DBS: Roxy-Pacific proposed sale of Sydney property worth a cheer

Australian notes and coins

Roxy-Pacific’s proposed sale of a Sydney property is a key positive, DBS said in a note subtitled “Hip hip hooray.”

The company said on May 4 that its indirect associate company, Feature-Roxy, has entered into a non-binding heads of agreement with an Australian institutional investor to sell its 117 Clarence Street property in Sydney Australia for A$153 million, or around S$153 million, subject to due diligence and board approvals.

DBS noted that the price was at a 28 percent premium to its latest valuation in February, and that the building was acquired around two years ago for A$81 million. It estimated the exit yield was lower than the current yield of around 4 percent.

“We believe this is positive for Roxy as a testament to its successful investment and asset recycling strategy while it continues to record strong sales from its Singapore residential projects,” DBS said in a note dated Monday.

It noted that Roxy has sold more than 90 percent of Harbourview Gardens, its latest project launch, in April, priced at an average S$1,760 per square foot, while the Navian project is more than 70 percent sold. Its Grange Road development will be the next launch, DBS said.

It kept a Buy call with a S$0.63 target price.

“We remain positive on Roxy as a small- to mid-cap gem among the property developers, a niche proxy to the Singapore property market,” it said.

The stock ended Wednesday at S$0.52.