate of 5.5% (vs. the current market range of 4+%) signals Sponsor’s commitment and support to grow EREIT. Despite having only a minor stake, it allows EREIT to be privy to the portfolio performance, thus offering an edge in acquisition opportunities. On the other hand, the continuous AEI/development efforts with 7% yield to cost would provide EREIT a stable organic growth. We have a BUY rating and TP of S$0.47/unit.

ASEAN Builder's Scoop (7May21) - EREIT Maiden Expansion into AUS

Mid-market focused investment bank within SE Asia, Evolve Capital Advisory Pte Ltd

Evolve Capital Research

Mid-market focused investment bank within SE Asia

Evolve Capital Advisory Pte Ltd

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/beverly-jcg-ltd" target="_blank" data-smartkarma-citation="entities:11480:1" rel="noopener">Beverly JCG Ltd (JCGI SP)</a> is a SGX-Catalist listed company. It offers a broad suite of services including invasive and non-invasive aesthetic procedures, dentistry and wellness treatments, amongst others.</li>
<li>As of Apr 25, the firm has a total of two Ministry of Health licensed hospitals, four aesthetic and three dental clinics, most of which are located in Klang Valley.</li>
<li>In this note, we provide a company update as well as our thoughts on the firm's latest sale and purchase agreement with KL Wellness City (KLWC).</li>
</ul>



Beverly JCG Ltd (JCGI SP) is a SGX-Catalist listed company. It offers a broad suite of services including invasive and non-invasive aesthetic procedures, dentistry and wellness treatments, amongst others.
As of Apr 25, the firm has a total of two Ministry of Health licensed hospitals, four aesthetic and three dental clinics, most of which are located in Klang Valley.
In this note, we provide a company update as well as our thoughts on the firm's latest sale and purchase agreement with KL Wellness City (KLWC).


Beverly JCG - Company Update - Balancing Between Dilution and Value Creation

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hyphens-pharma-international" target="_blank" data-smartkarma-citation="entities:28034:1" rel="noopener">Hyphens Pharma International (HYP SP)</a> is a specialty pharmaceutical and consumer healthcare group. It has three key operating segments: Specialty Pharma Principals, Proprietary Brands and Medical Hypermart and Digital.</li>
<li>It has a direct presence in five ASEAN countries, including Singapore, Indonesia, Malaysia, the Philippines and Vietnam.</li>
<li>We initiate rated coverage on Hyphens with a TP of S$0.365, pegged to 9.5x FY25E P/E, representing an upside of approximately 28.1%.</li>
</ul>



Hyphens Pharma International (HYP SP) is a specialty pharmaceutical and consumer healthcare group. It has three key operating segments: Specialty Pharma Principals, Proprietary Brands and Medical Hypermart and Digital.
It has a direct presence in five ASEAN countries, including Singapore, Indonesia, Malaysia, the Philippines and Vietnam.
We initiate rated coverage on Hyphens with a TP of S$0.365, pegged to 9.5x FY25E P/E, representing an upside of approximately 28.1%.


Hyphens Pharma Initiation - Decent Fundamentals, Weak Valuations

Singapore

ESR-REIT is a real estate investment trust that invests in and manages a diversified portfolio of income-producing industrial properties. These properties include logistics, high-specifications industrial, business parks, and general industrial assets across Singapore, Australia, and Japan. The company is headquartered in Singapore and was founded in 2006.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

ESR-REIT (EREIT SP)

ASEAN Builder's Scoop (2Jul21) - CBD Office Reduction in LT Supply

GCB deals YTD surpassed 2020; HDB prices 2.1% shy of 2Q13 peak; Indo shuts down malls; SIRI begins accepting cryptos; Phils tourist arrivals sanked

SCCM Asia Research

ASEAN Builder's Scoop (24Jun21) - PRIME Acquires US Offices

PRIME acquires US offices, +2.4% DPU accretion; CAPL obtains PE manager license in China; Carpark lot is latest trending asset class; BSP launching...

SCCM Asia Research

ASEAN Builder's Scoop (7May21) - EREIT Maiden Expansion into AUS

EREIT maiden expansion into AUS; LREIT robust occupancy with limited expiry; SHG acquires Maxwell House; Business Parks +ve outlook; MEG sets 2021...

SCCM Asia Research

Beverly JCG - Company Update - Balancing Between Dilution and Value Creation

In this note, we provide a company update as well as our thoughts on the Beverly JCG's latest sale and purchase agreement with KL Wellness City...

Evolve Capital Advisory Pte Ltd

Hyphens Pharma Initiation - Decent Fundamentals, Weak Valuations

We initiate rated coverage on Hyphens with a TP of S$0.365, pegged to 9.5x FY25E P/E, representing an upside of approximately 28.1%.

Evolve Capital Advisory Pte Ltd

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)