United Industrial Corporation (UIC) said on March 1 that it had secured its first green and sustainability-linked loans totalling $300 million. The loans from United Overseas Bank (UOB) and DBS Bank comprise a $200 million sustainability-linked loan for the partial refinancing of existing facilities and general corporate purposes.
Some $100 million of the green loan will go towards a major upgrading of the 48-storey Singapore Land Tower at 50 Raffles Place for the first time since 2002. The latest asset enhancement will introduce more green features when completed by the end of 2023. These include lush landscaped public spaces, energy-efficient lifts and lighting, a low emissivity double-glazed external curtain wall system, and priority parking for electric and hybrid cars. It will also create a canopy over the first-storey entrance plaza, a podium roof garden for restaurants, and a 49th storey rooftop public space. There will also be a covered walkway linking visitors to Raffles Place MRT station as well as end-of-trip facilities such as bicycle parking lots and changing rooms with showers, in line with the nation’s move to be a car-lite city. Singapore Land Tower, with an average occupancy of over 94%, will remain a “live” building during the twoyear refurbishment period, UIC said.
UIC owns 10 investment properties including Singapore Land Tower, altogether valued at around $6.2 billion. While such a portfolio is large enough for a commercial REIT, UIC is unlikely to divest its buildings into a REIT.
As of Dec 31, 2020, its gearing is just 3.8%, down from 5% a year ago. Moreover, its net operating cash flow in FY2020 ended Dec 31, 2020, was $195 million, and its free cash flow of $125 million.
Of the 10 properties, UIC owns a 100% stake in eight office buildings including Singapore Land Tower, a 100% stake in West Mall, 77% of Marina Square, and 20% of Novena Square. In the UK, UIC has a 50% share of 120 Holborn, a mixed-use freehold development located in Central London.
On the hospitality front, UIC owns stakes in five hotels, including 58% of the ParkRoyal Collection Marina Bay, 39% of Mandarin Oriental and 77% of Pan Pacific Singapore.
All in, based on UIC’s FY2020 financials, the company took a $125.8 million fair value loss on its investment properties.
UIC is interesting because of its shareholding, low liquidity and its significant discount to its NAV of $5.12. The company has two main shareholders who between them own 87.18%. UOL Group holds 50.13% and JG Summit Holdings, 37.05%. With minuscule debt versus its equity, and substantial cash flow, this company could be a privatisation target.
An investment banker recently suggested that UIC could privatise after restructuring its portfolio further following the refurbishment of Singapore Land Tower. In 2019, UIC acquired additional interests in Marina Centre Holdings and Aquamarina Hotels, giving it the controlling stake in the ParkRoyal Collection.
However, investors are unlikely to get the full value. UIC’s price to NAV chart shows the mean at 0.61 times book value, or $3.12, which at its last trade price of $2.43, still leaves room for upside.
