Forterra Trust (formerly: Treasury China Trust)

[Boon]

Let's try to do a valuation from a different perspective:

BLP is stabilized
Forterra House is stabilized
The HQ will be completed by end of the year.

Let’s try to Value all 3 properties on the basis of “As-If-Reit”

SGD (million)

BLP:
Capital Value = 70 mil
Gross Revenue = 6.32 mil

Forterra House:
Capital Value = 150 mil
Gross Revenue = 7.84 mil

The HQ：
Capital Value = 1,800 mil
Gross Revenue = 140 mil

Total Gross Revenue = 154 mil
Total Capital Value = 2,020 mil =AUM
Gross Revenue / AUM = 154/2,020 = 7.6%
Assuming NPI = 62.5% of Gross Revenue = 0.625 x 154 = 96.25 mil
NPI / AUM = 96.25 / 2,020 = 4.8 %

Management Fee = 0.5% of AUM = 0.005 x 2,020 = 10.1 mil
Debt = 800 mil @ 3.5 % interest
Gearing = 800 /2,020=40%
Financing cost = 28 million

Total DPU available = 96.25 – 10.1 – 28 = 58.15 million
DPU per unit = 58.15 / 254 = 23 cents per unit
Share Price (assuming yield of 7%) = 3.27 per share

"As- IF- Reit" Share Price = 3.27

What is left in FT is basically PD business:
Capital Value (Huai Hai Mall + Central Park Mall) = 400 mil = 1.57 per share
Debt = 0 (all debt transferred to Reits)

DTL = 393.6 million = 1.55 per share

V(FT) per share = V(As-If-Reit) + V(PD) + V(DTL) = 3.27 + 1.57 + 1.55 = 6.39

If 3.27 is not achievable, how about 3.00 , 2.50 , 2,00 , or 1.80

Assume V(PD) is 50% over-valued, one still get 0.78 per share.

If all 3 reit-able assets are “transferred” into “Reits” via “offshore” transaction sales, substantial DTL could be write back (it has value)

In short, plenty of upsides with abundant MOS.

(vested)