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

UOL Group - OCBC Investment 2016-10-10: Acquires Raintree Gardens en-bloc UOL GROUP LIMITED U14.SI

UOL Group - Acquires Raintree Gardens en-bloc

  • S$334.2m en-bloc acquisition.
  • Likely redevt into 600-750 unit condo.
  • Attractive site with decent price. 

Replenishes land-bank with 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.

Potential redevelopment into 600-750 unit condo project 

  • 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 | 2016-10-10
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 7.30 Same 7.300