A 70:30 JV between SPH and United Engineers bid S$328m (S$1,156 psf) for a commercial site at Sengkang West Avenue beside Fernvale LRT station. We expect total development cost (including land) to be ~S$2,450 psf NLA (net leasable area). Assuming rentals of S$15 psf per month (roughly in line with levels seen at Clementi Mall and Bukit Panjang Plaza), this works out to a rental yield of 5.3% which we are fairly neutral about. We are neutral on this acquisition and keep our fair value estimate unchanged. Maintain BUY at fair value estimate of S$3.99 and 12m dividend of S$0.24.
Top bid 20% above 2nd bidder. A 70:30 JV between SPH and United Engineers bid S$328m (S$1,156 psf) for a commercial site at Sengkang West Avenue beside Fernvale LRT station. The site area is 8,790.3 sqm with a maximum GFA of 26,370.9 sqm. SPH’s bid was 20% higher than the 2nd bidder, which was fairly aggressive in our view. The tender attracted 12 bidders with the average bid coming in at S$726 psf, 37% below SPH’s bid. We also note that neither CMT nor CMA were involved in this tender.
Location beside Fernvale LRT. We believe this site is fairly attractive given its location in the midst of the dense Sengkang estate beside Fernvale LRT station, linking it to the Sengkang MRT/LRT Station and the Sengkang Bus Interchange, similar to Bukit Panjang Plaza in the west.
Rental yields of 5.3%. We expect total development cost (including land) to be ~S$2,450 psf NLA (net leasable area). Assuming rentals of S$15 psf per month (roughly in line with levels seen at Clementi Mall and Bukit Panjang Plaza), this works out to a rental yield of 5.3% which we are fairly neutral about. We believe this aggressive bid reflects SPH’s commitment to expand its suburban mall portfolio, building on their Clementi mall acquisition previously.
Fair value estimate unchanged. Given the price paid, we are neutral on this acquisition and keep our fair value estimate unchanged. That said, we note that management had executed well on Clementi Mall and expect them to leverage on that experience for this asset. In addition, we like the further diversification from the core Newspaper and Magazine business into the resilient suburban retail landlord business. Maintain BUY at fair value estimate of S$3.99 and 12m dividend of S$0.24.
Location beside Fernvale LRT. We believe this site is fairly attractive given its location in the midst of the dense Sengkang estate beside Fernvale LRT station, linking it to the Sengkang MRT/LRT Station and the Sengkang Bus Interchange, similar to Bukit Panjang Plaza in the west.
Rental yields of 5.3%. We expect total development cost (including land) to be ~S$2,450 psf NLA (net leasable area). Assuming rentals of S$15 psf per month (roughly in line with levels seen at Clementi Mall and Bukit Panjang Plaza), this works out to a rental yield of 5.3% which we are fairly neutral about. We believe this aggressive bid reflects SPH’s commitment to expand its suburban mall portfolio, building on their Clementi mall acquisition previously.
Fair value estimate unchanged. Given the price paid, we are neutral on this acquisition and keep our fair value estimate unchanged. That said, we note that management had executed well on Clementi Mall and expect them to leverage on that experience for this asset. In addition, we like the further diversification from the core Newspaper and Magazine business into the resilient suburban retail landlord business. Maintain BUY at fair value estimate of S$3.99 and 12m dividend of S$0.24.
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