soilbuild business space reit -...

Page | 1 | PHILLIP SECURITIES RESEARCH (SINGAPORE) MCI (P) 019/11/2014 Ref. No.: SG2015_0095

Soilbuild Business Space REIT

Exposure to niche Business Park space; and longest land lease expiry SINGAPORE | REAL ESTATE (REIT) | INITIATION

16 March 2015

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 S-REITs – 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%. 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.

Investment Actions We initiate coverage on Soilbuild REIT with "BUY" rating and DDM valuation of S$0.960.

BUY (Initiating)CLOSING PRICE

FORECAST DIV

TARGET PRICE

TOTAL RETURN

COMPANY DATA

O/S SHARES (M N) : 816

M ARKET CAP (USD mn / SGD mn) : 470 / 653

52 - WK HI/LO (SGD) : 0.82 / 0.76

3M Average Daily T/O (mn) : 1.04

MAJOR SHAREHOLDERS (%)

27.1%

SCHRODERS PLC 9.9%

JINQUAN TONG 7.1%

SCHRODER INVESTM ENT M GM T HK LTD 3.3%

DBS BANK LTD 2.9%

PRICE PERFORMANCE (%)

1M T H 3 M T H 1Y R

COM PANY 0.6 4.0 13.1

STI RETURN (1.3) 1.8 12.3

PRICE VS. STI

Source: B loomberg, PSR

KEY FINANCIALS

Y / E D ec F Y 13 F Y 14 F Y 15e F Y 16 e

Gross Rev. (SGD mn) 24.6 68.1 74.0 74.3

NPI (SGD mn) 20.6 57.4 62.3 62.5

Dist. Inc. (SGD mn) 18.3 50.2 51.9 51.8

P/NAV (x) 0.95 0.99 1.01 1.03

DPU, adj (Cents) 2.27 6.19 6.35 6.27

Distribution Yield, % 3.0 7.9 7.9 7.8

Source: Company Data, PSR est.

Valuation Method

DDM (Cost o f Equity: 6.5%; Terminal g: 0.5%)

Richard Leow, CFTe (+65 6531 1735)

[email protected]

SGD 0.960

27.9%

CHAP HUAT LIM

SGD 0.800

SGD 0.064

0.75

0.77

0.79

0.81

0.83

0.85

Mar-14 Jun-14 Sep-14 Dec-14SBREIT SP EQUITY FSSTI index

Page | 2 | PHILLIP SECURITIES RESEARCH (SINGAPORE)

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) 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.

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.) 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.)

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.) SBREIT has the longest remaining land lease expiry among the Industrial S-

REITs. 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.)

Fig 1. 4Q 2014 Industrial space

Factory76%

Warehouse20%

Business Park4%

Source: JTC, PSR

Fig 2. Limited Business Park

Supply (million sqm)

0.0

0.5

1.0

1.5

2.0

20

15

20

16

20

17

20

18

20

19

>20

19

Source: JTC, PSR

Factory

Warehouse

Business Park

Fig 3. Business Park space in SG, by percentage of portfolio value (%) Fig 4. SBREIT has the longest remaining land lease (years)

66.8%

39.0%

16.7%

16.0%

7.0%

2.2%

0% 20% 40% 60% 80%

Viva Industrial Trust


Mapletree Industrial Trust

Ascendas REIT

AIMS AMP Capital

Cambridge Industrial Trust

Source: Various REITs, PSR

48.646.145.8

43.040.940.5

38.437.9

30.6

0 20 40 60


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.

For perspective, the national average occupancy for Business Park space was 79.8% in 4Q 2014.

http://www.channelnewsasia.com/news/business/singapore/ura-to-decentralise/1632638.html



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

Source: SBREIT website. (Accessed: 13 March 2015)

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: SB Property Service Pte Ltd. 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.



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

Rank Occupancy (%)

1 Soilbuild Business Space REIT 100

2 Cache Logistics Trust 98.5

3 Mapletree Logistics Trust 96.94 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: Various REITs , PSR est.

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.

Fig 6. Portfolio Overview

Source: SBREIT FY14 results presentation, 21 January 2015



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. 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.

Strong alignment of interest between REIT Manager and Unitholders. Base fee is pegged to Distributable income, while Performance fee is pegged to DPU growth.

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

Rank WALE (Years) weighted by

1 Cache Logistics Trust 4.6 GFA

2 Mapletree Logistics Trust 4.4 NLA

3 Cambridge Industrial Trust 4.0 rental income

4 Soilbuild Business Space REIT 3.9 rental income

- Ascendas REIT 3.9 rental income

6 Viva Industrial Trust 3.8 rental income

7 AIMS AMP Capital Industrial REIT 3.4 rental income

8 Mapletree Industrial Trust 2.6 rental income

9 Sabana REIT 2.5 rental income

Average 3.7

Source: Various REITs , PSR est.

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.



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

Properties Description

Maximum

GFA

('000 sq ft)

Underlying

Land Tenure

1020, 1022, 1024 & 1026

Tai Seng Avenue

3 blocks of 7-s torey

flatted factory bui lding

and a s ingle-s torey

amenity centre

1,031 60 years from

26 August 2011

164 & 164A Kal lang Way 7-storey l ight industria l

bui lding and a s ingle

s torey amenity centre

575 40 years from

26 August 2011

171 Kal lang Way 5-storey l ight industria l

bui lding

326 40 years from

26 August 2011

Bukit Batok Street 23 9-storey l ight industria l

ramp-up bui lding

404 30 years from

20 November 2012

Source: SBREIT IPO prospectus

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.

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




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




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



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



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 FY15e FY16e FY17e FY18e FY19e

Forecasted distributions (S$) 0.064 0.063 0.062 0.062 0.057

PV of forecasted distributions (S$) 0.060 0.055 0.051 0.048 0.042

Terminal value (S$) 0.962

PV of terminal value (S$) 0.702

Price Target (S$) 0.960

Assumptions

Cost of equity 6.5%

Terminal growth rate 0.5%

Source: Phi l l ip Securi ties Research (Singapore)

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.

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$mn) Price (S$) P/NAV yield (%)

Ascendas REIT 5,990 2.490 1.22x 5.9

Mapletree Industria l Trust 2,699 1.545 1.28x 6.9

Soi lbui ld Bus iness Space REIT 653 0.800 1.00x 7.9

Viva Industria l Trust 504 0.810 1.07x 9.4

Average 1.14x 7.5

Source: Bloomberg (Updated: 13 March 2015) 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.

At 1.00x P/NAV, SBREIT is undervalued relative to peer average. SBREIT deserves a premium on P/NAV relative to peers on the basis of having the longest land lease to expiry among peers.

Fig 6. Historical P/NAV with SD bands Fig 7. Historical price with P/NAV derived price bands (S$)

0.70

0.75

0.80

0.85

0.90

0.95

Se

p-1

3

Ma

r-14

Se

p-1

4

Ma

r-15

Source: Company, Bloomberg, PSR est.

price 1.1x P/NAV 1x P/NAV 0.9x P/NAV

0.90x

0.95x

1.00x

1.05x

Se

p-1

3

Ma

r-14

Se

p-1

4

Ma

r-15

Source: Company, Bloomberg, PSR est.

P/NAV + 1.0 SD AVERAGE -1.0 SD



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 S-

REITs. 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.



Financials

Statement of Total Return and Distribution Statement Balance Sheet

Y/E Dec, SGD mn FY13 FY14 FY15e FY16e Y/E Dec, SGD mn FY13 FY14 FY15e FY16e

Gross revenue 24.6 68.1 74.0 74.3 ASSETS

Property expenses (4.0) (10.8) (11.7) (11.8) Investment properties 935 1,031 1,031 1,031

Net property income 20.6 57.4 62.3 62.5 Inv. Propty. Under Devmnt. - - - -

Net Finance (Expense)/Inc. (3.3) (9.7) (11.8) (12.1) PPE - - - -

Manager's fees (2.0) (5.5) (6.6) (6.3) Others 0.0 1.0 1.0 1.0

Other i tems (0.3) (1.1) (1.9) (1.9) Total non-current assets 935 1,032 1,032 1,032

Exceptional i tems - - - - Cash 20.0 21.0 18.5 15.3

Net income 15.0 41.2 42.1 42.2 Trade receivables 0.2 0.8 0.9 0.9

FV change, Invmnt. properties 29.7 0.9 - - Others 0.1 0.5 0.6 0.6

Total Return Before Tax 44.7 42.1 42.1 42.2 Total current assets 20.2 22.3 20.0 16.8

Taxation - - - - Total Assets 955 1,054 1,052 1,048

Total Return After Tax 44.7 42.1 42.1 42.2

Distribution adjustments (26.5) 8.1 9.8 9.5 LIABILITIES

Income available for distribution 18.3 50.2 51.9 51.8 Trade payables 8.3 8.7 9.4 9.5

Income distributed 18.3 50.2 51.9 51.8 Borrowings - 94.6 94.6 94.6

Others 0.8 2.6 2.8 2.8

Total current liabilities 9.1 105.9 106.9 106.9

Borrowings 275.3 274.3 274.3 274.3

Others 23.5 23.0 23.0 23.0

Total non-current liabilities 298.8 297.3 297.3 297.3

Per share data (Cents) Total Liabilities 308.0 403.2 404.2 404.2

Y/E Dec FY13 FY14 FY15e FY16e

NAV 80.0 80.0 78.9 77.7 Net assets 647 651 648 644

EPU 1.86 5.09 5.15 5.12 Represented by:

DPU 2.27 6.19 6.35 6.27 Unitholders' funds 647 651 648 644

Cash Flow

Y/E Dec, SGD mn FY13 FY14 FY15e FY16e

CFO

Net income 15.0 41.2 42.1 42.2

Adjustments 5.8 16.7 18.3 18.4

WC changes 3.0 3.4 0.8 0.0

Cash generated from ops 23.8 61.3 61.2 60.7

Others (1.8) (7.4) (11.8) (12.1)

Cashflow from ops 22.0 53.9 49.5 48.5 Valuation Ratios

Y/E Dec FY13 FY14 FY15e FY16e

CFI P/NAV (x) 0.95 0.99 1.01 1.03

CAPEX, net - (0.2) - - P/DPU (x) 33.55 12.73 12.60 12.75

Purchase of Inv. Propty. (799.2) (94.6) - - Dis tribution Yield (%) 2.98 7.86 7.94 7.84

Others - - - - NPI yield (%) 5.84 6.04 6.07

Cashflow from investments (799.2) (94.8) - - Growth & Margins (%)

Growth

CFF Revenue 177.4% 8.6% 0.4%

Share i ssuance, net 612.6 (0.1) - - Net property income (NPI) 178.4% 8.6% 0.4%

Loans , net of repayments 190.8 91.5 - - Dis tributable income 174.7% 3.4% -0.2%

Dividends (6.1) (49.4) (51.9) (51.8) DPU 172.8% 2.5% -1.2%

Others - - - - Margins

Cashflow from financing 797.2 41.9 (51.9) (51.8) NPI margin 84.2% 84.2% 84.2%

Net change in cash 20.0 1.0 (2.4) (3.2) Key Ratios

Effects of exchange rate - - - - Net Debt or (Net Cash) 255.4 348.0 350.4 353.6

Ending cash 20.0 21.0 18.5 15.3 Gearing (%) 28.8% 35.0% 35.1% 35.2%

Source: Company, Phi l l ip Securi ties Research (Singapore) Estimates

*Forward multiples & yields based on current market price; historical multiples & yields based on historical market price.



Total Returns Recommendation Rating

> +20% Buy 1

+5% to +20% Accumulate 2

-5% to +5% Neutra l 3

-5% to -20% Reduce 4

< -20% Sel l 5

We do not base our recommendations entirely on the above quanti tative

return bands . We cons ider qual i tative factors l ike (but not l imited to) a s tock's

ri sk reward profi le, market sentiment, recent rate of share price appreciation,

presence or absence of s tock price catalysts , and speculative undertones

surrounding the s tock, before making our fina l recommendation

Ratings History

PSR Rating System

Remarks

1 2 3 4 5

0.70

0.75

0.80

0.85

0.90

0.95

1.00

Sep-1

3

Dec-13

Mar-14

Jun-14

Sep-1

4

Dec-14

Mar-15

Jun-15

Sep-1

5

Dec-15

Mar-1

6

Jun-16

Sep-1

6

Source: Bloomberg, PSR

Market PriceTarget Price



Contact Information (Singapore Research Team) Management Chan Wai Chee (CEO, Research - Special Opportunities)

[email protected] Research Operations Officer Jaelyn Chin [email protected]

Macro | Equities Market Analyst | Equities US Equities Soh Lin Sin [email protected] Kenneth Koh [email protected] Wong Yong Kai [email protected] Bakhteyar Osama

[email protected]

Finance | Offshore Marine Real Estate REITs Benjamin Ong [email protected] Caroline Tay [email protected] Dehong Tan [email protected] Telecoms | Technology Transport & Logistics

Colin Tan [email protected] Richard Leow, CFTe

[email protected]

Contact Information (Regional Member Companies) 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

MALAYSIA Phillip Capital Management Sdn Bhd

B-3-6 Block B Level 3 Megan Avenue II, No. 12, Jalan Yap Kwan Seng, 50450

Kuala Lumpur Tel +603 2162 8841 Fax +603 2166 5099

Website: www.poems.com.my

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 Phillip Financial Advisory (Shanghai) Co Ltd

No 550 Yan An East Road, Ocean Tower Unit 2318,

Postal code 200001 Tel +86-21 5169 9200 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

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

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