Roxy announced yesterday that it has acquired, for AUD90.2m, a property located at 59 Goulburn Street, Sydney, NSW, Australia. This is located in the central CBD opposite the World Square development and is also adjacent to Sydney’s Chinatown. The freehold asset has 18.9k and 546 sqm of commercial and retail net lettable area, respectively, with 126 car park spaces. The current occupancy stands at 89%, with a passing net income of S$6.6m which translates to a NPI yield of 7.3% - a reasonable price in our view.

Given continued uncertainties in the Singapore housing space, we like that management is growing its recurring income streams, in addition to recurring contributions from the Grand Mercure Roxy hotel asset in Singapore, and diversifying its portfolio geographically. Maintain HOLD with an unchanged fair value estimate of S$0.61 per share.

Source: OCBC Research - 25 Apr 2014