Soilbuild REIT

Soilbuild REIT: OCBC initiates coverage with BUY rating and $0.82 TP. House note that Soilbuild REIT currently owns a young portfolio of seven modern business space properties in Singapore and has the largest exposure to the business park segment. House like Soilbuild REIT’s exposure in this space because demand in the local scene has been growing steadily throughout the years. Also believe that Soilbuild REIT is able to leverage on the capabilities of its Sponsor, Soilbuild Group, to grow its income given its track record and expertise. Soilbuild REIT is granted Right of First Refusal (ROFR) by its Sponsor over all its income-producing business space assets in Singapore. The ROFR currently covers four industrial properties, providing Soilbuild REIT with a clear acquisition pipeline. As of the listing date, Soilbuild REIT is sitting at healthy gearing ratio of 29.9%, while 75.0% of its interest rates are fixed. This not only gives Soilbuild REIT ample debt headroom to pursue its growth plans but also limits its exposure to rising interest costs. At current price, Soilbuild REIT is also trading at the steepest discount of 8.8% to its book value, compared to its subsector peers. This is unjustified in given Soilbuild REIT’s quality portfolio assets, growth potential and respectable FY14F yield of 7.8%.