Singapore Press Holdings (SPH)

[Temperament]

Can it be more like assets multiplying mainly using the retail/institution investors money? Like Capital Land all over China and Singapore &......? The main ? is under what circumstances or market conditions will cause these REITS become bubbles?
Or is it really a safer investment sector than others, that has recovery ability after a Bear market?
Anyone can remember what happened to REITS during the 2008/2009 fiasco? I do.


Only vested in LippoMall now. Purchased with "taking a chance" by buying the last NIL Paid Rights and then subscribed. Sold some and trying to sell the rest. It's OK if i can't sell at the price i want, i keep lol. Or i may just sell , regardless.

Not sure how bubbles will form, but trouble will come when valuation of properties is adjust significantly downwards when interešt rate is raising rapidly or above 4%. When it happens at a time when a highly geared REIT near its lending cap, they will be forced to do fund raising to pare down, leading to dilution of yield even if u subscript to its rights.

But since the Gfc, reits has generally keep a buffer from the lending cap and space out their debts servicing. So that risk is reduced.

Another problem is when the parent sponsor also get into trouble.

Ah yes! Even if the market is "intact" Reits are very sensitive to interest rate rise & the condition of the Capital Loan Market (And of course Reits Gearing and who is the AH KONG behind the REITS).
But Mr.market will adjust the price of the Reits to try to maintain the DPU (yield).

[yeokiwi]

I don't quite see the relationship with the Popular Hldgs post, so I'm not including the quote here...

haha.. finger does not connect brain during replying.
I did not mean to quote the popular post..

[Musicwhiz]

The Straits Times
www.straitstimes.com
Published on Mar 12, 2013
COMPANIES
SPH stock surges on Reit news
Move could unlock value, boost reputation as a retail mall player

By Alvin Foo

SINGAPORE Press Holdings (SPH) shares surged to their highest levels in nearly five years yesterday after the group said on Sunday that it is exploring setting up a Singapore-listed real estate investment trust (Reit).

The blue-chip counter soared 14 cents, or 3.4 per cent, to $4.31 for its best finish since June 2008.

Analysts said the potential Reit creation could unlock further value for shareholders and boost SPH's reputation as an influential retail mall player here.

OCBC Investment Research analyst Eli Lee said: "If this transaction does occur, we see it to be a favourable move which would unlock additional value from its mall assets... and recycle capital back into the group's growing retail mall business."

The SPH news comes just days after the red-hot $1.7 billion public listing of Mapletree Greater China Commercial Trust - the largest Reit ever launched here.

It was 29.5 times subscribed in total, and surged as much as 12 per cent on its trading debut last Thursday.

The latest Mapletree Reit added another 1.5 cents yesterday to $1.065, and is now nearly 15 per cent above its initial public offer price of 93 cents. It also follows media reports late last month of Overseas Union Enterprise (OUE) planning a $1 billion listing of its Singapore hospitality assets via a Reit as early as the third quarter.

DBS Vickers analyst Andy Sim said: "Investor demand has been quite robust for Reits of late."

Reits have been popular with investors in recent years, as they are seen as a good hedge against high inflation amid low bank deposit interest rates. Moreover, Singapore's Reit sector was the best-performing globally last year and is also tipped to shine this year.

Singapore Reits have also outperformed their regional peers in Hong Kong, Japan and Australia, according to a recent Singapore Exchange My Gateway report.

Analysts say spinning off a company's assets into a Reit allows it to raise funds, which can then be deployed to look for growth opportunities. Having a Reit also allows the company to earn regular income from the recurring fees of managing the malls, and gives it a lower tax bill.

Maybank Kim Eng analyst Ong Kian Lin said: "If the hospitality Reit comes to fruition, OUE also stands to benefit from the recurring fees as the Reit manager and tax savings in millions from the tax-exemption granted to a Reit."

Analysts say SPH's Reit listing would likely comprise its key property asset Paragon shopping mall, which was valued at $2.43 billion as of last August.

SPH has a 60 per cent stake in The Clementi Mall. It also has a 70 per cent share of Seletar Mall, which is slated for completion by the end of next year. A retail Reit comprising Paragon and The Clementi Mall would have assets worth about $3 billion, analysts estimate.

That could still be worth listing as a Reit, given the multi-billion dollar value of Paragon, which will underpin the trust, they add.

DBS Vickers' Mr Sim said: "It doesn't mean that with two, three assets it can't do it."

SPH could also find a partner for the Reit, or offer a higher yield for the Reit to attract investors, he added.

The potential move could even boost SPH's share price by showing that it has another area of growth. OCBC's Mr Lee said that this would position the group as "a growing retail mall player, whose expansion is supported by a cash-rich balance sheet and newspaper cash cow business".

alfoo@sph.com.sg

[mkmk]

Hm, not sure if I can post Analysts views, if not please delete this:


DBSVickers
SPH: BUY (Upgrade from HOLD); S$4.31; SPH SP
Pressing towards a REIT
Price Target : 12-month S$ 4.79 (Prev S$ 4.01)
by: Andy SIM CFA +65 6398 7969

• Upgrade SPH to BUY with possible asset value realisation through establishment of REIT
• Formal announcement may be taken as a signal that conditions are ripe and process is ongoing
• Paragon and Clementi Mall, fair market value at S$3bn, are most likely candidates
• TP raised to S$4.79, unlocking value for shareholders; special dividends are key catalysts

Upgrade SPH to BUY, announcement signals conditions are ripe. We raised SPH to BUY as we believe asset value realisation will be a trigger for share price outperformance with the establishment of a real estate investment trust (REIT). Through the successful listing of the proposed REIT, we estimate SPH could see a cash inflow of S$1.5bn-1.8bn assuming a retention of 40%-50% eventual interest; shareholders should stand to reap special dividends. Given the conservative stance of management, we believe this could signal that conditions are ripe (and that the process is ongoing), compared to before. This is the first time the group has formally announced its intention.

Paragon and Clementi Mall are most likely assets. Details are not available pertaining to the intended REIT, but we believe Paragon and Clementi Mall could be the assets in the initial portfolio. Based on latest independent valuer’s estimate of c.S$3bn and our assumptions (see pg 3), the proposed REIT could likely have an initial distribution yield of c. 5.77%, which is likely to see some decent demand. We do not expect Seletar Mall to be part of the initial portfolio injection as it is still under development, but it could be earmarked as a pipeline for the future. One key challenge for the proposed REIT would be the pipeline of assets for growth. This could be addressed should management be able to tie up with third party asset owners or further development of new sites.

TP raised to S$4.79. We raised our SOTP TP to S$4.79, pegging our property valuation to the latest fair market estimates (S$3bn) and raised our valuation of its newspaper/ magazines ops, backed by DCF to S$4.5bn. Further catalyst could come from the eventual launch of the REIT, and if successful, potential for special dividend payout.

[CityFarmer]

Hm, not sure if I can post Analysts views, if not please delete this:


DBSVickers
SPH: BUY (Upgrade from HOLD); S$4.31; SPH SP
Pressing towards a REIT
Price Target : 12-month S$ 4.79 (Prev S$ 4.01)
by: Andy SIM CFA +65 6398 7969

• Upgrade SPH to BUY with possible asset value realisation through establishment of REIT
• Formal announcement may be taken as a signal that conditions are ripe and process is ongoing
• Paragon and Clementi Mall, fair market value at S$3bn, are most likely candidates
• TP raised to S$4.79, unlocking value for shareholders; special dividends are key catalysts
...

It is amusing the different on TP by analyst, from $4.01 to $4.79 base on a spin-off announcement.

So what changes deserve such a uplift in TP? Let's see

- The market value of SPH's investment properties does not change, and it is always up-to-date MV
- The media business's fundamental does not change too
- Previous valuation method is the same as current one, the SOTP

So i saw it is "unlocking value" that push-up the price... It is a "add-on value" which might disappear overnight by an announcement.

[violinist]

Ha ha, elephant can fly.

[Temperament]

Alamak! Sold all my SPH 1 to 2 weeks ago. But who knows? No regret, No regret. In stock investment, if you want to regret then either way you will always have a lots of regret.

[2V.]

Nice, its up all the way. It seem the funds are buying

Ha ha, elephant can fly.

[a74henry]

Wow. The institutions that are buying 40 lots and above has boosted the share price significantly today. Warren Buffet's report on newspaper company and the REIT announcement is rubbing off on our local market.

[memphisb]

The last thing shareholders want to know is sph announced that the plan for reit is not feasible. But still its possible.

Vested.