Soilbuild REIT - OCBC Investment 2018-01-02: Proposed Divestment Of KTL Offshore

Soilbuild REIT - OCBC Investment 2018-01-02: Proposed Divestment Of KTL Offshore SOILBUILD BUSINESS SPACE REIT SV3U.SI

Soilbuild REIT - Proposed Divestment Of KTL Offshore

  • The trustee of Soilbuild REIT has entered into an option agreement to sell KTL Offshore for S$55.0m in cash. The purchaser is a wholly-owned subsidiary of sponsor, Soilbuild Group Holdings. 
  • As at 28 Dec 2017, Soilbuild REIT’s trade receivable due from KTL Offshore Pte. Ltd. comprised ~6 months of rent and other charges, including a sum of S$1.5m (Specified Sum). The trustee entered into a supplemental deed to the KTL Lease Agreement on 28 Aug 2017 under which Soilbuild REIT has agreed to forbear from exercising its rights and remedies up till 24 Aug 2023 with respect to the Specified Sum. 
  • The lease agreement and supplemental deed are to be novated to the purchaser upon completion of the divestment. Following the completion of the proposed divestment and the novation, Soilbuild REIT will no longer be exposed to KTL Offshore Pte. Ltd. 
  • We view the potential divestment as a positive development, as it allows Soilbuild REIT to redeploy its capital while reducing its exposure to the marine offshore and oil & gas industry. That said, current unit prices do not seem particularly compelling to us. For now, we maintain HOLD with a fair value of S$0.66.




Deborah Ong OCBC Investment | http://www.ocbcresearch.com/ 2018-01-02
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 0.660 Same 0.660



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