Real News‎ > ‎2014‎ > ‎April 2014‎ > ‎

22nd April 2014

Singapore Real Estate

Tuas industrial site to be put up for public tender

Source: Straits Times

An industrial plot in Tuas South Street 11 will be put up for public tender at the end of this month. The 1ha parcel was made available on the reserve list under the first half of the Industrial Government Land Sales (GLS) programme for 2014.

Sembcorp revives property unit

It will develop homes in group's industrial parks

Source: Business Times / Top Stories

[SINGAPORE] Sembcorp Industries is reactivating Sembcorp Properties, a dormant subsidiary which developed condominiums in Singapore a decade ago, with a new strategy - to develop residential and commercial properties in its existing industrial parks, starting with China.

This is in tandem with its ramped-up efforts to build up urban development as a third pillar of the company, next to its mainstay utilities and marine operations.

In a recent interview, Sembcorp Development CEO Kelvin Teo told The Business Times that he aims to have the group's urban development segment generate a three-digit net profit by 2020, up from the $50 million, or 6 per cent of the group's overall earnings, that it contributed in FY13.

Over the past two decades, Sembcorp Development has been involved in master planning, land preparation and infrastructure development to transform raw land into large-scale urban developments overseas. For the most part, it has been developing industrial parks and now has 11 projects in China, Vietnam and Indonesia.

-By Lee Meixian

M&C finds room for acquisitions and expansion

Source: Straits Times

While the domestic property market takes a breather, it is all systems go at CDL's hotel arm Millennium & Copthorne (M&C). M&C owns and manages or operates a network of 120 hotels spread over many countries spanning China, Europe and the United States.

A developer's keen eye for the lie of the land

Source: Straits Times

Most Singaporeans know of listed City Developments and its many condominiums around town but few probably realise just how long the owner Kwek Leng Beng has been at the top of his game. CDL has been developing homes for the past 50 years and remains among the largest residential players here - no mean feat in a fiercely competitive sector that has seen many prominent players fall by the wayside.

Real Estate Companies' Brief

Ascendas Reit posts Q4 DPU of 3.55 cents

It enjoyed a $131m revaluation gain for its 105 properties

Source: Business Times / Companies

ASCENDAS Reit posted a distribution per unit (DPU) of 3.55 cents for its fourth quarter ended March 31, 2014, a 16 per cent increase from 3.06 cents a year ago.

This will be paid on May 30, 2014.

The higher distribution came on the back of a 23.9 per cent increase in distributable income to $85.3 million. This was due to higher net property income, finance lease interest income from a tenant, and incentive payment received as income support for Ascendas Hi-Tech Development (Beijing) Co (AHTDBC) in relation to Z-Link business park in Beijing.

The distribution also included capital distribution of net income from AHTDBC, following its consolidation into the group from Oct 2011.

-By Lee Meixian

Higher rents, acquisitions boost A-REIT’s income

Source: Today Online / Business

SINGAPORE — Ascendas Real Estate Investment Trust (A-REIT) yesterday reported that its fiscal fourth-quarter distributable income surged 21.9 per cent as it enjoyed higher rents and recognised rental takings from The Galen in Science Park, Nexus @one-north and A-REITCity@Jinqiao in Shanghai.

For the three months ended March 31, A-REIT’s distributable income totalled S$83.9 million, up from S$68.8 million in the corresponding period a year earlier.

Distribution per unit (DPU) rose 16 per cent to 3.55 cents. Net property income for the period increased 12.2 per cent to S$112.3 million as gross revenue rose 7.7 per cent to S$156.5 million.

For the full fiscal year, DPU rose 3.6 per cent to 14.24 cents as the amount available for distribution increased 11.9 per cent to S$342 million. Net property income and gross revenue both grew 6.6 per cent to S$436 million and S$613.6 million, respectively.

The trust manager said: “In 2014, while the supply of industrial space in Singapore is expected to increase, the demand outlook for business and industrial space is likely to remain healthy on the back of a tentative global recovery.”

Mr Tan Ser Ping, chief executive of the trust manager, said: “A-REIT’s portfolio achieved positive rental reversion averaging 14.8 per cent for leases renewed in FY13/14 … We expect the trend to continue in FY14/15, albeit at a more modest rate.”

MLT Q4 DPU up 9.2% at 1.89 cents

Source: Business Times / Companies

MAPLETREE Logistics Trust posted a distribution per unit (DPU) of 1.89 cents for its fourth quarter ended March 31, 2014, up 9.2 per cent from 1.73 cents a year earlier.

This will be paid on May 30, 2014.

The higher DPU came on the back of a 10.1 per cent increase in distributable amount to $46.3 million.

Net property income rose 4.3 per cent to $68.3 million, while earnings per unit almost doubled to 6.07 cents from 3.09 cents a year ago.

-By Lee Meixian

MGCCT beats own income prediction for Q4

Source: Business Times / Companies

MAPLETREE Greater China Commercial Trust (MGCCT) said distributable income per unit rose to 1.587 cents in the fiscal fourth quarter, beating its own forecast by 15.9 per cent.

The real estate investment trust plans to distribute 3.099 cents per unit, or its entire distributable profit for its second half. That would bring its full-year payout to 6.265 cents per unit.

MGCCT's full-year distribution yield is 6.7 per cent, based on its closing share price of 87 cents on Monday.

Overall distributable income during the three months ended March was $42.6 million, 16.1 per cent over the China-focused commercial real estate investment trust's forecasts during its 2013 initial public offering. Year-on-year comparisons against pro-forma figures prior to listing are not meaningful because MGCCT only acquired its key assets at listing.

-By Kenneth Lim

CMA shareholders should stand their ground against 'fair offer'

CMA is a cash cow and is worth much more than that

Source: Business Times / Companies

THE CapitaLand (CL) offer for the 35 per cent of the CapitaMalls Asia (CMA) shares they do not own is yet another example of the lack of respect for minority shareholders. The post-IPO performance of CMA shares and the paltry premium over the IPO price and book value multiple should concern all CMA shareholders.

At the November 2009 CMA IPO, all of the proceeds went to CapitaLand and none were invested into CMA. Thus the IPO and current offer are just asset trades for CL with no strategic benefit for CMA shareholders. Prior to the IPO, CL shares peaked at $8.60 and during the financial crisis fell almost 80 per cent. A few months later, CMA's IPO was priced at $2.12, closed the first day at $2.30 and the multiple of book value offered was 1.55x. The current offer of $2.22 is valued at a thin 1.2x book value.

Yet, now more than four years later, CL wants to pay only a 4.7 per cent premium to the IPO price, a 3.4 per cent discount to the day one closing price and a 23 per cent discount to the IPO book value multiple. Has CMA really deteriorated that much over the last four years?

At the time of the IPO, CMA had 59 completed projects and today there are 85, a 44 per cent increase. In 2013 vs 2012, revenue, profit and the asset value per share were all up about 10 per cent and operating income increased a whopping 40 per cent. Looking back to the IPO, in 2009, profit was $388 million and for 2013 it was $600 million, an increase of 55 per cent. 

Total equity in 2009 was $5.5 billion and at year-end 2013, it is $7.2 billion, more than a 30 per cent increase. So operating performance since the IPO has been quite strong and hardly justifies a discounted multiple to book value and a discount to the closing price after the IPO.

-By Michael Dee

Why CMA investors may be cool to CapLand offer

Source: Straits Times

Capitaland has enjoyed a good run-up in its share price since it launched a $3.06 billion buyout of the rest of mall operator CapitaMalls Asia (CMA), in which it already holds a 65.3 per cent stake. It closed five cents up at $3.18 on Thursday, giving it a rise of 8.9 per cent for the week.

CapitaCommercial Trust

Source: Business Times / Singapore Markets

Q1 2014 distributable income increased 7.6 per cent to $59.9 million, mostly due to stronger contributions from portfolio assets and lower interest expenses. Q1 figures were mostly within expectations and YTD distributable income now constitutes 25.6 per cent of our full-year forecast.

UIC extends SingLand offer deadline to April 25

Source: Straits Times

United industrial Corp (UIC) has extended the deadline for its general offer for Singapore Land shares toFriday, April 25. The extension is to give shareholders more time to consider the offer in view of the GoodFriday public holiday last week.

Rowsley gets nod to build Iskandar condo

Source: Business Times

Developer Rowsley has obtained a regulatory nod to develop its first residential development in the Iskandar region in Malaysia. The SKIES project will comprise two 75-storey towers with some 500 apartments each.

Global Economy & Global Real Estate

China plans bad debt fund for foreigners

US$1b fund will help them invest in soured property loans and distressed real estate

Source: Business Times / Property

[BEIJING] A unit of one of China's biggest bad-debt banks plans to woo foreign investors with a US$1 billion fund for soured property loans and distressed real estate assets, reopening the sector to outsiders after a failed attempt last decade.

That the fund is being launched just as growth in the world's second-largest economy has slowed to an 18-month low and the housing market is losing strength is no coincidence.

China Orient Summit Capital, 80 per cent owned by China Orient Asset Management Corp, will use its connections to help foreigners invest in an attractive but sometimes treacherous market for distressed assets, chief executive Lijian Chen said. "We see the cycle coming," he said, referring to an expected cooling down in the housing market. "Especially since this is synchronised with the economy."

And China Orient Summit wants to be ready. Founded in February, it has sought regulatory approval for its new fund, which would target institutional investors and pension funds in the US, the UK, and the Middle East. "The best deal in any country, always, is going to be the off-market deal," Mr Chen said in an interview at the firm's office in downtown Beijing. "You have to explore the relationship, you have to explore the off-market opportunity."

-From Beijing, China

New launches send Q1 condo sales in Toronto up 68%

Source: Business Times / Property

[TORONTO] Toronto condominium sales had their best March on record, more than doubling from a year ago as new projects stoked demand, according to RealNet Canada Inc.

Sales of new condos jumped to 2,496 units in Canada's biggest city, driving first quarter sales 68 per cent higher to 4,962 from a year ago, the Toronto-based real estate research firm said last week in a report.

Prices dipped to C$548 (S$623.6) per square foot in March from a record high of C$559 in February while the average unit was 797 square feet, up from a record low of 784 sq ft in February.

There are more condos under construction in Toronto than in any other North American city, according to industry website, fuelling a debate over whether the booming city can absorb supply.

-From Toronto, Canada

Rising property taxes filling US cities' revenues

Collection at fastest pace since housing crash, helps to end era of budget cuts

Source: Business Times / Property

[WASHINGTON] Property tax collections are rising at the fastest pace since the US housing market crash sent government revenue plunging, helping end an era of local budget cuts.

In cities including San Jose, California, Nashville, Tennessee, Houston and Washington, revenue from real estate levies has set records, or is poised to.

Local governments are using the money to hire police, increase salaries and pave roads after the decline in property values and 18-month recession that ended in 2009 forced them to eliminate about 600,000 workers and pushed Detroit, Central Falls, Rhode Island, and three California cities into bankruptcy.

"'The money is flowing back, but it's not like an open spigot," said Rob Hernandez, deputy administrator of Broward County, Florida, where property tax revenue is set to rise 7 per cent this fiscal year, though it remains below earlier peaks. "It's trickling in."

-From Washington, US

Qatar to build fewer World Cup stadiums

Source: Business Times / Property

[DUBAI] Qatar has reduced the number of stadiums it plans to build for the 2022 soccer World Cup by a third amid rising costs and delays.

The country, which won the right in 2010 to host the world's most-watched sporting event, plans to build eight stadiums for the games, Ghanim Al Kuwari, the organising committee's senior manager for projects, said at a conference in Doha on Sunday.

The country originally announced plans for 12 stadiums, including nine new playing fields and three refurbishments.

Mr Al Kuwari did not give a reason for the cut.

-From Dubai, UAE

Property-Tax Collections Rising at Fastest Pace Since U.S. Crash

Source: Bloomberg / Personal Finance

Property-tax collections are rising at the fastest pace since the U.S. housing market crash sent government revenue plunging, helping end an era of local budget cuts.

In cities including San Jose, California, Nashville, Tennessee, Houston and Washington, revenue from real-estate levies has set records, or is poised to.

Local governments are using the money to hire police, increase salaries and pave roads after the decline in property values and 18-month recession that ended in 2009 forced them to eliminate about 600,000 workers and pushed Detroit, Central Falls, Rhode Island, and three California cities into bankruptcy.

“‘The money is flowing back, but it’s not like an open spigot,” said Rob Hernandez, deputy administrator of Broward County, Florida, where property-tax revenue is set to rise 7 percent this fiscal year, though it remains below earlier peaks. “It’s trickling in.”

Some localities that were hit hardest in the real-estate collapse, such as Clark County, Nevada, haven’t yet rebounded but forecast improvement in the next fiscal year.

Property-tax collections nationally rose to $182.8 billion during the last three months of 2013, when much of the money is due, according to a U.S. Census estimate last month. That topped the previous peak four years earlier, before the decline in housing values reduced revenue.

That increase helped boost collections for the year by 3 percent over 2012. That was the biggest gain since 2009, when revenue climbed 9 percent.

Bond Improvement

“With cities having increased real-estate tax collections, it will really improve their bottom lines,” said Brooks Rainwater, a director of research for the National League of Cities in Washington.

The financial recovery is easing the risk of credit-rating cuts for local governments, which could increase prices by pushing down yields as a result of less risk.

Bonds from local government issuers have gained 5.34 percent this year through April 16, outpacing the broad market’s 4.86 percent advance, Bank of America Merrill Lynch data show. It would be the first time since 2008 that debt from cities, counties and townships have outpaced all securities in the $3.7 trillion market.

Property taxes have taken longer to rebound than other types of levies, prolonging the effects of the 18-month recession that ended in 2009. It can take more than a year for tax bills to catch up with changes in home values. Some state laws limit annual property-tax increases.

Library Money

In Nashville and Davidson County, Tennessee, property tax revenue rose 13 percent in the 2013 budget year compared with 2012. With revenue hitting $891 million, the government rebuilt fire stations and started work on a police station.

In Houston, where property tax collections are up more than $100 million from the 2011 low, the city is putting more into its libraries and parks and has begun adding to its workforce.

“We’re clearly headed in the right direction,” said Houston Controller Ronald Green.

In Washington, property-tax collections in the year that ended in September rose about 5 percent from the year before to $1.9 billion. The city is spending more on schools and affordable housing.

Health Costs

San Jose, in the heart of Silicon Valley, is using the extra cash mostly to cover rising costs for employee health care and pensions. Property-tax collections are set to rise 8.1 percent for the year ending in June to about $222 million, above the previous peak of $210 million in 2009.

“We were able to stop the bleeding,” said San Jose Mayor Chuck Reed. “The real-estate market will help us not have to cut services, but it is not strong enough to give us enough revenues to overcome these increasing costs.”

Local governments remain hesitant to hire after cutting jobs from mid-2008 through March 2013, according to the U.S. Labor Department. Since then, local governments, which employ about 14 million people, have added 57,000 workers.

“Property values are rebounding to a degree and fairly robustly in some locations, but the effect of that on the fiscal circumstances in many cities is not as salutary as we would like,” said Steven Kreisberg, the director of collective bargaining for the American Federation of State, County and Municipal Employees, which represents more than 1.6 million government workers and retirees.

Since March 2013, property values have risen by more than 10 percent each month from a year before, according the S&P/Case-Shiller index of property values in 20 U.S. cities.

Nevada’s Clark County has a backlog of projects awaiting funding, said Commissioner Steve Sisolak. The county’s property-tax collections during the year beginning in July are forecast to rise for the first time since 2009, though gains will be limited by state caps on how much they can increase.

“The county’s turning a corner,” Sisolak said. “You fall off a cliff fairly quickly, and it takes you a while to climb back out.”

-By William Selway