Author: tfwee
AllCo – Phillip
Amidst news of recent aggressive buying sprees in the core CBD area, Allco took the alternative approach by making an acquisition in the CBD fringe area. Allco annouced the acquisition of Keypoint, located at the junction of Beach Road and Jalan Sultan, for a total consideration of $370 million, which is at a discount of 1.18% to the appraised value of $374.4 million.
About the property. Keypoint is an integrated 25-storey commercial building with a total NLA of 311,892 sq ft. The building comprises a three storey podium and a 22-storey office tower. Office space represents 89.4% of the NLA while retail space occupies 10.6%. Allco will acquire the property for a total consideration of $370 million, a discount of 1.18% to the appraised value of $374.4 million, at an initial yield of 4.65%. In addition, the acquisition has an income support deed of up to $10.5 million over a period of two years. The acquisition will be fully funded by debt which will bring gearing up to 46%, slightly past the target range of 40%-45%. The leases have a WALE of 1.05 years contracted at an average of $3.28 psf versus the current asking rate of $6.00 psf.
Valuation and Recommendation. With our revised estimates, we have a forecasted payout of 5.42 cents for FY07 and 7.63 cents for FY08, which translate to 5.0% and 7.1% yields respectively. We retain our fair value estimate of $1.68, pending a review after the 3rd quarter results annoucement later in the month. We view the acquisition favourably, mainly due to the a) spillover demand from the core CBD area, and b) expiring leases that allow Allco to capture positive rental reversions at an opportune time when rentals are on an uptrend. We reiterate our view that Allco’s valuation remains attractive given that it is currently trading at a 22% discount to its book value. We feel that Allco has not caught up to the broad market upswing recently and this presents an entry opportunity.
K-Reit – UBS
Saizen – BT
Japan property trust eyes up to $244m in S’pore IPO
SINGAPORE – Saizen Real Estate Investment Trust (Reit), based entirely on Japanese property assets, has lodged its prospectus to raise as much as $244.4 million (US$166 million) in Singapore, confirming a Reuters story last month.
A Hong-Kong based private equity group is selling 196.74 million units of Saizen in an initial public offer at between $1.00 and $1.08 per unit, with a further 29.5 million units to be sold if an over-allotment option is exercised.
Saizen Reit’s initial portfolio of 146 residential buildings are located in 12 cities across Japan. It does not own any property in Tokyo and Osaka.
The trust’s sponsor, Japan Regional Assets Manager, said in the prospectus that the regional residential properties generate higher yields than similar properties in Tokyo and Osaka.
The properties are valued at $626.8 million, with 27 per cent of their aggregate income generated from the city of Sapporo.
Saizen Reit expects to add a further 15 properties worth $71.4 million.
The REIT is forecast to pay dividend yields of between 6.09 and 6.51 per cent per unit this year and 5.29-5.65 per cent next year.
Credit Suisse and Morgan Stanley are arranging the deal.
Unlike Singapore Reits, Japanese-listed trusts are not allowed to hold offshore assets.
Other property trusts based on Japanese assets are expected to emerge soon in Singapore, which is Asia Pacific’s third largest Reit market after Australia and Japan.
JPMorgan and Lehman Bros are believed to be helping Tokyo-based Asia Pacific Land Group raise at least $500 million (US$333 million) from the divestment of some of its Japanese retail and office properties via a Singapore-listed Reit, while Japanese real estate funds manager Re-plus is said to have hired Citigroup to arrange a property trust based on office buildings in China. — REUTERS
Reference : Prospectus