MapletreeLog to raise some S$607m through rights issue

MapletreeLog to raise some S$607m through rights issue

 

SINGAPORE: Mapletree Logistics Trust is planning to raise nearly S$607 million through a renounceable rights issue.

 

It is issuing about 831 million rights units at 73 Singapore cents each, representing a 21.4 per cent discount to MapletreeLog’s volume weighted average price on June 24.

 

Unit holders will get three rights units for every four units held.

 

The net proceeds will be used to finance or refinance the acquisition of certain properties by MapletreeLog, to repay bank borrowings and for working capital.

 

MapletreeLog said the rights issue will strengthen its balance sheet, reduce its aggregate leverage significantly to about 38 per cent and give it flexibility to pursue yield-accretive acquisitions.

 

Mapletree Investments, the sponsor of the trust, said it will take up its full entitlement of 30.16 per cent of the rights issue. – CNA/vm

 

Source: Channel NewsAsia

Frasers Centrepoint Trust puts in top bid of S$88m for Woodleigh site

Frasers Centrepoint Trust puts in top bid of S$88m for Woodleigh site

 

SINGAPORE: Frasers Centrepoint Trust has put in the top bid of nearly S$88 million for a residential site at Woodleigh Close. The price works out to S$270 per square foot per plot ratio.

 

The next highest bid came from Hoi Hup Realty at about S$83 million. The lowest bid of S$74 million was put in by Sim Lian Land.

 

The Urban Redevelopment Authority received six bids in total when the tender closed on Tuesday.

 

The site at Woodleigh Close was launched for public tender on April 29.

 

The 99-year leasehold parcel spans nearly 10,800 square metres, with a maximum gross floor area of some 30,200 square metres.

 

Property consultants CB Richard Ellis said based on the top bid of S$270 per square foot plot ratio, the estimated breakeven cost of the new project is around S$650 to S$700 per square foot.

 

It expects the units to be sold between S$800 and S$850 per square foot. – CNA/ac

 

Source: Channel NewsAsia

Foreign developers remain upbeat about Singapore’s property sector

Foreign developers remain upbeat about Singapore’s property sector

 

SINGAPORE: Foreign developers are upbeat about Singapore’s property market, and despite signs of a slowdown, they see opportunities for growth.

 

Although the government may be releasing fewer sites for sale under the Confirmed List, one of the largest property developers in Hong Kong is viewing the latest government land sales list with great interest.

 

Cheung Kong Holdings is interested in the white site at Jurong East Street 13, placed for sale on the government’s land sales programme for the second half of the year.

 

Justin Chiu, executive director of Cheung Kong, said: “It’s a good location because the environment is good. Jurong could make itself to be one of the major business centres of Singapore.

 

“I’ve already asked my team in Singapore to study the location and to come up with some recommendations. Definitely we’re looking to expanding into Jurong area.”

 

He added that the general cooling in the local property market is a necessary price correction given the increases over the past three years.

 

Mr Chiu said: “If you look at (the) property market as whole in (the) past two, three years, I’d say prices went up too fast. So we expect some correction anyway in two years’ time.

 

“So I’d say this slight correction is actually a consolidation of (the) market, which will build a much stronger, solid base for future growth.”

 

Lippo Group also said it will continue to invest in Singapore, on top of its current focus on emerging markets.

 

“We like emerging markets. (We) put-two thirds of our money in emerging markets, one-third in developed markets like Singapore and Hong Kong,” Lippo Group’s President Stephen Riady revealed during a panel discussion at the 7th Annual Real Estate Investment World Asia 2008 conference.

 

At the conference, regional property bigwigs discussed the state of Asian realty, but not all were for Asian properties.

 

Yu Lai Boon, group chief investment officer of Dubai World, said: “Our point of view is that when you have corrections, that’s where a new golden era arises. Instead of emerging markets in Asia, my point of view is the US.”

 

Despite the current housing slump in the US, he said investors in the Middle East are looking seriously into the American and European market now, for the next golden era. – CNA/ac

 

Source: Channel NewsAsia

Grace Fu: Outlook of Asian retail estate market continues to be bright

Grace Fu: Outlook of Asian retail estate market continues to be bright

 

Senior Minister of State for National Development, Grace Fu, says the outlook for Asia’s real estate market, including Singapore’s, remains optimistic, notwithstanding the recent shake-up in the global financial markets and rising inflation.

 

She says Asia will continue to be resilient and the growth momentum across the region can withstand the challenges posed by the current financial and economic uncertainties.

 

In her upbeat address to the Real Estate Investment World Asia Conference, Ms Fu said Asia still offers a diverse range of investments that can match different interests and risk appetites.

 

She highlighted Singapore as an attractive location for investments for two key reasons – its strong economic fundamentals, and the quality living environment it offers for locals and global talents alike.

 

Singapore, she added, is putting in place new plans to further support future growth and sharpen our attractiveness as a magnet for investments and new businesses.

 

These development plans will open up many opportunities in Singapore’s real estate market, from the provision of quality homes, to new hotel, leisure and retail investment and development opportunities.

 

Source: 938Live

The bigger you are, the better you weather the storm

The bigger you are, the better you weather the storm

 

WHAT a difference a year makes.

 

Last year, euphoria ruled asset markets. After a moribund three years which saw Singapore property values dive by some 45 per cent, the market sprang to life in 2007, fuelled by the robust stock market and supported by a slew of new infrastructure initiatives – most notably the integrated resort (IR) development plans. Property prices surged some 28 per cent last year.

 

But all that is history now.

 

Latest data shows that prices for some property transactions in the sub-sale market have declined almost 40 per cent from last September’s levels. And although new home prices are still holding up amid only 2,100 new units launched to date, a potential glut of new supply next year could put pressure on new home prices.

 

Not surprisingly, property stocks have been hit.

 

And the turbulence facing the industry has sparked the inevitable rumours about who might be impacted most.

 

One company which is being closely watched is high-end property developer SC Global Developments.

 

With its properties priced at $4,000 per square foot per plot ratio (psf ppr) and above, speculation is rife that the company is caught between a rock and a hard place. Not surprisingly, SC Global’s stock price has dived into a seemingly inexorable decline, losing some two-thirds of its value since last October to close at $1.26 yesterday.

 

Weighing down sentiment on the stock is market talk that the company is struggling under a huge overhang of unsold apartment units and grappling with a huge debt burden.

 

Indeed, SC Global started the year with almost 1.1 million sq ft of unsold property – primarily at The Marq on Paterson, Hilltops, The Ardmore and The Beachfront Collection @ Sentosa. More critically, the company had debts of some $1.2 billion, almost double the $700 million it had a year earlier.

 

And its debt/equity ratio was almost three times.

 

Not exactly comforting numbers.

 

But looks can be deceiving. And SC Global is not just any developer.

 

The company, which has over $60 million in cash in its coffers, is a niche player catering to a high-end, globally mobile, jet-setting class which is relatively price-insensitive and discriminating.

 

Over the past half-year, the company has managed to sell some 200,000 sq ft of its land bank – mainly at The Marq @ Paterson and Hilltops – for over $700 million.

 

If SC Global exercises its option to prepay its debts from sale proceeds, the company would be left with a net debt of some $500 million against a remaining land bank of 900,000 sq ft. The resulting debt-land bank ratio of some $555 psf ppr is not exactly an insurmountable problem for a company like SC Global.

 

Seen from another angle, this could be a breakeven price of sorts for the company should it want to be completely debt-free (not that SC Global will ever sell any of its luxury units at such bargain basement prices, though).

 

In fact, the company has completely recouped its costs at The Marq with the sale of 40 per cent of the units there. So proceeds from every additional unit sold in the future will go straight to its bottom line.

 

But all this does not change the depressing macro picture for the property sector here, where there is still significant downside risk to valuations.

 

Still, as Merrill Lynch noted recently, SC Global has only two property assets that are at risk of impairment in the current downcycle: the Sentosa Beachfront Collection and The Ardmore. But the investment house noted that the average book value of these assets would have to dive by two-thirds, from $2,141 psf ppr to $824 psf ppr, ‘to be of any real threat to SC Global’s survival’ – an outcome which is highly unlikely.

 

Recent evidence suggests that despite the current slowdown, the luxury segment seems to have held up pretty well, with some 50 new apartments in the over $10 million price range being snapped up this year. This number could double by year-end.

 

Meanwhile, Fitch Ratings believes that residential receivable transactions have not been impacted by the softening of the local residential market. Fitch – which applies market value decline (MVD) assumptions of between 48 per cent and 58 per cent to the transactions depending on the property location – dismisses the possibility that the current stress scenario will develop into anything similar to that which existed during the Asian financial crisis.

 

The bottom line? Not all property players are equal. Some, like SC Global, have a premium land bank, cater to a niche market, and have the ability to sit on their land bank for a while. These players will ride out the current turbulence better than others.

                                   

Source: Business Times

Healthy weekend home sales as attractive pricing draws buyers

Healthy weekend home sales as attractive pricing draws buyers 

Price levels set below those at nearby units launched recently or not yet completed

 

THE anaemic property market received a shot in the arm during the weekend, with robust sales and buyers keen to show that they will still deal if the price is right.

Suites 123 at Rangoon Road was sold out – a rarity these days – while Oxley Ventures offloaded 50 units of Parc Sophia in Adis Road. Sales were also healthy at Dakota Residences in Dakota Crescent.

 

Market watchers said the sales at these mid-market projects show that homebuyers can be drawn off the sidelines if prices are attractive.

 

‘Buyers will bite if you price your developments below recently launched or yet-to-be completed projects nearby and about 10 to 15 per cent above older properties in the vicinity,’ said Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong.

 

Ho Bee Investment and NTUC Choice Homes have sold more than 80 units of the 99-year leasehold Dakota Residences since Saturday morning.

 

The developers released 122 units in the 348-unit project at an average price of $970 per sq ft (psf) – under the $1,100 or so they wanted a year ago.

 

Said an investor who went to the launch on Saturday: ‘This project is not exactly cheap. What it offers is value for money, especially in view of the makeover plans for Kallang.’

 

Ho Bee’s general manager of marketing and business development, Mr Chong Hock Chang, added: ‘Another reason the project did well in the current market was pent-up demand. It shows that there are people on the sidelines who are waiting to come out to buy at the right price.’

 

Suites 123, a 43-unit development marketed by Huttons Real Estate Group, was sold out yesterday.

 

The 37 residential units next to Little India and Farrer Park MRT station went for $940 psf to $1,277 psf, while the six shop units fetched between $375,000 to $595,000.

 

In the Mount Sophia area, buyers snapped up all 50 flats released at the 152-unit Parc Sophia over the weekend. Prices ranged from $1,500 psf to around $1,650 psf, or between $742,000 and about $1.2 million.

 

Developer Oxley Ventures, which is also behind Zenith in Zion Road and Tyrwhitt 139 in Tyrwhitt Road, offers an interest absorption scheme. It lets buyers postpone the bulk of their payments on new purchases.

 

Listed developer Sim Lian also started sales at the The Amery, a 74-unit development in Telok Kurau at the weekend. It sold 16 out of 39 launched units at an average of $860 psf, or between $1.16 million and almost $2 million.

 

More launches are expected in the next couple of weeks, including mass-market projects such as the 724-unit Livia in Pasir Ris and the 616-unit Clover by the Park in Bishan.

 

Meanwhile, the Strata Titles Board gave the go-ahead yesterday for the collective sale of the 342-unit Minton Rise. Kheng Leong, which bought the site early last year, plans to build 1,300 flats for launch next year.  

 

Source: Straits Times

Subsales carve out bigger slice of home deals

Subsales Subsale carve out bigger slice of home deals

In some popular projects, average subsale prices slipped by up to 5% in the first five months

 

(SINGAPORE) Subsale volumes are down amidst a quieter property market, but a new study by Jones Lang LaSalle shows that in most parts of Singapore, subsales actually rose as a percentage of total private apartment and condo sales in the first five months compared with last year.

 

Driving the trend have been players who bought properties from developers on deferred payment schemes (DPS) but who are seeking to exit the market as projects near completion.

 

In some popular projects such as Icon, Marina Bay Residences, 8 @ Mt Sophia, Park Infinia at Wee Nam, The Grange, One Amber and The Sea View, average subsale prices have slipped between one and 5 per cent in the first five months of 2008 (5M 2008) compared with levels scaled in H2 2007. However, in some projects, prices are still much higher than H1 2007 levels, the study shows.

 

Subsales are secondary market transactions involving projects that have yet to receive a Certificate of Statutory Completion (CSC) and are often used as a gauge of speculative activity.

 

JLL’s head of research (SE Asia) Chua Yang Liang expects the percentage of subsales to continue to increase till end-2008 before some high-profile projects receive their Temporary Occupation Permit (TOP). Property market watchers are keeping tabs on the potential unwinding of positions by speculators and specuvestors as the scale of such transactions could lead to a much-predicted slide in subsale prices that could ripple through the broader market.

 

JLL’s study showed that in the prime districts 9, 10 and 11, subsales made up 23 per cent of non-landed private home sales in 5M 2008, up from a 17 per cent share in H1 2007 and an 18 per cent share for the whole of 2007.

 

In the east coast (districts 15 and 16), the proportion of subsales rose from 8 per cent in H1 2007 to 11 per cent in 5M 2008. In mass-market areas (defined as all districts falling outside prime, central and east coast), the subsale share went up from 9 per cent to 14 per cent over the same period.

 

However, in the central districts 1 to 4 (which include places like Marina Bay, Harbourfront and Sentosa Cove), the subsale percentage dipped from 35 per cent in H1 2007 to 33 per cent in 5M 2008, although the latest share remains the highest in the four submarkets in JLL’s study.

 

‘Going by the relatively high subsales proportion in the Central district, this location has a higher probability of future consolidation in subsale prices given that a number of projects in the area are reaching completion,’ Dr Chua says.

 

Savills Singapore director (marketing and business development) Ku Swee Yong says that agents have a long list of units in high-profile condos available for the subsale market. ‘But asking prices have yet to come down to a level that would be attractive to potential buyers. So we’re not seeing that many subsale transactions,’ he says.

 

Mr Ku says that things may not be so bad. ‘Some of them bought their units a few years ago from developers at pretty low prices, so they should be able to get bank loans when the project gets TOP and the DPS runs out. Others bought their units in the subsale market and the developers would not have extended DPS to them; so they’ve already got their housing loans in place. For these owners, it’s more the fear of prices falling that may drive them to put their units on the market.’

 

JLL’s Dr Chua argues that the rising proportion of subsales this year is ‘not a bad phenomenon as it may suggest a transfer of ownership from speculators to potentially long-term occupiers or investors with stronger investment stamina’.

 

‘The danger for the market lies with short-term speculators who decide to hold back in anticipation of a higher gain but only to be caught up by insufficient investment breath. This could result in a later surge in fire sales by these speculators, or in their returning units back to developers, who in turn may be hard put to find buyers at a time when sentiment may be weak,’ he argues.

 

Says Knight Frank executive director (residential) Peter Ow: ‘If I’m not a long-term player and I bought my unit sometime ago when prices were lower than today, it would be more prudent to let go and take some profit first. Property can be very illiquid in a weak market. By the time you want to sell, everybody may also want to do the same thing.’

 

The level of subsales, and the prices at which such deals are done, is being watched closely by market players as a slew of condos launched earlier and sold on DPS approach their physical completion. The Sail @ Marina Bay (Tower 2) received TOP this month, while Tower 1 is expected to be completed by Q3 2008. The Oceanfront @ Sentosa Cove is expected to be completed in Q1 2009.

 

A project usually gets its CSC three to 12 months after obtaining TOP. Hence deals in a project that has obtained TOP but not CSC are still classified as subsales.

 

Typically, the deferred payment expires when the project gets TOP, which is when buyers have to pay the developer a huge portion of the purchase price. ‘Those who bought on DPS and have not exited the market yet, will have to make a call as to whether to secure a loan or begin to release their holdings back into the market now,’ JLL says.

 

The government stopped granting DPS approvals in October last year.

 

 

Source: Business Times

 

Europe commercial property dips

Europe commercial property dips

But price drop unlikely to be as much as in the UK, says CBRE

 

 

 

(LONDON) Commercial property prices on the European mainland are adjusting downwards in the wake of a global credit crunch but are unlikely to fall by as much as in the UK, a senior executive of CB Richard Ellis said yesterday.

 

 

‘We are seeing elements of repricing but the repricing is not as severe as in the UK because it does not need to be as severe to get back to equilibrium,’ said Mike Strong, president of CB Richard Ellis in Europe, the Middle East and Africa (EMEA), at the Reuters Global Real Estate Summit.

 

CB Richard Ellis, a constituent of the S&P 500 Index, is the world’s biggest property services firm and generated about a fifth of its revenues last year in the EMEA region.

 

Mr Strong said that British commercial property values – down an average 18 per cent since last summer, according to Investment Property Databank – had started from a higher starting point after a vintage bull run.

 

‘On the up, none of the (other) European markets went over the tipping point. One or two of them got close but none of them went over . . . the point of unaffordability. Say the UK has shifted 100 basis points, then mainland Europe would have shifted by between 30 and 50 basis points . . . so the wind back is less,’ Mr Strong said, referring to property yields which have risen by around a percentage point in the last year.

 

He said that if yields – which measure rental income in relation to capital values and move inversely to price – were currently about 5.4-5.7 per cent for prime office property in central London, the equivalent in central Paris was in the ‘mid-to-high 4 per cents’, Mr Strong said.

 

But he said that direct comparisons with the UK were misleading because property investors had access to cheap debt.

 

‘You cannot directly compare European mainland yields with London because the arbitrage between the cost of money and property yields is different,’ he said.

 

Five-year sterling interest rate swaps – a benchmark for property borrowing costs – are currently trading at around 6.1 per cent, compared with 5.1 per cent in the case of euro interest rate swaps, according to Reuters data.

 

When asked where he would put his money, Mr Strong nonetheless singled out the central London office market.

 

‘I think, selectively, there is value in London,’ Mr Strong said.

 

‘I agree with the Kuwaitis,’ he said, referring to the £pounds;400 million (S$1.07 billion) purchase last month of the Willis Building in London’s financial district by the property investment arm of the state of Kuwait. — Reuters

 

Source: Business Times

China may start Reit next year: industry group

China may start Reit next year: industry group

Move could lead to the listing of US$60b worth of buildings in 5 years

 

(SINGAPORE) China could kick-start a property trust market next year to give its pension funds and insurers an alternative to volatile stocks and meagre returns from government bonds, according to an industry group.

 

The move could lead to the listing of as much as US$60 billion worth of buildings in the form of real estate investment trusts (Reits) over the next five years.

 

And although it is unclear whether overseas investors would be allowed to invest in the securities, foreign property funds in China are keen to see new potential buyers for the office blocks and shopping centres they are accumulating.

 

Stock market watchdog China Securities Regulatory Commission (CSRC) sent a delegation to Australia in May to study property trusts, and is working with other authorities, including the central bank, to draw up legislation.

 

The trusts will probably be externally managed, in line with the Singapore and Hong Kong model, said Peter Mitchell, head of the Asian Public Real Estate Association, which is advising the CSRC on the matter.

 

‘A pilot Reit could possibly get underway next year,’ Mr Mitchell said. ‘They see pension funds and insurance companies as the main investors, as well as the man on the street,’ he said.

 

Property trusts, which pay most of their rent as dividends, have been long- established in the United States and Australia, but have caught on across Asia over the last five years as commercial property markets rode a cyclical upswing.

 

Asian Reit market capitalisation has grown to around US$80 billion, but unit prices have dropped this year – by as much as 24 per cent in Japan – as investors demand higher rental yields to compensate for rising bond yields and inflation.

 

However, China is pushing ahead with Reits because insurers and pension funds are desperate for the stable returns that they offer to match long-term liabilities. Reits tend to yield more than bonds, and offer capital gain if property values rise, but are typically less volatile than stocks.

 

Beijing is talking about allowing insurance firms to invest in property; but at the moment, they are only allowed to invest in stocks, bonds and deposits.

 

Flush with US$300 billion for investment, insurers could spend as much as US$30-40 billion on Chinese commercial property if they followed global industry norms of 10-15 per cent portfolio allocations to property.

 

If China’s Reit market grows along the lines of Japan’s, it could be worth some US$60 billion in five years time.

 

But the experience of RREEF China Commercial Trust, one of three Reits with Chinese assets listed in Hong Kong and Singapore, demonstrates the possible risks ahead for the market.

 

Last year, the trust found that tenants in its newly acquired Beijing office block – its only asset – paid less rent than expected and blamed the former landlord’s team for falsifying lease agreements and tampering with tenant replies during due diligence.

 

The trust saw its share price plunge by as much as 44 per cent below its initial public offering in the aftermath. It cut the valuation of its building, the twin 25- storey Beijing Gateway Plaza, and sought compensation from the former landlord.

 

Although Chinese authorities are keen to set up a stable and transparent Reit market, they may not introduce the same tax breaks and trustee structure common in most markets, said Andrew Weir, head of China property at consultants KPMG.

 

‘It might look like a Reit and smell like one but when you delve down, it might not have all the characteristics,’ Mr Weir said.

 

State-owned enterprises (SOEs), keen to trim their balance sheets, would be prime candidates to set up property trusts.

 

And developers, squeezed by a clampdown on bank loans by a government bent on cooling the housing market, would welcome them as another source of capital. — Reuters

 

Source: Business Times

Lippo to invest US$10b in Asia over 5 yrs

Lippo to invest US$10b in Asia over 5 yrs

Two-thirds of funds will be allocated to emerging markets

 

(SINGAPORE) Indonesian conglomerate Lippo Group said yesterday it remains bullish on Asian property despite a slowdown, and plans to invest US$10 billion on projects and acquisitions over the next five years.

 

The group is targeting retail, residential, hospital and hotel projects, and also distressed property firms.

 

It will allocate two- thirds of the funds to emerging markets like China and Indonesia, and the remainder in developed markets such as Hong Kong and Singapore.

 

‘We’re still very bullish about the market. This downturn is just part of the economic cycle, and a huge opportunity for us to expand in the next 1-2 years,’ Lippo Group president Stephen Riady said at the Reuters Global Real Estate Summit in Singapore.

 

He said the group will fund its growth mainly from internal resources such as the sale of non-core assets and listing of real estate investment trusts (Reits), and will limit loans from banks as borrowing costs rise amid a global credit crunch.

 

The Lippo Group currently has about 70 per cent of its assets in Indonesia, where its listed units include Lippo Karawaci and Lippo Cikarang, two satellite town developments near Jakarta with their own hospitals, universities, malls, housing, offices and even golf courses.

 

The group has two Singapore-listed Reits: First REIT, which is backed by Lippo’s Indonesian hospitals and raised US$64 million in its initial public offering in 2006; and Lippo- Mapletree Indonesia Retail Trust, which raised US$356 million last November and is backed by Indonesian shopping malls. — Reuters

 

Source: Business Times