UEM Sunrise (UEMS) announced that it has entered into a Contract of Sale with Evolution MIT Services Pty Ltd, as trustee for the GS Collingwood Property Trust (owned by Greystar, build-to-rent investment fund) to sell its 1.33-acre plot of land at 21-53 Hoddle Street, Collingwood Vic 3066 in Melbourne, Australia for AUD45.15m (~RM143.25m). The land was purchased a few years ago for AUD43m and as such, there is not much gain from this land sale. The Group has also entered into a “Fund Through Agreement” with Greystar to facilitate the development of the property for a Build to Rent (BTR) development whereby UEMS undertakes the construction and development of the property for a total payment of AUD232.2m plus GST (~RM731.5m). Details are still sketchy at this point, though we understand that management fees, if any, will only be recognized from FY27 onwards. All told, no change to our earnings estimates for now. We maintain our Neutral call with TP unchanged at 33sen.

• Entering the BTR market in Australia. We understand that this is the first BTR project by a Malaysian developer in Australia. The agreement will see Greystar as the investor and eventual owner-operator of the proposed BTR development through a fund-through structure, with UEM Sunrise as the developer and delivery partner. All in, the deal is valued at AUD277m (RM881m) with completion expected in 2027.

• Development details. The proposed development is expected to include approximately 400 apartment units across two buildings, with a mix of studios and one-, two- and three-bedroom apartments suitable for multi-generational living. The proposed development will also feature extensive common facilities and services for residents including swimming pool, gym, movie room, wellness and entertainment spaces, bike parking, electric vehicle charging stations, concierge, and co-working spaces. No details have been disclosed on the development profit/management fees as yet.

Source: PublicInvest Research - 22 Jun 2023