Soilbuild Business Space REIT

[Greenrookie]

AM Fraser initiated with BUY, fair value $0.83:

Tried cut and pasting the paragraphs but somehow system can't accept it

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thanks for sharing, very good read

I think at the current price its a pretty decent buy with the 8% yield and low gearing of 30%, one of the better choice if one wishes to purchase reit and definitely a better pick as compared to sabana reit (horrible management)

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Sorry guys can help me with this

Looking at the attached picture (screen shot from AM report)

how come distribution for 2015 drops to 5.41 cents?

is it because of the ipo this year the a big portion of distribution is carried forwarded to 2014 making it 6.20 cents for 2014??

at FY15 5.41 cents, its yield would be 7.5% instead, still decent but less than what I was expecting (8% or so)

thanks a lot guys

Come 2015, performance fees come into the picture and payout need not be 100%. It can be 90%. It's in the prospectus. Do note the performance fees is higher than sabana and the only requirement is higher DPU. Acquisition fees also higher. More incentive to be buy trigger happy, although they might not. Sabana has no reason to be trigger happy, acquisition fees is meagre and performance fees not existence, but they still do it.

We shall see about soilbuild in due term.

[felixleong]

ohhh no wonder, thanks a lot for the answer

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guess you are right, the distribution should be 6 cents at 100% payout rate for 2015
the analyst put 5.41 for assumption of 90% payout

got it liao, thanks again ^^

[KopiKat]

AM Fraser initiated with BUY, fair value $0.83:

Tried cut and pasting the paragraphs but somehow system can't accept it

---

thanks for sharing, very good read

I think at the current price its a pretty decent buy with the 8% yield and low gearing of 30%, one of the better choice if one wishes to purchase reit and definitely a better pick as compared to sabana reit (horrible management)

---

Sorry guys can help me with this

Looking at the attached picture (screen shot from AM report)

how come distribution for 2015 drops to 5.41 cents?

is it because of the ipo this year the a big portion of distribution is carried forwarded to 2014 making it 6.20 cents for 2014??

at FY15 5.41 cents, its yield would be 7.5% instead, still decent but less than what I was expecting (8% or so)

thanks a lot guys

Come 2015, performance fees come into the picture and payout need not be 100%. It can be 90%. It's in the prospectus. Do note the performance fees is higher than sabana and the only requirement is higher DPU. Acquisition fees also higher. More incentive to be buy trigger happy, although they might not. Sabana has no reason to be trigger happy, acquisition fees is meagre and performance fees not existence, but they still do it.

We shall see about soilbuild in due term.

Those appears to be DDM data used to compute their Target Price of 83ct, but I don't know how it's computed...

If you look at pg21, they have the DPS data. Pg19 also had a sensitivity analysis of the yield which implies a growing DPU...

[felixleong]

thanks, the page 21 info was very helpful

page 19, best case target price 88 cents
worst case 78 cents

seems that the current price of 72 cents makes it undervalued, thats why mr lim bought more at 73 cents
the fundamentals looks ok but its so out of flavor

will monitor management over the next 1-2 years

[KopiKat]

seems that the current price of 72 cents makes it undervalued, thats why mr lim bought more at 73 cents

Hmm... I doubt that's the only reason. Probably many reasons.... beyond the understanding of poor folks like us...

At listing, his stake was 20% as 7% was "loaned" to the Stabilising Mgr. If the Stabilising Mgr had been more active, they'd have easily bought back the entire 7% at below IPO price (78ct) and would have made some extra "pocket money" on the difference (below 78ct). The whole 7% would then have been returned to Mr Lim at the end of stabilising and he'd have ended up with 27% stake.

For whatever reasons.... the Stabilising Mgr chose to stay inactive (after the huge 1st day effort at pre-open) and the share price dropped all the way to below 70ct (at it's lowest) within the 30-days, before some smaller purchases at the last 2 days of stabilising. In between, Mr Lim came in to buy 20Mil units @ 73ct, raising his 20% (19.992%, to be precise) to 22.481%, at the same time, providing some price stability ie. doing a more effective job than the Stabilising Mgr. Depending on how you look at it, it can also appear to be a short @ 78ct being covered at 73ct... He must have appeared to be like a hero to those who'd been alloted during IPO @ 78ct....

At the end of the 30-days stabilising period, the Stabilising Mgr had bought a total of 3.55% (out of a possible 7%). This will be returned to Mr Lim and he'll end up with a 26.03% stake.

I do have unanswered questions which I hope will get answered in the coming days, weeks, months, years...

[felixleong]

just to check, for soil buld reit, is there any there any distribution this year? (since it ipo in august only)

[xaley]

just to check, for soil buld reit, is there any there any distribution this year? (since it ipo in august only)

Nope. I remember reading that the distribution will be for till 31st Dec this year. So will only receive distribution on Feb next year. Not in time for CNY next year. Ang bao a bit late.

[felixleong]

Thanks for the info, late ang pow haha

[freedom]

Hmm... I doubt that's the only reason. Probably many reasons.... beyond the understanding of poor folks like us...

At listing, his stake was 20% as 7% was "loaned" to the Stabilising Mgr. If the Stabilising Mgr had been more active, they'd have easily bought back the entire 7% at below IPO price (78ct) and would have made some extra "pocket money" on the difference (below 78ct). The whole 7% would then have been returned to Mr Lim at the end of stabilising and he'd have ended up with 27% stake.

For whatever reasons.... the Stabilising Mgr chose to stay inactive (after the huge 1st day effort at pre-open) and the share price dropped all the way to below 70ct (at it's lowest) within the 30-days, before some smaller purchases at the last 2 days of stabilising. In between, Mr Lim came in to buy 20Mil units @ 73ct, raising his 20% (19.992%, to be precise) to 22.481%, at the same time, providing some price stability ie. doing a more effective job than the Stabilising Mgr. Depending on how you look at it, it can also appear to be a short @ 78ct being covered at 73ct... He must have appeared to be like a hero to those who'd been alloted during IPO @ 78ct....

At the end of the 30-days stabilising period, the Stabilising Mgr had bought a total of 3.55% (out of a possible 7%). This will be returned to Mr Lim and he'll end up with a 26.03% stake.

I do have unanswered questions which I hope will get answered in the coming days, weeks, months, years...

My guess is that Mr. Lim will hold more units in his personal account and fewer units in his company account(SoildBuild), with similar total units(around 27%). In this way, Mr. Lim will receive dividends directly from the REIT instead of waiting for distribution from SoilBuild. It gives more cash flow stability/visibility for his personal account.

[greengiraffe]

OCBC Sec:

Soilbuild Business Space REIT: Best proxy to Singapore industrial market
We are initiating coverage on Soilbuild Business Space REIT (Soilbuild REIT) with a BUY rating. Soilbuild REIT currently owns a young portfolio of seven modern business space properties in Singapore and has the largest exposure to the business park segment. We like Soilbuild REIT’s exposure in this space because demand in the local scene has been growing steadily throughout the years. We also believe that Soilbuild REIT is able to leverage on the capabilities of its Sponsor, Soilbuild Group, to grow its income given its track record and expertise. Soilbuild REIT is granted Right of First Refusal (ROFR) by its Sponsor over all its income-producing business space assets in Singapore. The ROFR currently covers four industrial properties, providing Soilbuild REIT with a clear acquisition pipeline. As of the listing date, Soilbuild REIT is sitting at healthy gearing ratio of 29.9%, while 75.0% of its interest rates are fixed. This not only gives Soilbuild REIT ample debt headroom to pursue its growth plans but also limits its exposure to rising interest costs. Our fair value of S$0.82 implies an attractive total expected return of 20.1%. At current price, Soilbuild REIT is also trading at the steepest discount of 8.8% to its book value, compared to its subsector peers. This is unjustified in our view given Soilbuild REIT’s quality portfolio assets, growth potential and respectable FY14F yield of 7.8%. (Kevin Tan)