UOL Group - OCBC Investment 2016-10-10: Acquires Raintree Gardens en-bloc

UOL GROUP LIMITED U14.SI

UOL Group - Acquires Raintree Gardens en-bloc

Right off the bat from its GBP229.6m acquisition of 120 Holborn in London UK, UOL announced that it has, through a JV with United Industrial Corporation Ltd (UIC), successfully acquired the Raintree Gardens residential development at Potong Pasir Ave 1 for S$334.2m through an en- bloc tender. More than 80% of the owners in the 175-unit estate have given consent to the sale and the purchase price works out to be about S$1.9m per unit.
We understand that the river- fronting site attracted significant interest from developers and received between five and ten bids, and the final price was about 6% above the S$315m reserve price.
Raintree Gardens is a privatized Housing and Urban Development Company (HUDC) estate built in the 1980s and comprises two 12-storey maisonette blocks and a seven-storey maisonette block. The 99-year leasehold site is zoned for residential use and has an area of 18.7k sqm with a plot ratio of 2.8.

The sale price translates to about S$797 psf per plot ratio on the potential gross floor area, including an estimated differential premium to top up the lease to a fresh 99 years and for redevelopment of the site to a gross plot ratio of 2.8. The site will likely be redeveloped into a 600-750 unit condominium project.
We believe this is a decent price for an attractive river- facing site near the up-and-coming Bidadari area and are positive that the group has successfully replenished their land-bank in a competitive environment.
Management has announced that the acquisition would be financed principally from bank borrowings and internal resources. The completion of the en-bloc acquisition is further subject to several conditions being met, including an order of sale by the Strata Titles Board or High Court.
Maintain BUY with an unchanged fair value estimate of S$7.30.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2016-10-10

OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 7.30 Same 7.300