Soilbuild Business Space REIT

[felixleong]

http://www.todayonline.com/business/soil...properties
SINGAPORE — Soilbuild Group Holdings, a Singapore developer, is seeking up to S$642.8 million in an initial public offering of its industrial properties.

The announcement comes a week after two real estate investment trusts had somewhat mixed fortunes on their debut, with SPH REIT gaining 9 per cent but OUE Hospitality Trust ending flat.

Soilbuild Business Space REIT is offering 586.5 million units at S$0.77 to S$0.80 each, according to a preliminary prospectus filed with the central bank yesterday.

Mr Lim Chap Huat, Soilbuild’s co-founder, has offered to buy an additional 216.9 million units.

The REIT’s initial portfolio comprises two business park developments and five industrial properties.

The REIT expects to offer a dividend yield of as much as 7.8 per cent based on projections for fiscal 2014, according to the prospectus.

Citigroup, DBS Group and Oversea-Chinese Banking Corp are managing the offering. BLOOMBERG

[cfa]

Very weak sponsor, may face difficulty for refinancing when credit is tight.

[safetyfirst]

Even if you have strong sponsors, it doesnt mean much. In fact during the recent global financial crisis, many reits linked to capitaland were the first few to do a rights issue!

[cfa]

Even if you have strong sponsors, it doesnt mean much. In fact during the recent global financial crisis, many reits linked to capitaland were the first few to do a rights issue!

I always prefer right issue. The right issue by Starhill Global during the financial crisis was at 0.35. I am still holding on to it. The cost of this right after deducting the total dividends I received is around 0.22 . Not all right issues are bad.

[greengiraffe]

http://infopub.sgx.com/FileOpen/Soilbuil...leID=10394

Caveat Emptor...

I managed to trace down to the delisting circular of the old Soilbuild Group and found very interesting info on the value for the core assets that are anchoring the Soilbuild BS Reit:

i) Eightrium@ Changi Business Park - $93.2m (current purchase price) vs 65.0m (delisting valuation) + $28.2m

ii) Solaris - $299.0m vs $145.0m +$154m

iii) Tuas Connection - $125.0m vs $80.0m +45.0m

iv) West Park BizCentral - $319.0m vs $150m (1/3 completed valued @ $45m at delisting valuation) + $169m

So based on the above core assets - the vendor of the assets has already reaped S$396.2m just on the intended sale vs delisting valuation alone.

Moreover, the delisting exercise was done at a small premium back in 2010 - $0.80 vs 0.754.

The construction arm was recently listed and the vendors reaped easily 4 folds over their costs based on their IPO alone.

Mr Lim Chap Huat and the Sponsor will together immediately after the completion of the Offering, hold 216,937,000 Units (constituting 27.0% of the total number of Units expected to be in issue) (assuming that the Over-Allotment Option is not exercised) or
160,630,000 (constituting 20.0% of the total number of Units expected to be in issue) (assuming the Over-Allotment Option is exercised in full).

Assuming the pricing @ $0.80 - the remaining committed stake is valued between $128.5m and $173.6m. Seriously, the commitment is peanuts compared to the profits that they are booking up front just on the listing.

Caveat Emptor
GG

[safetyfirst]

we are more or less aware that some towkays delist at a low price and then a few years later, when memories fade, when IPO market starts picking up, these towkays return to list their businesses at a higher price/valuation.

... but then again, forgetful investors never seem to learn their lessons!!!

[Stocker]

I have some friends in construction ind , they know them very very well.

[smallcaps]

Don't really like working there... rain no shelter, food court need to walk to fusion. Taxi also no. Ho bee's one much better located imo.

[lonewolf]

So based on the above core assets - the vendor of the assets has already reaped S$396.2m just on the intended sale vs delisting valuation alone.

Oh wow. Thanks for the info. I was wondering why Soilbuild sounds so familiar.

I suppose it can be argued that if SBGH was not de-listed, the same valuation would be prevailing in the current market?

I have some friends in construction ind , they know them very very well.

Meaning what exactly? Though somehow I'm thinking 'know' as in not very nice way/??

Don't really like working there... rain no shelter, food court need to walk to fusion. Taxi also no. Ho bee's one much better located imo.

Meaning where exactly? Soilbuild office? or one of the REIT assets?

[AlphaQuant]

i find some other points interesting also:

1) other than the 4 sponsored properties, the remaining 3 in Tuas were bought in early 2013

2) the leases of the 3 properties are:
a) NK Ingredients 30+30yrs from 1986 so 33 years remaining
b) COS printers 30+19 yrs from 1993 so 29 years remaining
c) Beng Kuang Marine 60yrs from 1996 so 43 years remaining

3) under Pg E-68 of the prelim prospectus, for NK ingredients:
"Possibility of decontamination of premises may be required if
redevelopment is to take place." This plot forms 10% GFA of the REIT.