Ho Bee

Ho Bee: Group announced the acquisition of Rose Court, a freehold investment property with 157.4k sf in Central London, for £67.2m. The property has an existing lease that expires in 2018. CIMB view this as an opportunistic move as Ho Bee seeks attractive rental yields to increase recurring income. The purchase consideration of £67.2m will be financed via a mix of internal funds and bank borrowings, scheduled to be payable in full on 24 Jun 2013. The property will continue to be fully leased to the Secretary of State for Communities and Local Government, with lease expiry in Sep 2018. Current rental yield at 6% for the acquisition. CIMB expect positive rental reversion in the range of 100% in 5 years’ time when the current government lease expires. Office rentals at Southwark are estimated to increase by at least 5% p.a. over the next five years. CIMB has an OUTPERFORM, with TP of $2.52. At the current price of $2.03, Ho Bee trades at 32.5% discount to RNAV and 0.8x P/B.