Roxy-Pacific reported that it has acquired, along with its JV partner Hostplus, a 4.4 hectare site in Western Australia for A$59m. Roxy will take a 40% stake in the site, which is located next to the prime Leighton beach and the train station connected directly to Perth’s central business district.

The consortium intends to rezone the site (currently industrial) into residential and commercial use, and we note this is their second venture in Australia after having acquired, on similar terms, two adjoining sites in South Brisbane earlier this year.

Assuming that the rezoning exercise is successful, we see the price for the site to be fairly decent but opt to assign no RNAV surplus to the group’s valuation until more color on development plans is given. Maintain HOLD with an unchanged fair value estimate of S$0.55 per share.

Source: OCBC Research - 24 Mar 2015