Ascott Reit makes forays
into KL, Wuhan and Xi'an
Acquisition of three serviced residences for a
property value of $173.9m
Source: Business Times / Companies
ASCOTT Reit has signed conditional deals to acquire its first
serviced residences in Kuala Lumpur and the Chinese cities of Wuhan and Xi'an
for a total property value of $173.9 million.
The consideration includes a debt
component of $42.3 million.
On a pro forma basis, the acquisitions are expected to raise its
FY13 distribution per unit (DPU) from 8.71 cents to 8.81 cents, and generate an
Ebitda (earnings before interest, taxes,
depreciation and amortisation) yield
of 5.1 per cent for FY13.
Ascott Reit will acquire the 207-unit Somerset Ampang Kuala Lumpur
from its sponsor, The Ascott, for RM175 million (S$68.4 million).
It is banking on more multinational corporations setting up
offices in Malaysia, with the government promoting investments, which will in
turn drive expatriates' and business travellers' demand for serviced
residences.
-By Lee Meixian
http://www.businesstimes.com..sg/premium/companies/others/ascott-reit-makes-forays-kl-wuhan-and-xian-20140708
http://www.straitstimes.com/premium/money/story/ascott-the-lookout-big-opportunities-us-20140708
KepLand raises stake in
Vietnam property project
Holding to be raised from 55% to 98% for
development's remaining phases
Source: Business Times / Companies
KEPPEL Land, which owns 55 per cent of a residential development
project in Vietnam known as The Estella, has entered into a deal to raise the
stake to 98 per cent for the remaining two phases of the development.
The Singapore-listed company and its Vietnamese partner, Tien
Phuoc Co Ltd, had embarked on the project through Estella Joint Venture Company
Limited.
Keppel Land is paying Tien Phuoc US$11.46 million for the
additional 43 per cent stake.
The transaction under a conditional share purchase agreement is
expected to be completed by the end of the year.
http://www.businesstimes.com.sg/premium/companies/others/kepland-raises-stake-vietnam-property-project-20140708
Is Batu Pahat in Johor the
next Iskandar?
Developing the area could signify the northward
expansion of the Singapore-Johor megalopolis
Source: Business Times / Editorial & Opinion
ON July 30, the Iskandar Malaysia economic corridor will celebrate
its eighth anniversary. Thus far, Iskandar has been a great success story,
attracting over $54 billion in investments since 2006. Nonetheless, it may
already be time to search for the next frontier of investment.
THE Hillview Loft condominium complex, perched on a quiet hill and
surrounded by lush rainforest, towers above the city of Batu Pahat, Johor.
Dubbed "The Fortress" by some residents, the three luxury high-rise
buildings are housed within a gated compound equipped with entry checkpoints
and 24-hour security. Wealthy Malaysians and a handful of expats from all over
the world - Canada, China, Germany, the Middle East, Singapore, and the United
States - park their BMWs and Range Rovers in an underground deck beneath the
Olympic-sized swimming pool. After work, residents hit the in-house gym or the
synthetic-grass tennis courts before retiring to their flats to chow down on
organic dinners purchased from local markets.
Batu Pahat's transformation
Located just 110 kilometres north-west of Singapore and 240
kilometres south-east of Kuala Lumpur, the district of Batu Pahat (meaning
"chiselled stone" in Malay) is comprised of nearly half-a-million
people. Some 20 years ago, the sort of lifestyle and economic prosperity seen
today would have been unthinkable; Batu Pahat was little more than a set of
sleepy villages. But today, "BP", as it is affectionately referred to
by locals, is the second largest city in the state of Johor (after Johor Bahru)
in terms of both population and manufacturing production. The area has
transformed itself into something of a boomtown, relying on industries as
wide-ranging as textiles, food processing, and electronics to spur growth. BP
accounts for 50 per cent of the textiles exported out of Malaysia, and is home
to production facilities for a number of multinational corporations, including
Fujitsu and Sharp.
-By Madhu Narasimhan & Jonathan S WeinTraub
http://www.businesstimes.com.sg/premium/editorial-opinion/opinion/batu-pahat-johor-next-iskandar-20140708
Iskandar: Too many homes,
too soon?
Source: Straits Times
It has been touted as an affordable real estate investment destination
in an up-and-coming market, an attractive alternative to Singapore's pricey
housing scene. But property buyers in Iskandar are now facing two big investor
problems: a potential oversupply of homes and an inadequate supply of property
data.
http://www.straitstimes.com/premium/opinion/story/iskandar-too-many-homes-too-soon-20140708?error=3#sthash.XDOBLk0Z.dpuf
China govt travel rules
seen to benefit serviced residences
Source: Business Times / Companies
CHINA'S anti-corruption crackdown, which has seen it cut
government officials' travelling and entertainment budgets, may actually be a good
thing for serviced apartments, Ronald Tay, the chief executive officer of
Ascott Reit's manager, told the media and analysts yesterday.
This is because many of the enforcement actions are likely to turn
the bureaucrats away from luxury hotels to serviced apartments instead.
"(The crackdown) has anecdotally impacted hotels more, rather
than serviced residences. We don't have many restaurants and banquet facilities
like in four and five-star hotels. Many restaurants and F&B businesses in
hotels have been very negatively affected because of the crackdown, which
directly affects the profitability of hotels too.
"We also understand that when government officials travel,
they can't stay in star-rated hotels, so the occupancies at four and
five-star-rated hotels have been affected . . . It is a good thing for our
serviced apartments that we don't have star ratings, so we are not affected by
the crackdown."
-By Lee Meixian
http://www.businesstimes.com.sg/premium/companies/others/china-govt-travel-rules-seen-benefit-serviced-residences-20140708
Property price cap eased
for Beijing developers: report
Source: Business Times / Property
[HONG KONG] China's Poly Real Estate Group has received regulatory
approval to price a Beijing project at a record high of almost 100,000 yuan
(S$20,000) per square metre, signalling an easing on pricing policy for
developers in the capital, a local report said yesterday.
Last month, seven projects in Beijing that received selling
approval had planned to set prices above 40,000 yuan, a cap that the local
authority set last November, China's national business daily added. The cap
made developers less interested in bidding for expensive land in the city.
Any move to drive up home prices in China, which are already near
record levels, can be controversial. The central government would prefer that
local authorities help curb property speculation because it fears unaffordable
property prices could cause social unrest.
At the same time, some Chinese cities have tried to limit property
price cuts to 15-20 per cent from the original asking price, developers and
real estate agents said in May, in a bid to slow a steeper industry downturn
and boost confidence in the market.
-From Hong Kong, China
http://www.businesstimes.com.sg/specials/property/property-price-cap-eased-beijing-developers-report-20140708
Brewer SABMiller to divest
US$1.1b stake
Sale of hotel-casino comes as firm aims to beef up
Africa beverage operations
Source: Business Times / Property
[LONDON] SABMiller plc said it will sell a US$1.09 billion stake
in South African hotel and casino operator Tsogo Sun Holdings Ltd as the
world's second-biggest brewer looks to bolster beverage operations in Africa.
Following a review of its 39.6 per cent holding in the
Johannesburg-based company, SABMiller will divest the stake in a two-stage
transaction involving a sale to institutional investors and a buyback of shares
by Tsogo Sun, the maker of Peroni and Castle Lite said yesterday in a
statement.
The beverage maker generates almost one-third of its earnings from
the African continent, and South Africa is the second-biggest provider of the
company's revenue after Latin America.
It struggled to grow in South Africa last year amid rising
inflation and increased competition from Heineken NV and Diageo plc, while
expansion across Africa has been hampered by tough economic conditions in South
Sudan and Zimbabwe.
-From London, UK
SABMiller To Sell $1.09 Billion Stake In Tsogo Sun
Source: Bloomberg / Luxury
SABMiller Plc (SAB) said it will sell a $1.09 billion stake in South African hotel and casino operator Tsogo Sun Holdings Ltd. (TSH) as the world’s second-biggest brewer looks to bolster beverage operations in Africa.
Following a review of its 39.6 percent holding in the Johannesburg-based company, SABMiller will divest the stake in a two-stage transaction involving a sale to institutional investors and a buyback of shares by Tsogo Sun, the maker of Peroni and Castle Lite said today in a statement.
The beverage maker generates almost one-third of its earnings from the African continent, and South Africa is the second-biggest provider of the company’s revenue after Latin America. It struggled to grow in South Africa last year amid rising inflation and increased competition from Heineken NV and Diageo Plc (DGE), while expansion across Africa has been hampered by tough economic conditions in South Sudan and Zimbabwe.
In addition to protecting market share in South Africa, “there remains a lot of whitespace opportunity for them in Africa as well,” Philip Gorham, an analyst at Morningstar, said in an e-mail. “Kenya is an opportunity. Their presence is quite patchy, and they could look to plug some geographic gaps.”
Decelerating Volume
Since taking the helm last year, SABMiller Chief Executive Officer Alan Clark has sought to offset declines in Europe and a difficult U.S. market by cutting costs and targeting developing economies across Latin America and Africa. SABMiller gets more revenue from developing regions than other major brewers.
“Gaming and hotels are not core to our operations and we have concluded that the time is right for us to exit our investment,” Clark said in today’s statement.
SABMiller shares fell 0.9 percent to 3,368.5 pence as of 1:19 p.m. in London. Tsogo Sun declined as much as 7.4 percent, the most on an intraday basis in more than a year, and traded 2.8 percent lower at 26.15 rand in Johannesburg, giving the company a market value of 30.9 billion rand ($2.9 billion).
“We support Tsogo Sun in buying back the shares,” said Johnny Copelyn, CEO of the casino operator’s biggest shareholder Hosken Consolidated Investments Ltd. (HCI), which now owns 47 percent of the company. “It’s a good company. The industry has a good future,” he said by phone.
SABMiller said in April it was considering options for the stake. The possibility that the brewer could sell its holding increased after SABMiller merged Tsogo Sun with Gold Reef Resorts Ltd. in 2011, a transaction that reduced its stake from 49 percent.
‘Anemic Growth’
SABMiller was founded in South Africa, where it first sold beer to thirsty miners more than a century ago. The company controls about 90 percent of the beer market in South Africa, yet the slowing economy, social instability and the weakening rand have weighed on improvements there.
“We think SABMiller is likely to report another quarter of anemic growth before trends improve,”Trevor Stirling, an analyst at Sanford C. Bernstein, said in a note today.
Tsogo Sun has more than 90 luxury hotels in seven African countries including Nigeria and the Seychelles. Its interests include Montecasino, Johannesburg’s Tuscany-themed hotel, theater and casino complex.
“There are wider implications in that it further entrenches HCI as the parent in Tsogo,” De Wet Schutte, a Cape Town-based analyst at Avior Research, said by phone. The buyback “won’t stretch Tsogo’s balance sheet, they’ve got ample capacity in the balance sheet to buy back these shares and still continue with the fairly large capex program.”
-By Matthew Boyle, Kamlesh Bhuckory and Chris Spillane
http://www.businesstimes.com.sg/specials/property/brewer-sabmiller-divest-us11b-stake-20140708
http://www.bloomberg.com/news/2014-07-07/sabmiller-to-sell-1-09-billion-holding-in-tsogo-sun.html
Dubai may limit sales of
off-plan property
It is mulling over rules to address property
flipping
Source: Business Times / Property
[DUBAI] Dubai is considering regulations to limit the sale of
properties before they are built to address one of the main causes of the 2008
property crash, according to the International Monetary Fund. "The Dubai
authorities are completing a review of the off-plan transaction market, and
will issue additional regulations, which could slow down real estate sector
price growth, in the coming months," the IMF said in its Article IV
consultation dated July 3.
Dubai's recovery from the verge of default in 2009 fuelled a 35
per cent increase in real estate prices last year, according to broker Knight
Frank, sparking concerns the emirate is at risk of a bubble in the real estate
market. That prompted authorities to double property transaction fees to 4 per
cent last year and the United Arab Emirates' central bank to impose mortgage
caps.
The buying and selling of off-plan properties for a quick profit,
known as flipping, was seen as a major cause of the crash in 2008. Buyers
usually put down a deposit of about 10 per cent on off-plan homes and make
additional payments as construction progresses, with a final sum due when the
property is delivered. At the height of the property bubble, contracts often
changed hands before any construction took place.
Emaar Properties, Dubai's biggest developer, banned the resale of
incomplete properties before 40 per cent of the home's total value is paid. The
move was made to minimise speculation.
-From Dubai, UAE
http://www.businesstimes.com.sg/specials/property/dubai-may-limit-sales-plan-property-20140708
Swiss property, equity
markets still at risk
Instability is due to low interest rates: SNB
board member
Source: Business Times / Property
[ZURICH] Switzerland's property and equity markets are still at
risk of instability due to the low interest rate environment, a board member of
the Swiss central bank said in a newspaper interview published on Sunday.
Real estate prices, mortgage lending and equities have risen strongly
in Switzerland in recent years, a by-product of ultra-low interest rates set by
the Swiss National Bank (SNB) to lower the appeal of the Swiss franc.
The SNB cannot easily raise rates as this would clash with its
efforts to cap the franc. Fritz Zurbruegg said the low rates raised risks for
Swiss financial stability.
"We always constantly point out the risks that others do not
like," Mr Zurbruegg said, when asked in an interview with Switzerland's
SonntagsZeitung and Le Matin Dimanche whether there was a risk of a crash in
the property and stock markets.
-From Zurich, Switzerland
http://www.businesstimes.com.sg/specials/property/swiss-property-equity-markets-still-risk-20140708
Aussie construction index
at 7-month high
Source: Business Times / Property
[SYDNEY] A survey on Australian construction activity released
yesterday showed the sector expanding for the first time this year in June, led
by strength in home building and a rebound in engineering work.
The overall index of construction activity climbed 5.1 points to
51.8 in June, the highest in seven months and above the 50 threshold that is
supposed to separate growth from contraction, the report by the Australia
Industry Group and Australian Housing Association showed.
The survey's measure of house building added 2.2 points to reach
56.6, offsetting a 16.7 point drop in the volatile apartment sector to 49.2.
New orders in home building also surged 5.6 points to 60.1, suggesting the
improvement in activity has some way to run yet. New orders for all sectors
climbed 6.7 points to 52.6.
The Reserve Bank of Australia (RBA) has been counting on a revival
in non-resources investment to help offset a cooling mining sector.
-From Sydney, Australia
http://www.businesstimes.com.sg/specials/property/aussie-construction-index-7-month-high-20140708
GDF buys Lend Lease's UK
facilities mgt unit
Source: Business Times / Property
[PARIS] French gas and power group GDF Suez has bought the UK
facilities management business of Australian property group Lend Lease, the
firm said yesterday.
GDF is making the acquisition through its Cofely energy and
technical services unit and said that the deal will provide Cofely with a
guaranteed revenue stream of £2.5 billion (S$5.33 billion) through a portfolio
of contracts with the healthcare, education, government and retail sectors. It
gave no financial details.
Cofely said in December that it planned to buy several smaller
peers with combined revenue of one billion euros to drive home its advantage as
Europe's biggest provider of energy services for buildings.
Last year, it bought the facilities management business of British
infrastructure firm Balfour Beatty for £190 million.
-From Paris, France
http://www.businesstimes.com.sg/specials/property/gdf-buys-lend-leases-uk-facilities-mgt-unit-20140708
Homes in London’s Priciest
Districts Trail Rest of City
Source: Bloomberg / Luxury
Home price gains in London’s most-expensive districts are trailing the rest of the city as uncertainty over the 2015 national election, high asking prices and tax changes deter buyers.
Values in the 13 neighborhoods that Knight Frank LLP defines as prime central London rose 8.1 percent in the 12 months through June, the broker said in a report today. Home prices in the whole city jumped 26 percent in the second quarter from a year earlier, the biggest gain in 27 years, Nationwide Building Society said July 2.
Prime London districts including Mayfair and Chelsea have risen by more than 70 percent since the last trough in 2009 as overseas economic turmoil and a weakened pound drew buyers. Chancellor of the Exchequer George Osborne will introduce a capital-gains tax on homes sold by people living abroad next year and the opposition Labour Party wants to implement an annual tax on homes worth more than 2 million pounds.
“We’ve had 44 months of growth and buyers at some stage have a pause for breath,” Tom Bill, head of London residential research at London-based Knight Frank, said by phone.
Homes valued at less than 2 million pounds increased by about 14 percent in the 12 months through June, while those offered for 10 million pounds or more climbed 3.5 percent, according to the report.
The City of London financial district and its fringes, along with Islington, were the best-performing districts with gains of 16 percent each, Knight Frank said. Homes in Belgravia rose 1 percent, the smallest gain among the areas covered by the report.
Contract exchanges for homes have fallen by almost 37 percent from a year ago and the number of new properties coming onto the market is down about 25 percent, according to the report. The number of new people interested in buying a home in London’s best districts has fallen more than 14 percent in a year, Knight Frank said.
-By Neil Callanan
http://www.bloomberg.com/news/2014-07-07/homes-in-london-s-priciest-districts-trail-rest-of-city.html
UPP Reaches $240 Million
Dorm Deal With London University
Source: Bloomberg / Luxury
UPP Group Holdings Ltd., the U.K.’s second-largest provider of student housing, and the University of London announced a 140.7 million-pound ($240 million) project to build 1,200 rooms that will be designed and operated by UPP.
The 50-year deal for the project in the Bloomsbury area of central London will receive 113.8 million pounds of bond debt from Pension Insurance Corp., according to a statement today. The University of London will take an undisclosed stake in the UPP unit that will develop the property.
“There is an insatiable demand for that location,” UPP Chief Executive Officer Sean O’Shea said by telephone. “Within a three-mile radius there’s over 30,000 students.”
Investors are expected to spend 2.5 billion pounds on U.K. student accommodation this year, almost 25 percent more than in 2013, broker Savills Plc said last month. London-based UPP plans to invest more than 1 billion pounds on the construction of university residence halls in the next three years, according to its website.
The property in Bloomsbury is due to be completed during 2016, according to the statement.
-By Neil Callanan
http://www.bloomberg.com/news/2014-07-07/upp-reaches-240-million-dorm-deal-with-london-university.html
Macquarie to Buy Rest of
International-Matex for $1 Billion
Source: Bloomberg / News
Macquarie Infrastructure Co. (MIC), a U.S. owner of storage terminals for oil products and chemicals, agreed to buy the 50 percent of International-Matex Tank Terminals it doesn’t already own for $1.03 billion in cash and stock.
Macquarie Infrastructure, part of Australia’s Macquarie Group Ltd., will purchase the stake from the founding family, the New York-based company said in a statement today. Members of the Coleman family will step down from roles as chairman, chief executive officer and head of government relations for the company.
The accord comes after years of disagreement and arbitration between Macquarie and other investors, including members of the Coleman family, according to U.S. regulatory filings. Macquarie Infrastructure bought its initial 50 percent stake in the company in May 2006.
“We believe the acquisition will deliver dividend growth for shareholders of MIC and further enhance our ability to drive operational improvement and growth investments,” James Hooke, CEO of Macquarie Infrastructure, said in the statement.
The company’s board authorized increasing its quarterly cash dividend. The dividend payable for the second quarter will be 95 cents a share, up 1.3 percent from the prior quarter. The dividend will be payable on Aug. 14 to shareholders on record on Aug. 11.
Macquarie Infrastructure said it will buy the remaining stake for $910 million in cash and $115 million in stock.
Marine Terminals
After the deal, International-Matex Tank Terminals will become the largest business division within Macquarie, which has a market value of $3.5 billion. The company said it doesn’t expect the transaction to close before late July.
International-Matex Tank Terminals owns and operates 12 bulk liquid storage terminals in North America, with a capacity of 42 million barrels, including marine terminals on the U.S. east, west and Gulf coasts, according to a company website.
Macquarie’s earnings before interest, taxes, depreciation and amortization, or Ebitda, from International-Matex Tank Terminals has more than tripled to $279.6 million for the 12 months through March 31, the company said in a statement. Macquarie’s 50 percent stake in the business contributed $39.7 million to Macquarie’s first quarter Ebitda, according to the company’s earnings report April 30.
-By Zain Shauk
http://www.bloomberg.com/news/2014-07-07/macquarie-to-buy-rest-of-international-matex-for-1-03-billion..html