1. No category

Soilbuild Business Space REIT
Exposure to niche Business Park space; and longest land lease
expiry
16 March 2015
SINGAPORE | REAL ESTATE (REIT) | INITIATION
REIT Snapshot
 Soilbuild Business Space REIT ("SBREIT") was listed on the Mainboard of the Singapore
Exchange in August 2013.
 Investment strategy of investing in a portfolio of income-producing real estate for
business space use.
 Managed by SB REIT Management Pte Ltd, and Trustee is DBS Trustee Limited.
 Current portfolio is entirely in Singapore, consisting of two (2) Business Parks, two (2)
Multi-user factories and six (6) Single-user factories.
 Portfolio has a total NLA of 3.33 million sq ft and value of S$1.03 billion as at 31
December 2014.
 Credit rating of BBB- with Stable Outlook from Standard & Poor's.
 Current market capitalisation of about S$653 million.
Investment merits
 Specific portfolio niche exposure to Business Park space: Riding on secular trend of
decentralising business activities outside of the City – Expect businesses to shift away
out of the City to Business Parks. SBREIT has two young Business Park properties with an
average age of 4.3 years and constitute 39.0% of its portfolio (both weighted by
valuation).
 Dominant positioning: Longest remaining land lease expiry among the Industrial SREITs – This is longer than the typical 30 year land lease from Government Land Sales
(GLS). Moreover, recent GLS for Industrial land shows a trend of land lease moving
towards 20 years.
 Distinct competitive edge: Sponsor from Construction sector – Sponsor has track
record of developing quality buildings. SBREIT can leverage on Sponsor for competitive
costings and dedicated project turnaround.
 Strong alignment of interest between Manager and Unitholders – Base fee is pegged
to Distributable income, while Performance fee is pegged to DPU growth.
 Stable income visibility – Long weighted average lease expiry (WALE) of 3.9 years by
Gross Rental Income (fourth highest for the Industrial REIT sector) and the only
Industrial S-REIT to have 100% occupancy.
 Attractive distribution yield – SBREIT offers an attractive dividend yield of about 7.9%.
BUY (Initiating)
SGD 0.800
SGD 0.064
SGD 0.960
27.9%
CLOSING PRICE
FORECAST DIV
TARGET PRICE
TOTAL RETURN
COMPANY DATA
O/S SHA RES (M N) :
816
M A RKET CA P (USD mn / SGD mn) :
470 / 653
52 - WK HI/LO (SGD) :
0.82 / 0.76
3M A verage Daily T/O (mn) :
1.04
MAJOR SHAREHOLDERS (%)
CHA P HUA T LIM
27.1%
SCHRODERS P LC
9.9%
JINQUA N TONG
7.1%
SCHRODER INVESTM ENT M GM T HK LTD
3.3%
DB S B A NK LTD
2.9%
PRICE PERFORMANCE (%)
1M T H 3 M T H
1Y R
COM P A NY
0.6
4.0
13.1
STI RETURN
(1.3)
1.8
12.3
PRICE VS. STI
0.85
0.83
0.81
0.79
0.77
0.75
Mar-14
Jun-14
Sep-14
SBREIT SP EQUITY
Dec-14
FSSTI index
So urce: B lo o mberg, P SR
Risk factors
 Rental reversion & occupancy risk – Sector specific risk of maintaining occupancy in the
wake of near term head winds of new supply of Industrial space in 2015 and 2016. This
could put pressure on rents, and in extreme cases lead to negative rental reversion.
 Refinancing risk – Ability to refinance debt is one of the key risks for any REIT.
 Macroeconomic risk – Global trade slowdown to dampen demand for industrial space.
 Regulatory risk – Government policy on tightening of land use and tenant quality can
affect growth prospects and ease of securing new tenants.
 Unitholder dilution & value destruction – Due to the nature of a REIT, there will be
more frequent calls (compared to stocks) for capital through placements or rights issue
to acquire properties. There is a risk that the acquisition might not be DPU accretive.
KEY FINANCIALS
Y / E D ec
F Y 13
F Y 14 F Y 15e F Y 16 e
Gro ss Rev. (SGD mn)
24.6
68.1
74.0
74.3
NP I (SGD mn)
20.6
57.4
62.3
62.5
Dist. Inc. (SGD mn)
18.3
50.2
51.9
51.8
P /NA V (x)
0.95
0.99
1.01
1.03
DP U, adj (Cents)
2.27
6.19
6.35
6.27
3.0
7.9
7.9
7.8
Distributio n Yield, %
So urce: Co mpany Data, P SR est.
Valuation Method
DDM (Co st o f Equity: 6.5%; Terminal g: 0.5%)
Investment Actions
We initiate coverage on Soilbuild REIT with "BUY" rating and DDM valuation of S$0.960.
Page | 1 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
MCI (P) 019/11/2014
Ref. No.: SG2015_0095
Richard Leow, CFTe
(+65 6531 1735)
[email protected]
SOILBUILD BUSINESS SPACE REIT INITIATION
Initiation of coverage
We initiate coverage on Soilbuild Business Space REIT ("SBREIT") with "BUY" rating
and DDM valuation of S$0.960.
Investment Thesis for Soilbuild REIT

Secular trend of decentralising business activities outside of the City. Reported
by the media on 2 February 2015 that Urban Renewal Authority (URA) intends to
intensify efforts to decentralise business activities outside of the City.
(Source: URA to decentralise business activities and commercial centres outside
CBD, Channel NewsAsia, 2 February 2015)
Fig 1. 4Q 2014 Industrial space
Business Park
4%
Warehouse
20%
http://www.channelnewsasia.com/news/business/singapore/ura-to-decentralise/1632638.html


Business Park space: A direct substitute to Commercial space for lower rent.
Business Parks offer comparable features to Commercial space in terms of
location, amenities and physical specifications. However, Business Park rents are
lower compared to Commercial space in the City, thus making Business Parks a
viable substitute for cost-conscious tenants.
Business Park rents are the highest among the Industrial sector. For 4Q 2014,
Median rent for Central area Commercial space was $10.42 psf/month, while
Business Park space was $3.20 to S$6.00 psf/month. Other Industrial spaces such
as Factory and Warehouses typically go for under S$2 psf/ month.
Factory
76%
Source: JTC, PSR
Fig 2. Lim ited Business Park
Supply (m illion sqm )
2.0
Factory
Warehouse
Business Park
1.5


Scarcity of available Business Park space. According to JTC data, Business Park
space makes up only 4% of total available Industrial space as of 4Q 2014. (Fig 1.)
Viva Industrial Trust
39.0%
Mapletree Industrial Trust
16.7%
Ascendas REIT
16.0%
AIMS AMP Capital
7.0%
Cambridge Industrial Trust
Source: Various REITs, PSR

Fig 4. SBREIT has the longest remaining land lease (years)
66.8%
Soilbuild Business Space REIT
2.2%
0%
20%
40%
60%
80%
Soilbuild Business Space REIT
Ascendas REIT
Mapletree Industrial Trust
Mapletree Logistics Trust
Viva Industrial Trust
AIMS AMP Capital Industrial REIT
Cambridge Industrial Trust
Sabana REIT
Cache Logistics Trust
Source: Various REITs, PSR
SBREIT's portfolio enjoys 100% occupancy. SBREIT is the only Industrial S-REIT
with 100% occupancy. Even its multi-tenanted Business Park space, Solaris,
which is on a Master Lease, has 100% underlying occupancy.
Page | 2 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
>2019
Fig 3. Business Park space in SG, by percentage of portfolio value (%)
2019
SBREIT has the longest remaining land lease expiry among the Industrial SREITs. This is longer than the typical 30 year land lease from Government Land
Sales (GLS). Moreover, recent GLS for Industrial land shows a trend of land lease
moving towards 20 years. (Fig 4.)
2018

2017
SBREIT has significant exposure to niche segment of Business Park space. 39.0%
of SBREIT's portfolio by valuation is in Business Park space. (Fig 3.)
0.0
2016

Source: JTC, PSR
0.5
2015
Limited supply pipeline for Business Park space. Supply of Industrial space in
2015 and 2016 will be about 2.6 million sqm and 2.2 million sqm respectively,
according to JTC. The overwhelming majority of the space will be for Factory use.
Business Park space however, will constitute only 7.7% and 8.8% of the 2015 and
2016 supply respectively. (Fig 2.)
1.0
48.6
46.1
45.8
43.0
40.9
40.5
38.4
37.9
30.6
0
20
40
60
For perspective, the national average
occupancy for Business Park space
was 79.8% in 4Q 2014.
SOILBUILD BUSINESS SPACE REIT INITIATION
REIT Introduction
"Soilbuild REIT is a Singapore-focused real estate investment trust ("REIT") with a
portfolio of business parks and industrial properties used by industries engaging in
manufacturing, engineering, logistic, warehousing, electronics, marine, oil & gas,
research and development and value-added knowledge-based activities. Its portfolio
of properties includes Solaris, a landmark development in one-north, Eightrium @
Changi Business Park, Tuas Connection and West Park BizCentral. Soilbuild REIT’s
portfolio has a net lettable area of 3,334,324 square feet and an occupancy rate of
100.0% as at 31 December 2014."
Source: SBREIT 4QFY14 Media Release, 21 January 2015
Trust Structure
The following figure illustrates the structure of the trust.
Fig 5. REIT structure for SBREIT
Trustee: DBS Trustee Limted. The
property portfolio is held in a trust
by the Trustee. The Trustee is
responsible for the safe custody of
the assets on behalf of Unitholders.
REIT Manager: The REIT is externally
managed by SB REIT Management
Pte Ltd. The Manager is responsible
for managing the assets and
liabilities in the best interest of
Unitholders.
Property Manager:
Service Pte Ltd.
SB
Property
Sponsor: Soilbuild Group Holdings
Ltd is a leading integrated property
group with capabilities ranging from
end-to-end construction, design and
development,
to
project
management.
Distinct competitive edge: SBREIT's
Sponsor comes from the Construction
sector.
The
Sponsor
has
demonstrated the ability to develop
quality buildings. SBREIT can
leverage on Sponsor for competitive
costings and dedicated project
turnaround.
Source: SBREIT website. (Accessed: 13 March 2015)
Page | 3 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
SOILBUILD BUSINESS SPACE REIT INITIATION
Overview of Portfolio
SBREIT's initial portfolio at IPO consisted of seven properties (2 business park
properties and 5 industrial properties). As of 4QFY14, the portfolio has grown to ten
properties; the 3 additional properties were acquired from third-parties during FY14.
SBREIT's portfolio now consists of 2 Business Park spaces, 2 Multi-user Factories and
6 Single-User Factories
The only Industrial S-REIT with 100% occupancy
SBREIT is the only Industrial S-REIT that currently enjoys 100% occupancy. Even its
crown jewel property, Solaris (situated at one-north Business Park), which is on a
Master Lease, has 100% underlying occupancy.
Table 1. Occupancy across Industrial REITs sector
Occupancy (%)
Rank
1 Soilbuild Business Space REIT
100
2 Cache Logistics Trust
98.5
3 Mapletree Logistics Trust
96.9
4 Cambridge Industrial Trust
96.0
5 AIMS AMP Capital Industrial REIT
95.9
6 Mapletree Industrial Trust
90.8
7 Sabana REIT
90.7
8 Ascendas REIT
86.8
9 Viva Industrial Trust
80.5
Average
92.9
Source: Va ri ous REITs , PSR es t.
Fig 6. Portfolio Overview
Source: SBREIT FY14 results presentation, 21 January 2015
Page | 4 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
Acquisition history
Tellus Marine in May 2014.
KTL Offshore in October 2014.
Speedy-Tech in December 2014.
In-built rental escalations
The Master Lease agreements are
structured with built-in rental
escalation of about 2% to 3% per
annum over the lease term, or 2.5%
to 4.5% every two years. This
provides stable organic rental
escalation for the portfolio.
SOILBUILD BUSINESS SPACE REIT INITIATION
Fees Structure
The following section summarises the fee structure for service agreements in relation
to the management of the Trust and its property operations. (Source: FY2013 Annual
Report)
Trustee's Fees
 0.1% per annum of the value of deposited property.
REIT Manager's Fees
 Base fee of 10.0% per annum of annual distributable income.
 Performance fee of 25.0% of the difference in DPU in a financial year.
 Lease management fee of 1.0% per annum of gross revenue.
 Other fees include lease renewal commissions, acquisition, divestment and
development fees.
Strong alignment of interest
between REIT Manager and
Unitholders. Base fee is pegged to
Distributable
income,
while
Performance fee is pegged to DPU
growth.
Property Manager's Fees
 Property management fee of 2.0% per annum of gross revenue.
 Other fees include commissions for new leases and project management fees.
Long Weighted Average Lease Expiry (WALE) of 3.9 years
We compare SBREIT's WALE across the Industrial sector S-REITs. While the various
REITs weight their WALE differently, but we believe that it is still an indicative relative
comparison for the sector. We see that SBREIT's current WALE of 3.9 years, is above
the sector average of 3.7 years and is the fourth highest WALE for the sector. We like
SBREIT for its above average WALE. The main advantage of having a long WALE is the
stability and predictability of the income stream.
Table 2. WALE across Industrial REITs sector
WALE (Years)
Rank
1 Cache Logistics Trust
4.6
2 Mapletree Logistics Trust
4.4
3 Cambridge Industrial Trust
4.0
4 Soilbuild Business Space REIT
3.9
Ascendas REIT
3.9
6 Viva Industrial Trust
3.8
7 AIMS AMP Capital Industrial REIT
3.4
8 Mapletree Industrial Trust
2.6
9 Sabana REIT
2.5
Average
3.7
Source: Va ri ous REITs , PSR es t.
Page | 5 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
weighted by
GFA
NLA
rental income
rental income
rental income
rental income
rental income
rental income
rental income
SBREIT's WALE at 3.9 years is above
the Industrial sector average of 3.7
years; and is the fourth highest for
the sector.
SOILBUILD BUSINESS SPACE REIT INITIATION
Sponsor and Right of First Refusal
Due to their operating structure, REITs have limited capacity to develop their own
properties, and hence the Sponsor can play an integral role for REITs to grow their
portfolio. Soilbuild Group Holdings Limited is the Sponsor for SBREIT, and has granted
a Right of First Refusal (ROFR) to SBREIT. The ROFR portfolio consists of four
properties in Singapore with a maximum GFA of 2,335,694 sq ft.
Table 3. ROFR properties portfolio
Description
Properties
1020, 1022, 1024 & 1026 3 bl ocks of 7-s torey
Ta i Seng Avenue
fl a tted fa ctory bui l di ng
a nd a s i ngl e-s torey
a meni ty centre
164 & 164A Ka l l a ng Wa y 7-s torey l i ght i ndus tri a l
bui l di ng a nd a s i ngl e
s torey a meni ty centre
171 Ka l l a ng Wa y
5-s torey l i ght i ndus tri a l
bui l di ng
Buki t Ba tok Street 23
9-s torey l i ght i ndus tri a l
ra mp-up bui l di ng
Source: SBREIT IPO pros pectus
Maximum
GFA
('000 sq ft)
Underlying
Land Tenure
1,031
60 yea rs from
26 Augus t 2011
575
40 yea rs from
26 Augus t 2011
326
404
40 yea rs from
26 Augus t 2011
30 yea rs from
20 November 2012
Well staggered lease expiry
SBREIT has a well staggered lease expiry, with less than 23.5% lease expiry for each of
the following three years until 2017.
23.5% of SBREIT's portfolio by NLA is up for renewal in 2015. We understand from
SBREIT that these outstanding leases for 2015 are attributable to three properties:
Eightrium, Tuas Connection and West Park BizCentral. The majority of the lease
expiry is coming from West Park BizCentral (Multi-tenanted ramp-up factory). This
poses the most significant risk to the portfolio occupancy in view of the large supply
of new Factory space (1.8 million sq ft vs. existing 32.7 million sq ft) coming onto the
market in 2015.
Fig 7. Portfolio Lease Expiry Profile
Source: SBREIT FY14 results presentation, 21 January 2015
Page | 6 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
The property in Bukit Batok is
expected to receive its Temporary
Occupancy Permit (TOP) in 1Q 2015;
and will be a potential acquisition
opportunity for SBREIT.
SOILBUILD BUSINESS SPACE REIT INITIATION
Debt Management
Well-staggered debt maturity
SBREIT has no more than 26% of its debt expiring in any single year. This translates to
less than S$95 million of debt maturing each year. With such a staggered debt
maturity profile, SBREIT will not be faced with a large debt to refinance in any given
year. Financing cost will be more responsive to changes in interest rates and
experience gradual changes to its financing cost; as opposed to spikes in financing
cost with a bullet-maturity debt profile.
Interest rate hedging
81.9% of SBREIT's debt has been hedged.
Equity raising this year is possible. The gearing is 35.4% as of 4QFY14. SBREIT has a
remaining debt headroom of S$80 million and may have to do some form of equity
raising if there are further acquisition this year.
Fig 8. Prudent Capital Management
Source: SBREIT FY14 results presentation, 21 January 2015
Page | 7 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
SOILBUILD BUSINESS SPACE REIT INITIATION
Opportunities for Growth
SBREIT has a three-pronged growth strategy.
1. Stable organic growth through in-built rental escalation of Master Leases.
2. Upside potential from Multi-Tenanted properties.
3. Inorganic growth through acquisitions.
Stable organic growth through in-built rental escalation of Master Leases.
Seven of SBREIT's ten properties are on Master Leases. The Master Leases range
between 5 to 15 years and give long term stability to the portfolio's rental income.
Organic growth comes from annual or bi-annual built-in rental escalations. Annual
escalations are about 2% to 3%, while bi-annual escalations are 2.5% to 4.5%.
Fig 9. Cash flow from Master Leases
Source: SBREIT presentation, "DBS Pulse of Asia Conference", 5 Jan 2015
Upside potential from Multi-Tenanted properties.
The remaining three properties on multi-tenant leases are:
West Park BizCentral – Multi-User Ramp-up factory
Eightrium – Business Park
Tuas Connection – Multi-User Land-based factory
Fig 10. Upside potential from Multi-Tenanted properties
Source: SBREIT presentation, "DBS Pulse of Asia Conference", 5 Jan 2015
Page | 8 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
SOILBUILD BUSINESS SPACE REIT INITIATION
Inorganic growth through acquisition.
SBREIT had acquired three properties from third-parties during FY14. There are four
properties in the ROFR portfolio. The first ROFR property due for completion in 1Q
2015 located at Bukit Batok represents a potential acquisition for SBREIT in 2015.
Fig 11. Acquisition growth mechanisms on track
Source: SBREIT presentation, "DBS Pulse of Asia Conference", 5 Jan 2015
Page | 9 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
SOILBUILD BUSINESS SPACE REIT INITIATION
Valuation Model: Dividend Discount Model (DDM)
Absolute valuation
The DDM is an appropriate method to value SBREIT as most of its cash flow is paid
out to Unitholders through dividends. We derive a valuation of S$0.960 from our
DDM estimates.
Table 4. Dividend Discount Model
Y/E Dec
Forecasted distributions (S$)
PV of forecasted distributions (S$)
Terminal value (S$)
PV of terminal value (S$)
Price Target (S$)
FY15e
0.064
0.060
FY16e
0.063
0.055
FY17e
0.062
0.051
FY18e
0.062
0.048
Forecasted DPU show a declining
trend as we have adopted
conservative assumptions of (1)
declining NPI margin, (2) lower
occupancies as Master leases
convert to Multi-tenanted leases, (3)
higher commissions incurred for new
leases and (4) dilution from larger
Unit base.
FY19e
0.057
0.042
0.962
0.702
0.960
Assumptions
Cos t of equi ty
6.5%
Termi na l growth ra te
0.5%
Source: Phi l l i p Securi ti es Res ea rch (Si nga pore)
Peer comparison
There are several Industrial S-REITs listed on the Singapore Exchange. We believe that
the closest peer to SBREIT is Viva Industrial Trust ("VIT"), on the basis of Market
Capitalisation and types of properties held in the portfolio. However, SBREIT believes
its closest peers are Ascendas REIT ("A-REIT") and Mapletree Industrial Trust ("MIT").
Relative valuation
While we value SBREIT using a DDM, we also compare SBREIT on a relative valuation
basis against specific Industrial S-REITs with significant exposure to Business Park
space. We do not use P/NAV relative valuation method to value SBREIT, due to its
known weakness of treating the assets as a static pool, and does not factor future
portfolio growth.
Table 5. Peer relative data (arranged by Mkt. Cap.)
Mkt. Cap. (S$mn)
As cendas REIT
5,990
Mapl etree Indus tri al Trus t
2,699
Soi l bui l d Bus i nes s Space REIT
653
Vi va Indus tri al Trus t
504
Average
Source: Bl oomberg (Updated: 13 March 2015)
Price (S$)
2.490
1.545
0.800
0.810
P/NAV
1.22x
1.28x
1.00x
1.07x
1.14x
At 1.00x P/NAV, SBREIT is
undervalued relative to peer
average.
yield (%)
5.9
6.9
7.9
9.4
7.5
SBREIT deserves a premium on
P/NAV relative to peers on the basis
of having the longest land lease to
expiry among peers.
On a historical valuation basis, we note that SBREIT does not have a long operating
history as it was only recently listed in August 2013; so historical valuation is for
reference only. Fig 6 shows that SBREIT has historically traded below 1.0x P/NAV; and
is now just about +1 standard deviation above the historical average of 0.97x P/NAV.
Fig 7 shows that SBREIT is now trading at S$0.80, which is about 1.0x P/NAV.
Fig 6. Historical P/NAV with SD bands
1.05x
P/NAV
+ 1.0 SD
AVERAGE
Source: Company, Bloomberg, PSR est.
Fig 7. Historical price with P/NAV derived price bands (S$)
price
1.1x P/NAV
1x P/NAV
0.9x P/NAV
0.95
-1.0 SD
Source: Company, Bloomberg, PSR est.
0.90
1.00x
0.85
0.80
0.95x
0.75
0.90x
0.70
Mar-15
Sep-14
Mar-14
Sep-13
Mar-15
Sep-14
Mar-14
Sep-13
Page | 10 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
SOILBUILD BUSINESS SPACE REIT INITIATION
Ongoing litigation
The Manager of SBREIT made an announcement on 16 January 2015 that it would be
commencing legal proceedings in the High Court for a determination regarding the
amount of land rent payable to JTC Corporation in relation to Solaris.
What is the immediate impact?
No immediate impact on SBREIT as the land rent for Solaris is paid for by the Master
Tenant under the triple-net-lease terms.
What is the downside outcome if an unfavourable ruling from the High Court?
 There will be a balance sheet write down on the asset, and NAV per share would
be reduced by S$0.03.
 SBREIT would have to pay the higher land rent after 15 August 2015 if it converts
from the current Master Lease agreement to a Multi-tenant lease.
SWOT Analysis for SBREIT
Strengths
 Dominant positioning of having the longest land lease among the Industrial SREITs.
 Differentiated by having a Sponsor from the Construction sector.
 Expose to Business Park space through two properties, both of which have 100%
occupancy.
 Young portfolio with average age of 5.4 years, compared to nearest listed peer of
7.4 years.
Weaknesses
 Smaller portfolio of properties (relative to other listed peers), thus less
diversified.
 Limited opportunity for development of investment properties due to its smaller
asset base. (REITs are allowed only 10% of total assets to be in uncompleted
property developments.)
Opportunities
 Quality Business Park properties to ride on secular trend of decentralising of
commercial activities outside of the City.
Threats
 Upcoming supply of Industrial space to put pressure on rents and occupancy.
West Park BizCentral is the property that is currently facing some competition.
 Unfavourable government policy putting restrictions on land use or tenant type.
 Ongoing litigation for rent payable to JTC in relation to Solaris.
Page | 11 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
SOILBUILD BUSINESS SPACE REIT INITIATION
Financials
Statement of Total Return and Distribution Statement
Y/E Dec, SGD mn
FY13 FY14 FY15e FY16e
Balance Sheet
Y/E Dec, SGD mn
FY13
Gross revenue
Property expens es
Net property income
Net Fi na nce (Expens e)/Inc.
Ma na ger's fees
Other i tems
Excepti ona l i tems
Net income
FV cha nge, Invmnt. properti es
Total Return Before Tax
Ta xa ti on
Total Return After Tax
Di s tri buti on a djus tments
Income available for distribution
Income distributed
ASSETS
Inves tment properti es
Inv. Propty. Under Devmnt.
PPE
Others
Total non-current assets
Ca s h
Tra de recei va bl es
Others
Total current assets
Total Assets
935
0.0
935
20.0
0.2
0.1
20.2
955
1,031
1.0
1,032
21.0
0.8
0.5
22.3
1,054
1,031
1.0
1,032
18.5
0.9
0.6
20.0
1,052
1,031
1.0
1,032
15.3
0.9
0.6
16.8
1,048
8.3
-
8.7
94.6
9.4
94.6
9.5
94.6
0.8
9.1
275.3
23.5
298.8
308.0
2.6
105.9
274.3
23.0
297.3
403.2
2.8
106.9
274.3
23.0
297.3
404.2
2.8
106.9
274.3
23.0
297.3
404.2
647
651
648
644
647
651
648
644
24.6
(4.0)
20.6
(3.3)
(2.0)
(0.3)
15.0
29.7
44.7
44.7
(26.5)
18.3
18.3
68.1
(10.8)
57.4
(9.7)
(5.5)
(1.1)
41.2
0.9
42.1
42.1
8.1
50.2
50.2
74.0
(11.7)
62.3
(11.8)
(6.6)
(1.9)
42.1
42.1
42.1
9.8
51.9
51.9
74.3
(11.8)
62.5
(12.1)
(6.3)
(1.9)
42.2
42.2
42.2
9.5
51.8
51.8
LIABILITIES
Tra de pa ya bl es
Borrowi ngs
Others
Total current liabilities
Borrowi ngs
Others
Total non-current liabilities
Total Liabilities
Per share data (Cents)
Y/E Dec
FY13
FY14 FY15e FY16e
NAV
EPU
DPU
80.0
1.86
2.27
80.0
5.09
6.19
Y/E Dec, SGD mn
FY13
FY14 FY15e FY16e
CFO
Net i ncome
Adjus tments
WC cha nges
Ca s h genera ted from ops
Others
Cashflow from ops
15.0
5.8
3.0
23.8
(1.8)
22.0
41.2
16.7
3.4
61.3
(7.4)
53.9
78.9
5.15
6.35
77.7
5.12
6.27
Net assets
Represented by:
Unitholders' funds
FY14 FY15e FY16e
Cash Flow
CFI
CAPEX, net
Purcha s e of Inv. Propty.
Others
Cashflow from investments
(799.2)
(799.2)
(0.2)
(94.6)
(94.8)
42.1
18.3
0.8
61.2
(11.8)
49.5
-
42.2
18.4
0.0
60.7
(12.1)
48.5
-
CFF
Sha re i s s ua nce, net
612.6
(0.1)
Loa ns , net of repa yments
190.8
91.5
Di vi dends
(6.1) (49.4) (51.9) (51.8)
Others
Cashflow from financing
797.2
41.9
(51.9) (51.8)
Net change in cash
20.0
1.0
(2.4)
(3.2)
Effects of excha nge ra te
Ending cash
20.0
21.0
18.5
15.3
Source: Compa ny, Phi l l i p Securi ti es Res ea rch (Si nga pore) Es ti ma tes
Valuation Ratios
Y/E Dec
FY13
FY14 FY15e FY16e
P/NAV (x)
P/DPU (x)
Di s tri buti on Yi el d (%)
NPI yi el d (%)
Growth & Margins (%)
0.95
33.55
2.98
0.99
12.73
7.86
5.84
1.01
12.60
7.94
6.04
1.03
12.75
7.84
6.07
177.4%
178.4%
174.7%
172.8%
8.6%
8.6%
3.4%
2.5%
0.4%
0.4%
-0.2%
-1.2%
84.2%
84.2%
84.2%
348.0
35.0%
350.4
35.1%
353.6
35.2%
Growth
Revenue
Net property i ncome (NPI)
Di s tri buta bl e i ncome
DPU
Margins
NPI ma rgi n
Key Ratios
Net Debt or (Net Ca s h)
Gea ri ng (%)
*Forward multiples & yields based on current market price; historical multiples & yields based on historical market price.
Page | 12 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
255.4
28.8%
SOILBUILD BUSINESS SPACE REIT INITIATION
Ratings History
1.00
Market Price
Target Price
0.95
0.90
0.85
0.80
0.75
Source: Bl oomberg, PSR
0.70
Sep-16
Jun-16
Mar-16
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
1
2
3
4
5
PSR Rating System
Total Returns
Recommendation Rating
> +20%
Buy
1
+5% to +20%
Accumul a te
2
-5% to +5%
Neutra l
3
-5% to -20%
Reduce
4
< -20%
Sel l
5
Remarks
We do not ba s e our recommenda tions entirel y on the a bove qua ntitative
return ba nds . We cons i der qua l i tative fa ctors l i ke (but not l i mi ted to) a s tock's
ri s k rewa rd profi l e, ma rket s entiment, recent ra te of s ha re pri ce a ppreci a tion,
pres ence or a bs ence of s tock pri ce ca tal ys ts , a nd s pecul a tive undertones
s urroundi ng the s tock, before ma ki ng our fi na l recommenda tion
Page | 13 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
SOILBUILD BUSINESS SPACE REIT INITIATION
Contact Information (Singapore Research Team)
Management
Chan Wai Chee
(CEO, Research - Special Opportunities)
[email protected]
Research Operations Officer
Jaelyn Chin
[email protected]
Market Analyst | Equities
Kenneth Koh
[email protected]
US Equities
Wong Yong Kai
[email protected]
Finance | Offshore Marine
Benjamin Ong
[email protected]
Real Estate
Caroline Tay
REITs
Dehong Tan
[email protected]
Telecoms | Technology
Transport & Logistics
Richard Leow,
[email protected]
CFTe
Contact Information (Regional Member Companies)
MALAYSIA
Phillip Capital Management Sdn Bhd
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No. 12, Jalan Yap Kwan Seng, 50450
Kuala Lumpur
Tel +603 2162 8841
Fax +603 2166 5099
Website: www.poems.com.my
Macro | Equities
Soh Lin Sin
Bakhteyar
Osama
Colin Tan
[email protected]
[email protected]
[email protected]
SINGAPORE
Phillip Securities Pte Ltd
Raffles City Tower
250, North Bridge Road #06-00
Singapore 179101
Tel +65 6533 6001
Fax +65 6535 6631
Website: www.poems.com.sg
[email protected]
HONG KONG
Phillip Securities (HK) Ltd
11/F United Centre 95 Queensway
Hong Kong
Tel +852 2277 6600
Fax +852 2868 5307
Websites: www.phillip.com.hk
JAPAN
Phillip Securities Japan, Ltd.
4-2 Nihonbashi Kabuto-cho Chuo-ku,
Tokyo 103-0026
Tel +81-3 3666 2101
Fax +81-3 3666 6090
Website: www.phillip.co.jp
INDONESIA
PT Phillip Securities Indonesia
ANZ Tower Level 23B,
Jl Jend Sudirman Kav 33A
Jakarta 10220 – Indonesia
Tel +62-21 5790 0800
Fax +62-21 5790 0809
Website: www.phillip.co.id
CHINA
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Ocean Tower Unit 2318,
Postal code 200001
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Fax +86-21 6351 2940
Website: www.phillip.com.cn
THAILAND
Phillip Securities (Thailand) Public Co. Ltd
15th Floor, Vorawat Building,
849 Silom Road, Silom, Bangrak,
Bangkok 10500 Thailand
Tel +66-2 6351700 / 22680999
Fax +66-2 22680921
Website www.phillip.co.th
FRANCE
King & Shaxson Capital Limited
3rd Floor, 35 Rue de la Bienfaisance 75008
Paris France
Tel +33-1 45633100
Fax +33-1 45636017
Website: www.kingandshaxson.com
UNITED KINGDOM
King & Shaxson Capital Limited
6th Floor, Candlewick House,
120 Cannon Street,
London, EC4N 6AS
Tel +44-20 7426 5950
Fax +44-20 7626 1757
Website: www.kingandshaxson.com
UNITED STATES
Phillip Futures Inc
141 W Jackson Blvd Ste 3050
The Chicago Board of Trade Building
Chicago, IL 60604 USA
Tel +1-312 356 9000
Fax +1-312 356 9005
Website: www.phillipusa.com
AUSTRALIA
Phillip Capital Limited
Level 12, 15 William Street,
Melbourne, Victoria 3000, Australia
Tel +61-03 9629 8288
Fax +61-03 9629 8882
Website: www.phillipcapital.com.au
SRI LANKA
Asha Phillip Securities Limited
No-10 Prince Alfred Tower,
Alfred House Gardens,
Colombo 03, Sri Lanka
Tel: (94) 11 2429 100
Fax: (94) 11 2429 199
Website: www.ashaphillip.net
INDIA
PhillipCapital (India) Private Limited
No.1, 18th Floor
Urmi Estate
95, Ganpatrao Kadam Marg
Lower Parel West, Mumbai 400-013
Maharashtra, India
Tel: +91-22-2300 2999 / Fax: +91-22-2300 2969
Website: www.phillipcapital.in
Page | 14 | PHILLIP SECURITIES RESEARCH (SINGAPORE)
TURKEY
PhillipCapital Menkul Degerler
Dr. Cemil Bengü Cad. Hak Is Merkezi
No. 2 Kat. 6A Caglayan
34403 Istanbul, Turkey
Tel: 0212 296 84 84
Fax: 0212 233 69 29
Website: www.phillipcapital.com.tr
DUBAI
Phillip Futures DMCC
Member of the Dubai Gold and
Commodities Exchange (DGCX)
Unit No 601, Plot No 58, White Crown Bldg,
Sheikh Zayed Road, P.O.Box 212291
Dubai-UAE
Tel: +971-4-3325052 / Fax: + 971-4-3328895
Website: www.phillipcapital.in
SOILBUILD BUSINESS SPACE REIT INITIATION
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Page | 15 | PHILLIP SECURITIES RESEARCH (SINGAPORE)