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6th August 2014

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326 households on Enhanced Lease Buyback Scheme: Khaw

Speaking in Parliament, Minister of National Development Khaw Boon Wan also gave details on the type of flats Singaporeans aged 55 and above own, with 44 per cent staying in 4-room flats.

Source: Channel News Asia / Singapore

SINGAPORE: A total of 326 households have signed up for the Enhanced Lease Buyback Scheme since it was updated in February 2013, according to National Development Minister Khaw Boon Wan.

Mr Khaw was speaking in Parliament on Tuesday (Aug 5), in response to MP Dr Intan Azura Mokhtar's question on how many lower-income elderly Singaporeans have signed up for the scheme.

The Enhanced Lease Buyback Scheme is a monetisation option to help low-income elderly households in 3-room and smaller flats to unlock part of their housing equity while still living in their homes, and receive a lifelong income stream to supplement their retirement income, according to the Housing and Development Board's website.

Under the Scheme, elderly flat owners sell part of their flat lease to HDB and retain a 30-year lease. Their proceeds from selling part of the flat lease will be used to top up their CPF Retirement Accounts. Flat owners will use their full CPF Retirement Account savings to purchase a CPF LIFE plan to give them a monthly income for life.

Dr Intan also asked for the breakdown of the flats Singaporeans aged 55 years and above live in, and how many in each flat type is considered a lower-income elderly.

Mr Khaw said: "There are about 367,000 households with at least one Singaporean flat owner aged 55 years old and above, living in 3-room, 4-room and 5-room flats. Of these households, 32 per cent are 3-room flats, 44 per cent are 4-room flats, and 24 per cent are 5-room flats"

He added that the Housing and Development Board does not have the income information since it does not require flat owners to update their income.

- CNA/kk

Singapore Real Estate

Land acquisition: Owners to get better compensation

No 'betterment levy', so owners will be compensated at full market value

Source: Straits Times / Singapore

A NEW law passed yesterday will give better compensation for owners who have part of their land acquired by the Government.

The Land Acquisition (Amendment) Bill has removed what is known as the "betterment levy", among other reforms.

The levy required that any increase in the value of the owner's remaining land be deducted from the compensation he is given for the acquired land.

It was imposed because the value of the land remaining in the owner's hands could increase due to the improvement works undertaken on the acquired land.

Senior Minister of State for Law Indranee Rajah told Parliament that removing the levy means owners will receive compensation equivalent to the full market value of the acquired land.

"The amendment continues in the spirit of the previous set of amendments to the Land Acquisition Act in 2007, which pegged compensation for acquired land to the market value which a bona fide purchaser would reasonably be willing to pay for the property," said Ms Indranee during the second reading of the Bill.

Non-Constituency MP Lina Chiam, the only MP to speak during the debate on the Bill, asked if removing the levy will hit government coffers.

"If we are to now increase the compensation for land owners, taking into consideration the benefits of the public developments, we will be losing taxpayers' money to enrich the land owners on an 'after the fact' basis," she said.

Ms Indranee reiterated that the ultimate aim is to ensure that land owners receive a fair market value for the part of their assets that is compulsorily acquired.

"With respect to the betterment levy, it is not the case that one is unjustly or unfairly enriching the owner," Ms Indranee added.

Other amendments of the Bill include improving the efficiency of the land acquisition process.

One change will enable the management corporation of a strata-titled development to act on behalf of individual unit owners in the acquisition of common property.

Another amendment has removed the need to paste physical notices for site possession.

SLP International research head Nicholas Mak thinks that while removing the betterment levy is good for land owners, it will not have much impact on the market.

"A lot of the part-lot acquisitions that took place in the past was because of MRT construction work or the building of expressways," he noted.

"But these days, much of such work appears to be winding down or the Government would use state land where possible instead."

Part-lot acquisitions of the kind cited by Mr Mak were employed to get land for the North-East Line MRT construction.

-By Mok Fei Fei

Changes to Land Acquisition Act will benefit land owners: Indranee Rajah

The "betterment levy", imposed on the compensation a land owner gets when the land is acquired, will be removed.

Source: Channel News Asia / Singapore

SINGAPORE: Land owners will now be better compensated when part of their land is acquired for development, following changes to the Land Acquisition Act.

Following amendments passed in Parliament on Tuesday (Aug 5), the "betterment levy" - a fee imposed on the compensation a land owner gets - will be removed. This fee is equivalent to the rise in value of the area around the acquired land as a result of developments.

Senior Minister of State for Law Indranee Rajah outlined the changes: "Previously, if after having acquired Part A, the value of Part B goes up, when you compensate the owner for Part A, what we would have done is deduct the increase in Part B. So effectively the owner gets less. In this instance, what we are saying is we will no longer deduct the increase to Part B, which may have risen as a result of whatever else developments take place around that land. And in this way, the land owner benefits."

The amendments to the Act will also minimise inconvenience to individual unit owners, and quicken the acquisition process and disbursement of compensation. For instance, the Management Corporation of strata-titled developments will be able to act on behalf of the individual unit owners when common property is acquired. Currently, when common areas in strata-titled developments such as carpark lots are acquired, all unit owners must go through the entire acquisition process even if their own units are not affected by the acquisition.

- CNA/xy

Tough market prompts more property agency tie-ups

 Latest deal sees JLL S'pore taking 20% stake in PropNex unit

Source: Business Times / top Stories

[SINGAPORE] More property agencies here are consolidating to share resources and leverage on one another's networks, as the residential market continues to shrink.

Yesterday, JLL Singapore announced that it has acquired a 20 per cent stake in PropNex International, the project marketing arm of the homegrown PropNex - a move which will give JLL better access to the mass market home segment as the high-end condominium segment it has been dealing in continues to languish.

With this, JLL's current 170 sales associates have been invited to cross over to join the 5,600 sales agents at PropNex - culminating in a salesforce "marginally" larger than the other market leader, ERA Realty.

JLL's managing director for Singapore and South-east Asia, Christopher Fossick, said his company has noticed developers of new projects increasingly seeking large salesforces, which represent wider buyer reach, to support their sales.

"Even though we've got our international reach, our ability to add value to our clients without enlarging our sales associate network was actually going to decline ... For us the choice is: do we try to build 170 associates up to 5,000 associates? Or do we enter into a partnership with an already market-leading company that is well-established and highly respected?"

As for PropNex, which enjoys a third of the market share here with some 31,000 transactions closed a year, it would also get to leverage on JLL's global reach, especially at a time when Singaporean buyers are eyeing overseas property investments to flee cooling measures at home. Meanwhile, developers are also casting their nets beyond Singapore's shores in search of foreign buyers to counter the poor buying sentiment here.

"This partnership will allow PropNex to bring some of the developers' projects regionally, working with JLL's Jakarta or China office ... to expose their properties, explaining to possible overseas investors that despite the ABSD (additional buyer's stamp duties), at today's discounted prices, it may still be a right time to enter the market," said PropNex CEO Mohamed Ismail.

Beyond the residential market, there is also synergy to be made between PropNex's access to retail investors and JLL's numerous commercial strata-titled projects - another segment growing in popularity.

This announcement comes a month after four mid-sized property agencies - SLP International, OrangeTee, HSR International and Dennis Wee Realty - formed an alliance to rival the two largest players in the market, ERA Realty and PropNex Realty.

Steven Tan, managing director of OrangeTee, sees the latest acquisition as a natural move and expects more consolidation in the industry going forward.

"It makes sense because in any industry, when the market size shrinks in a big way, businesses will consolidate to share resources and leverage on each other's network," he said.

PropNex's Mr Ismail also believes that the consolidation trend is "timely".

"In any market, when there is a moment of challenge, the fittest will survive, the visionaries will think of solutions outside the box," he said. Consolidation is one such solution.

JLL's Mr Fossick views the consolidations as emulations of the existing successful model in the market, that is, the likes of ERA and PropNex. "It's all part of the same theme."

JLL's initial 20 per cent stake in PropNex International may also just be "phase one", he said. "If it succeeds as we expect it to, we will want to continue and grow the partnership because that's natural."

Mr Ismail added: "We never say the 20-per-cent is the end of the road. The next step would ideally be to see whether the partnership adds value to our respective objectives. If this value-add process continues, the possibilities are much wider."

As for the four-agency alliance, Project Alliance Group has, since inception, sold more units at their existing projects and is now actively preparing to market their first joint projects - two executive condo projects - later this month, OrangeTee's Mr Tan shared.

Several other small and mid-sized agencies have since also asked to join the alliance, but it is still deciding on their entry based on what each can offer in terms of expertise, network and size.

-By Lee Meixian

Real Estate Companies' Brief

CapitaLand Q2 sales slide

But earnings up on improved operating profits and revaluation gains

Source: Business Times / Companies

THE impact of slower development sales hit home for CapitaLand this year, with its second quarter ended June 30 results registering a drop in revenue. Having substantially sold down residential units in its launched projects, it still has some 500 launched but unsold units in Singapore and some 2,000 such units in China.

Also in its pipeline are close to 392 more residential units in Singapore and over 7,500 units in China that are ready for launch this year.

But group chief executive Lim Ming Yan noted that the rebalancing of the group portfolio since one and a half years ago has yielded results - 75 per cent of total group assets now resides in investment properties and 25 per cent in residential properties.

"This will help to mitigate the residential market headwinds faced in Singapore and China," Mr Lim said at the group's Q2 results briefing.

-By Lynette Khoo

Far East H-Trust Q2 DPU lower

Source: Business Times / Companies

AGAINST the backdrop of a challenging operating environment, Far East Hospitality Trust marked a 4.9 per cent dip in distributable income to S$22.1 million for the second quarter ended June 30.

Its distribution per unit (DPU) fell a larger 13.3 per cent to 1.24 Singapore cents. This was due to an enlarged stapled security base after issuing 148.3 million new stapled securities to a unit of The Straits Trading Company and Golden Development (a member of Far East Organization) as part of the acquisition cost of Rendezvous Hotel Singapore (RHS) and Rendezvous Gallery.

Net property income for the quarter edged down 1.3 per cent from the year before to S$26.6 million given lower hotel occupancies and average room rates.

But gross revenue for the period grew a marginal one per cent to S$29.6 million as Far East H-Trust recognised additional revenue from RHS, which was acquired in August last year.

-By Lynette Khoo

Far East Hospitality reports sharp drop in hotel occupancy

The hotel and serviced residence property trust said companies are continuing to restrain their travel spending as a result of the lingering economic uncertainty.

Source: Channel News Asia / Business

SINGAPORE: Far East Hospitality Trust, a Singapore-focused hotel and serviced residence property trust, will pay 13.3 per cent less in distribution per stapled security as occupancy at its hotels fell amid a plunge in visitor arrivals from China.

Far East Hospitality, whose properties include Rendezvous Hotel and Village Hotel Albert Court, will pay 1.24 Singapore cents per stapled security for the quarter ended June, down from 1.43 cents a year ago.

The average occupancy at its hotels was 80.1 per cent for the quarter, down from 87.7 per cent in the same period a year ago, while the average daily rate dipped to S$188 from S$191 a year ago.

Far East Hospitality's gross revenue rose 1 per cent to S$29.6 million for the quarter, mainly due to the contribution from Rendezvous Hotel which was acquired in August 2013.

Explaining its poorer performance, Far East Hospitality said companies continued to restrain their travel spending as a result of the lingering macroeconomic uncertainties.

"Leisure travel demand was also impacted by regional events," said Far East Hospitality. "In particular, arrivals from China, Singapore's second largest visitor market, was affected by the imposition of a new restriction by the Chinese Government on shopping tours and a decline in demand for Singapore-Malaysia-Thailand tour packages."

For the first five months of 2014, visitor arrivals from China fell by 27.4 per cent year-on-year, it added.

Looking ahead, the trust said the operating environment for the Singapore hospitality market is expected to remain relatively competitive.

The reduced business travel spending amid the protracted recovery of the global economy, and potential weakness in visitor arrivals could continue to weigh on the accommodation demand in the near term, it said.

- CNA/ek

GLP sees longer-term benefit from Chinese investment

Earnings down 12% in first quarter due to a host of factors

Source: Business Times / Companies

GLOBAL Logistic Properties (GLP) registered a 12 per cent drop in net profit to US$179.4 million for its first quarter ended June 30, while revenue rose 18 per cent to US$169.3 million.

The revenue of the logistics facility provider, 36 per cent owned by Singapore's GIC, rose on the back of higher rents and a continued lease-up of development projects in China.

But earnings fell due to several factors, chiefly its continual contribution of assets into its Japanese Reit, GLP J-Reit, which siphons rental income away from the parent company's bottom line. This quarter also saw an absence of foreign-exchange gains which it enjoyed a year ago because it had hedged the yen when selling a tranche of properties to the Reit before the currency weakened.

Another factor that led to its lower net profit attributable to shareholders was a higher share going to non-controlling interests, particularly a Chinese consortium comprising Bank of China, China Life and HOPU Funds, which now owns about a quarter of GLP's Chinese subsidiary. When its second-tranche investment is completed this year, this stake will grow to 34 per cent.

-By Lee Meixian

PCRT's DPU remains at 0.95 cent

Source: Business Times / Companies

PERENNIAL China Retail Trust (PCRT) yesterday announced a distribution per unit (DPU) of 0.95 Singapore cent for the second quarter ending June 30. This brings H1 DPU to 1.90 Singapore cents.

Distributable income for Q2 is similar to that for Q2 2013, at roughly S$10.9 million.

The distribution is essentially paid from the trust's earn-out fund. Having withdrawn another $10.9 million this quarter, there is S$26.4 million left for H2 2014. DPU is likely to take a hit after the income support expires at the end of the year.

Revenue was S$4.49 million in Q2 2014, compared to no revenue generated a year ago. This brings H1 2014 revenue to S$6.5 million, again up from none a year ago. The increase occurred as Perennial's Jihua Mall in Foshan and Qingyang Mall in Chengdu commenced operation in Aug 2013 and April 2014 respectively.

-By Cai Yong

S$246.8m valuation loss hits Forterra Trust's Q2 results

Source: Business Times / Companies

FORTERRA Trust's bottom line was dealt a severe blow in the second quarter as its investment properties swung to a S$246.8 million loss in valuation from a gain of S$41.3 million a year ago.

The Q2 net loss attributable to unitholders was S$138.2 million, against a net profit of S$24.2 million a year ago.

As at June, its total portfolio, including its 55 per cent interest in Central Park Mall Qingdao, was valued at 10 billion yuan (S$2.02 billion), a drop of 7 per cent from 10.8 billion yuan in December last year.

The changes in valuation amounts reflect the general market trend tracking a more cautious environment for retailers and retailing business in China as well as the expected ample new office supply in Shanghai in the coming years, said the business trust.

-By Mindy Tan

Global Economy & Global Real Estate

Extra Space takes majority stake in Taiwan company

Source: Business Times / Singapore

HOMEGROWN self-storage company Extra Space has acquired a majority stake in Taiwan's Storeasy Self Storage to become one of the largest self-storage companies in Asia, in terms of the number of facilities that it has.

The concept of self-storage was first popularised in urban areas such as Hong Kong and Manhattan.

Extra Space provides storage services for both households and businesses. It opened its first outlet in Singapore with 50 customers in 2007.

With the majority stake acquisition of Storeasy, Extra Space now has a total of 19 facilities encompassing over one million square feet of space. This will enable it to serve more than 8,500 customers in Singapore, Malaysia, South Korea and Taiwan.

-By Amanda Eber

Paris luxury hotel scene booming

Source: Straits Times / World

PARIS - A stone's throw from the Arc de Triomphe, in a building where George Gershwin composed An American In Paris, the Peninsula opened its doors last Friday, becoming the French capital's latest five-star hotel.

Qatar's Katara Hospitality and The Hongkong and Shanghai Hotels spent US$1 billion (S$1.25 billion) on the project, buying the building from the French Foreign Ministry, which took it over after World War II, when it served as the German army headquarters.

The Peninsula's opening coincided with the reopening of another luxury hotel in the city, the Plaza Athenee, which had been closed for several months for refurbishment, increasing super-high-end lodging options for the world's rich.

While Paris has fewer five-star hotels than New York or London, the market is heating up with several new and renovated hotels set to come on stream by 2016.

"I think the competition in 2016 will be intensely tough," Mr Nicolas Beliard, the general manager of the Peninsula Paris, said in an interview.

For now, Paris' hotel market remains attractive as the French capital continues to lure an increasing number of visitors, especially newly wealthy ones from emerging markets.

About 30 million tourists visited Paris last year, with 40 per cent of them coming from overseas. The majority of clients of luxury hotels are still American, British or Japanese, but since a growing number of them are coming from countries such as China, hotel chains are taking note.

"Twenty years ago, all hotels had the same code," Mr Vanguelis Panayotis, director of development at Paris-based MKG Hospitality, an industry analysis group, said in an interview. "Now, they specialise to appeal to particular clients."

At the Peninsula, Chinese lion sculptures greet visitors at the entrance, and it has a Cantonese restaurant - one of the hotel's six eateries. The hotel's rates start at €695 (S$1,160) and goes up to €25,000 (S$41,800) a night for the most expensive suite.

-By Bloomberg

NorthStar to Buy Griffin-American REIT for $3.4 Billion

Source: Bloomberg / News

NorthStar Realty Finance Corp. (NRF) agreed to buy Griffin-American Healthcare REIT II for about $3.4 billion, gaining medical-office buildings and senior housing in the biggest health-care real estate deal in three years.

Stockholders of Griffin-American, a real estate investment trust that isn’t traded on exchanges, will receive $11.50 a share, comprising $7.75 in cash and the rest in NorthStar common stock, the companies said today in a statement. NorthStar also will assume about $600 million of debt.

Real estate companies are seeking to take advantage of the growing demand for medical services and senior housing as the U.S. population ages. In June, Ventas Inc. (VTR), the country’s third-biggest health-care REIT by market value, agreed to buy American Realty Capital Healthcare Trust Inc. for $2.6 billion. New York-based NorthStar earlier this year acquired $1.05 billion of senior housing and skilled-nursing facilities.

The Griffin-American properties “are high-quality, diversified and stable cash-flowing assets that will enhance the long duration stable cash-flow growth that supports our dividend,” David Hamamoto, NorthStar’s chairman and chief executive officer, said on a conference call with analysts.

NorthStar climbed 6.5 percent to $17.19 today. The shares have gained less than 1 percent in the past 12 months.

Nontraded REIT

Griffin-American, based in Irvine, California, has sold shares in two offerings at $10 and $10.22 a share, according to its latest quarterly regulatory filing. The REIT, founded in 2009, concluded its fundraising last year, collecting $2.8 billion in equity. It has 295 properties in the U.S. and the U.K., according to a NorthStar filing today.

Nontraded REITs, primarily marketed by brokers to individual investors, have a finite life span and eventually have to give money back to holders. Typically the companies are sold or list their shares on a stock exchange.

NorthStar’s “health-care investment platform is relatively new, and with this deal it has ramped up pretty quickly,” Jeffrey Langbaum, an analyst with Bloomberg Intelligence, said in a telephone interview.

The planned purchase is the biggest among health-care REITs since Ventas bought Nationwide Health Properties Inc. in July 2011 for $6.8 billion, according to data compiled by Bloomberg.

“The transaction we announced this morning represents the largest acquisition of a quality, diversified health-care real estate portfolio in the past three years,” Jay Flaherty, who oversees NorthStar’s health-care property business, said on the conference call.

Rising Rates

Flaherty is the former CEO of HCP Inc., the second-biggest health-care REIT by market value. NorthStar formed a partnership with him in January to build a health-care business.

Health Care REIT Inc., with a market value of about $20 billion, is the largest company in the industry. Shares of health-care REITs are the worst-performers in the Bloomberg REIT index in the past 12 months, hurt by concern that rising interest rates will increase borrowing costs.

The NorthStar transaction is expected to be completed in the fourth quarter, according to the statement.

-By Brian Louis

Assurant Promotes Eric Greenman to Oversee $16 Billion

Source: Bloomberg / News

Assurant Inc. (AIZ), an insurer of consumer electronics and foreclosed homes, promoted Eric Greenman to oversee a $16 billion investment portfolio.

Greenman was named chief investment officer, effective Aug. 15, the New York-based company said today in a statement. He replaces Christopher Pagano, who will become chief financial officer in a switch that was announced in May. Greenman, 46, has been head of fixed income since 2004.

“Eric has played a key role in developing and executing Assurant’s successful investment strategy,” Chief Executive Officer Robert Pollock said in the statement. Greenman’s “financial expertise, extensive experience and knowledge of Assurant will ensure a smooth transition.”

Insurers have been counting on new chief investment officers to manage their portfolios as low interest rates pressure income from assets held to back policyholder obligations. Hartford Financial Services Group Inc. promoted Brion Johnson to CIO in May.

Assurant’s portfolio includes about $11.8 billion of fixed-income securities, with investment-grade corporate debt being the primary asset class.

‘Relative Value’

“We are always focused on A and BBB corporate bonds,” Greenman said in an e-mail today. “That being said, we invest across the credit spectrum and the capital structure as we see relative value opportunities.”

Assurant had a $1.25 billion investment in commercial-mortgage loans as of June 30, according to its most recent quarterly filing. The company also invests in preferred equity and private-placement securities, Greenman said.

The insurer slipped 0.5 percent to $63.44 at 4:15 p.m. in New York. Assurant has dropped 4.4 percent this year, compared with the 3.2 percent decline of the 21-company Standard & Poor’s 500 Insurance Index.

Greenman was director of quantitative strategies at New York Life Investment Management from 2001 to 2004, according to the statement. He has a bachelor’s degree from Babson College and an MBA from Columbia University, Assurant said.

-By Kelly Gilblom

Zillow Tops Analysts’ Estimates for Second-Quarter Sales

Source: Bloomberg / Tech

Zillow Inc. (Z), the real estate website that’s acquiring smaller rival Trulia Inc. for $3.5 billion, reported second-quarter sales that topped analysts’ estimates as traffic increased and more agents used its home-listing service.

Sales rose 68 percent to a record $78.7 million, from $46.9 million a year earlier, Zillow said yesterday in a statement. That compared with analysts’ average prediction of $76.6 million, according to data compiled by Bloomberg.

The Seattle-based company, the biggest U.S. website for real-estate agents and prospective home buyers, also raised its annual sales forecast as advertising and listing revenue surges. The all-stock deal for Trulia, unveiled last week, is part of Chief Executive Officer Spencer Rascoff’s goal of creating a family of Web brands under the Zillow name that could span sales to rentals to mortgages.

“Agents are increasingly looking to Zillow as a lead-generation tool,” said Ronald Josey, an analyst at JMP Securities, who rates the stock the equivalent of a buy. “As long as these things continue I think that should bode well for the results.”

Zillow shares fell 2.6 percent to $141.06 at yesterday’s close in New York. The stock has gained 73 percent this year.

Net Loss

The company’s second-quarter net loss was $10.5 million, or 26 cents a share, compared with a loss of $10.2 million, or 30 cents, a year earlier. Excluding certain costs, the per-share loss in the recent period was 5 cents, compared with analysts’ average prediction for a loss of 4 cents.

Zillow said revenue from its Premier Agent advertising program rose 82 percent, with bookings in that business more than doubling. Traffic on the Web and mobile devices reached 81.1 million average monthly unique users in the quarter, with a record of almost 89 million in July.

The increase in users “has created extra impressions available to sell,” Rascoff said in an interview. “And advertisers follow the audience.”

Third-quarter sales will rise to $87 million to $88 million, exceeding the average analysts’ estimate for $82.7 million. Revenue for the full year will be $321 million to $323 million, Zillow said yesterday, increasing its forecast from a prior range of $304 million to $308 million.

Trulia Deal

Last week, San Francisco-based Trulia reported second-quarter revenue of $64.1 million, beating the average analyst estimate of $62.3 million, according to data compiled by Bloomberg.

A combined Zillow and Trulia would be positioned to capture a larger share of digital real estate ads as more people turn to the Web for house-hunting and as property agents deploy more marketing dollars on the Internet. The companies estimate that together they would now have less than 4 percent of the $12 billion a year real estate advertising market in the U.S.

“This quarter was big before the Trulia deal even came together,” Rascoff said. “It’s too early to say the impact the announcement will have on our businesses.”

Trulia will be the largest acquisition for Zillow, according to data compiled by Bloomberg. The deal’s completion is contingent on regulators’ approval and isn’t projected to occur until 2015.

-By Jing Cao

InterContinental Earnings Decline on Lower Revenue

Source: Bloomberg / Luxury

InterContinental Hotels Group Plc (IHG), Europe’s second-largest publicly traded hotel operator, said first-half profit declined 8 percent as the company generated less revenue in the Americas region. The shares fell to the lowest in three months.

Operating profit before exceptional items and tax fell to $310 million from $338 million a year earlier, the Denham, England-based company said in a statement today. That beat $307 million, the average of 10 analyst estimates compiled by Bloomberg. Revenue declined by 3 percent to $908 million.

Marcato Capital Management LP, a hedge fund that owns about 4 percent of InterContinental, yesterday said it hired Houlihan Lokey to conduct a strategic review of the company to find ways to increase shareholder value. The announcement followed a May report by Sky News that the company had spurned an offer that valued it at about 6 billion pounds ($10 billion). InterContinental declined to comment on the bid speculation or the strategic review.

“The U.S. lodging industry continues to perform strongly, but we would anticipate only marginal movements in consensus EPS estimates,” Numis Securities Ltd. analysts led by Wyn Ellis said in a note today. “In the absence of material M&A activity, we consider the shares to be reasonably valued.” Numis cut its rating on the stock today to hold from buy.

InterContinental was down 3.3 percent to 2,288 pence at the 5:30 p.m. close of trading in London, the lowest since May 1. The shares have gained about 5 percent this year.

Higher Revpar

Revenue per available room, an industry measure of occupancy and rates known as revpar, increased 5.8 percent globally and 6.7 percent in the Americas. Revenue in the Americas, which accounts for about half of the total, dropped 5 percent to $435 million.

“Whilst several of our key markets continue to experience some political or economic uncertainty, we are encouraged by current trading trends,” Chief Executive Officer Richard Solomons said in the statement.

InterContinental plans to pay a dividend of 25 cents a share for the first half, up from 23 cents a year earlier. The company has a market value of 5.4 billion pounds. Accor SA, its biggest European competitor, is valued at 8.1 billion euros ($10.8 billion).

-By Andrew Blackman