UOL Group - OCBC Investment 2016-10-03: JV with UIC to acquire 120 Holborn in London

UOL Group - OCBC Investment 2016-10-03: JV with UIC to acquire 120 Holborn in London UOL GROUP LIMITED U14.SI

UOL Group - JV with UIC to acquire 120 Holborn in London

  • Forms JV with UIC.
  • Buys 120 Holborn for GBP229.6m.
  • 3rd asset purchase in London.

JV with UIC to acquire 120 Holborn in London for GBP229.6m 

  • UOL announced that a newly incorporated JV, United Venture Investments (HI) Pte. Ltd (UVIHI), has entered into a sales and purchase agreement to acquire for GBP229.6m a freehold 9-storey mixed used building located at 120 Holborn, Midtown London, UK. 
  • The asset is located in Farringdon, London and is within walking distance to Chancery Lane Tube Station, Farringdon Tube Station interchange and the upcoming Cross Rail. 
  • The site area is approximately 113,256 sq ft with a net lettable area of 349,088 sq ft comprising 197,226 sq ft and 151,862 sq ft of office and retail space, respectively. 
  • UVIHI is a 50:50 JV between UOL Ventures Pte Ltd, which is a wholly-owned subsidiary of UOL, and UIC Overseas Investments Ptd Ltd., a subsidiary of United Industrial Corporation Ltd.

Focused on diversifying and strengthening recurring income streams 

  • A deposit of GBP22.96m has been paid and the balance of the purchase price will be paid on the completion of the transaction on 10 Nov 2016. We believe this is a decent price for an asset in an vicinity that UOL knows well; recall that the group had in June 2016 acquired 110 High Holborn London for GBP98.75m which is located nearby. 
  • In addition to Bishopsgate, this is the group’s third acquisition in the UK and we like that management is focused on diversifying and strengthening the group’s recurring income streams in light of a muted residential market in Singapore and strong competition for land- banking. 
  • The group’s hotel segment continues to be a key source of recurring income and, looking forward, management expects to expand the footprint of its hospitality segment and will complete the extension of rooms at the ParkRoyal Parramatta in Sydney to 268 rooms. 
  • We also understand that a hotel management agreement for a Pan Pacific hotel in Beijing, China has been signed. 
  • Maintain BUY with an unchanged fair value estimate of S$7.30.

Eli Lee OCBC Investment | 2016-10-03
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 7.30 Same 7.300