ST James/ Perennial Real Estate

ST James/ Perennial Real Estate: St James received approval in principle by SGX for the listing of shares to be issued to Perennial Real Estate Holdings (PREH), for the proposed acquisition of the property group. Subsequently, St James will hold an EGM to seek shareholders' approval, where controlling shareholders (57% ownership) have undertaken to vote in favour on the reverse takeover deal. Recall, St James proposed to acquire PREH for ~$1.56b via the issue of new St James shares at $0.0267 apiece. The consideration comprises PREH's Singapore portfolio of $444m (at market valuation) and China portfolio of $934m (25% discount to market value). In addition, St James will make a voluntary conditional offer for Perennial China Retail Trust (PCRT) units at $0.70 each, satisfied via the issue of 0.5242 new St James shares post 50-into-1 consolidation (translates to an issue price of $1.335/share on a post-consolidated basis). Effectively, shareholders of PCRT will be able to gain exposure to PREH through the St James' deal. At the current price, upside for St James ($0.038) may be capped, given that it is trading at a 12-19% premium on the post-deal NTA of $0.032-$0.034/share. However, we highlight that PCRT shareholders stand to gain 35% upside to St James' offer price. PREH's key S’pore properties comprise: - Chijmes (51.6%) - TripleOne Somerset (50.2%) - Capitol Development (50%) - House of Tan Yeok Nee (50%) Key China properties comprise: - Beijing Tongzhou Integrated Dev Phase 1 (30%) - Beijing Tongzhou Integrated Dev Phase 2 (23.3%) - Xi’an North High Speed Railway Integrated Dev Plot 4 (51%) - Xi’an North High Speed Railway Integrated Dev Plot 5 (51%) - Chengdu East High Speed Railway Integrated Dev Plot C (50%) - Chengdu East High Speed Railway Integrated Dev Plot D (50%) - Zhuhai Hengqin Integrated Dev (20%) - PCRT (14.3%)