Real News‎ > ‎2014‎ > ‎June 2014‎ > ‎

4th June 2014

Singapore Economy

Lack of infrastructure funds is region's 'stumbling block'

Source: Straits Times

A lack of funds for building railways, power plants and other infrastructure poses a major stumbling block to the continued growth of Asian economies, said Temasek Holdings chairman Lim Boon Heng. Singapore has a role to play in helping regional governments and development agencies bring more major infrastructure projects to fruition, he added.

Planners now listen to what city dwellers have to say

Source: Straits Times

It may be ironic but city planners traditionally do not place great importance on how city dwellers feel about their surroundings. That bias is slowly, but surely, shifting, thinkers and industry leaders noted at the World Cities Summit yesterday.

Innovative solutions for a safer city

Source: Business Times / Singapore

IN the past year, four industry consortia have been working with government agencies to come up with ways to shorten the response times and improve the management of safety and security threats created by, for instance, car accidents, crime or fires.

Their efforts have produced innovative solutions under the Safe City Test Bed initiative, and may soon be put to practical use.

Some of these ideas include the monitoring of social media to identify emergencies as they happen, and the use of "smart" machines that can analyse patterns in video feeds and automatically flag deviations from what is normal or usual.

There were visible results even at the testing stage. For example, the social media analytical tool built into the system of NCS, a multinational infotech and communications engineering company, was able to detect a fire that broke out at a Downtown Line 2 worksite in Little India on March 26 by picking up on tweets mentioning the incident.

-By Lester Wong

Singapore Real Estate

Surbana academy to share expertise with region

It targets developing nations with urgent affordable housing needs

Source: Business Times / Singapore

SURBANA International Consultants yesterday officially launched its academy, which will become a platform for it to share affordable housing development and city management solutions with regional developing countries and, it hopes, pave the way for new project opportunities abroad.

"The academy, in a sense, is a platform for government officials from overseas to find out more about how we do things. If they trust us and like the way we work and there is a lot of comfort between them and us, and they have real projects on the ground, then Surbana Academy - if we want - can provide consultancy to them," Ng Beng Eng, director of corporate services who will also head Surbana Academy, told BT.

It also helps that many of the overseas government officials who will attend the academy's programmes are people in decision-making positions.

"Having an academy is a tool for us to get to understand the local situation, for us to network with the decision-makers there, and then influence them in what the best practices should be so when they make decisions . . . they would be more inclined to choose Surbana as a consultancy," Surbana's chief executive Pang Yee Ean told BT.

-By Lee Meixian

Fewer people selling HDB flats immediately after Minimum Occupation Period

Only 470 HDB flats were sold within a year of owners meeting the Minimum Occupation Period last year, half of 2012's numbers.

Source: Channel News Asia / Singapore

SINGAPORE: Fewer people are selling their new Housing and Development Board (HDB) flats immediately after meeting the Minimum Occupation Period (MOP), said HDB Tuesday (June 3).

Currently, owners are required to physically occupy their flat for five years, before they are allowed to sell their home in the open market or sublet the entire unit. They are also not allowed to buy or invest in a private residential property during their MOP.

Now, it seems fewer are choosing to sell once they've met that requirement.

According to HDB, there were only 470 flats sold within one year of meeting the MOP in 2013. This is less than half the number seen in 2012, when 1,006 flats were sold.

In 2010, the number was 1,338 -- the highest in the last five years. In 2011, only 1,231 units were sold.

"Last year's HDB resale prices have started to moderate," said Mr Eugene Lim, Key Executive Officer at ERA Realty Network. "We saw prices start to come down, especially towards the second half of last year. So those who are not in urgent need of selling their flat would probably want to wait it out for the next cycle, instead of selling their flat when the market is going down. They are probably waiting for the next upturn."

In the meantime, more are choosing to sublet their flats within one-year of meeting the MOP. There were 412 units sublet last year, up from 268 units in 2012 and 322 units in 2011.

"People see public housing as a price asset, because the minute they sell it, they are not able to generate income and at the same time, they are not able to enter the (HDB) market again," said Mr Mohamed Ismail, CEO of PropNex. "Today we are talking about public housing having a decent rental yield of about 4 to 4.5 per cent, which is marginally higher than private property, which would have 3 to 3.5 per cent (rental yield)." 

"A lot of homeowners feel if they were to dispose of their HDB flat and buy a private property, and subsequently buy a HDB again, they will be forced to sell off their private property," added Mr Lim. "This is the current government policy, so most homeowners if they can afford to, will try and hold on to both their HDB flats and their private property."

HDB owners who buy private property, are not required to dispose of their existing HDB flat. However, private property owners who buy an HDB flat are given six months to sell off their private property after the purchase of the flat.

HDB says over the last five years, the proportion of those who own a private residence and HDB flat concurrently has remained stable at around four per cent. However, analysts say the absolute number could have grown since there are more HDB flats in the system today.

"The base has gotten much bigger," said Mr Lim. "That means there are absolutely more flats in the system today."

"If the percentage increased to double-digits, then we would be concerned." said Mr Ismail. "Are there a lot of people trying to hold on to public housing and yet invest? I think these are very reasonable and acceptable numbers."

With prices in the HDB resale market still moderating, analysts say it is unlikely that HDB apartment owners will see any urgency in selling off their flat in the coming year. Experts say they expect the number of people choosing to sublet their flat to go up, even though rental is likely to remain relatively flat.

- CNA/ek

High drama at construction site in Whampoa East

A 39-year-old crane operator who felt unwell while operating a tower crane was rescued by SCDF's Disaster Assistance and Rescue Team officers.

Source: Channel News Asia / Singapore

SINGAPORE: A high-level drama took place at a construction site in Whampoa East on Tuesday morning (June 3).

Singapore Civil Defence Force (SCDF) said officers had to rescue a man who felt unwell while operating a tower crane. When officers arrived at the scene, they discovered that the 39-year-old was stranded at a height of 40 metres.

The SCDF's Disaster Assistance and Rescue Team (DART) officers climbed up the tower ladder and secured him with safety lines and a harness, before lowering him to safety. Paramedics then gave him medical assistance, and sent him to Tan Tock Seng Hospital.

Channel NewsAsia understands the man is a crane operator. He was neither injured nor trapped, but was too weak to descend on his own, according to SCDF.

The whole rescue operation lasted about 80 minutes.

- CNA/xk

New course on management of complex infrastructure projects

Source: Channel News Asia / Business

SINGAPORE: A new programme will be launched to train private and public sector mid-level executives in managing complex infrastructure projects, announced Trade and Industry Minister Lim Hng Kiang at the World Bank-Singapore Infrastructure Finance Summit on Tuesday (June 3).

To be run by the Singapore Management University and Lee Kuan Yew School of Public Policy's, the Asia Leaders Programme in Infrastructure Excellence (ALPINE) aims to groom specialist talent to handle development projects in emerging markets. The course will begin its first run in October. 

Mr Lim says the programme is Singapore's way of cultivating talent to complement the growing base of firms with project development expertise.

He added that Singapore supports the vision for infrastructure financing to be regarded as an asset class separate from traditional debt and equity investments.

At present, Asia's infrastructure requirements have been projected at US$800 billion annually till 2020. However, the proportion of bankable projects has been estimated to be as low as 10 per cent.

"Efforts must be made to enhance the bankability of Asian infrastructure projects," said Mr Lim. "Or we will lose the opportunity to bring in private sector capital, and the onus will then fall on governments again to provide the funding required."

Experts noted that Singapore's capability-building efforts can help it gain a bigger slice of the pie in infrastructure development within Asia. However, they note that emerging markets pose investment barriers.

"Poor regulatory frameworks, poor risk allocation, bad project preparation, are all very early-stage parts of project development," said Mark Rathbone, APAC Capital Projects & Infrastructure Leader at PricewaterhouseCoopers Singapore. "Now, in order to improve that, a couple of things need to happen.

"Firstly, human capacity and human capital needs to improve. So, people who understand infrastructure need to be available to work on these projects to prepare them more effectively. Secondly, you need to have governments which understand how to develop those projects."

Historically, the infrastructure sector has been creditworthy. Financial services firm Standard & Poor's has found that the average annual default rate for project finance debt since 1998 has remained at 1.5 per cent.

- CNA/ek

JTC signs MOU to help its industrial estates go green

JTC to co-develop energy efficient solutions with the Sustainable Energy Association of Singapore for its business parks and industrial estates.

Source: Channel News Asia / Business

SINGAPORE: JTC Corporation is joining hands with the Sustainable Energy Association of Singapore (SEAS) to work on energy efficiency solutions for buildings in JTC's business parks and industrial estates. The two partners signed a memorandum of understanding (MOU) on Tuesday (June 3).

They plan to co-develop energy efficient solutions, such as harnessing solar energy, converting manufacturing waste to energy and improved lighting technologies. The MOU will also cover energy management and control systems to monitor energy for better use. For a start, these projects will involve the JTC Woodlands' industrial estate. Potential projects include installation of solar PV panels and energy efficient lighting.

Successful technologies could be implemented on a large scale throughout JTC estates, and this is expected to lead to potential cost savings for its tenants.

Said the CEO of JTC Corporation, Mr Png Cheong Boon: "This partnership with SEAS will provide opportunities for Singapore companies, especially SMEs and startups, to demonstrate their innovations and establish track records, thereby giving them a leg up in the commercialisation of their new innovations in the global market." 

- CNA/ly

HDB, EMA explore home energy management scheme

Both agencies, together with Panasonic, will assess the feasibility of implementing a home energy management system or alternative electricity sources for flats.

Source: Channel News Asia / Singapore

SINGAPORE: The Housing and Development Board (HDB) and Energy Market Authority (EMA) on Tuesday (June 3) inked a deal with Japanese technology company Panasonic to explore the feasibility of a smart home energy pilot.

In a joint statement, HDB and EMA said a memorandum of understanding was signed with Panasonic on Tuesday during the World Cities Summit to conduct a year-long study to explore a suite of different energy choices and solutions for HDB households using Panasonic's technology.

The pilot study will look at the possibility of implementing time-of-use electricity rate packages and integrating features such as a home energy management system and energy aggregation models, according to the statement.

For instance, a time-of-use rate package with lower charges during certain hours, can "incentivise residents to shift their electricity consumption to off-peak periods, and achieve savings in their electricity bills".

The home energy management system would provide energy usage data to residents, and this information could be delivered via a mobile application for real-time monitoring, they added.

Findings from the study will allow the three parties to assess the feasibility of implementing the smart home energy pilot at the 38 HDB blocks in Yuhua estate, designated by HDB as the Greenprint neighbourhood in Jurong East.

Greenprint is a comprehensive and integrated framework of goals and strategies to guide greener HDB town development and create sustainable homes, according to HDB's website.

On the same day, Mr Lee Yi Shyan, Senior Minister of State for Ministry of Trade and Industry and Ministry of National Development, highlighted Singapore's efforts in capitalising on the opportunities on offer in the clean technologies sector. He was speaking at the UK-Singapore Green Growth and Business Forum.

He noted that the country is already experimenting with green technologies in HDB estates such as Punggol Eco-town, where intelligent energy and water management solutions have been deployed to engage residents and reduce consumption. Residents are also encouraged to take up eco-friendly mobility options such as electric bicycles, he added.

Ideas to retrofit mature estates to make them greener are also being explored, with solar panels and sensor-controlled LED lightings among some of the initiatives, Mr Lee said.

- CNA/kk

HDB, JTC in separate tie-ups to test green solutions

Source: Business Times / Singapore

THE Housing & Development Board (HDB) has joined hands with the Energy Market Authority (EMA) and Panasonic to study the feasibility of energy options for HDB households that could potentially shrink their electricity bills.

This year-long study will explore a suite of energy options and solutions that are underpinned by new technologies. The Smart Home Energy Pilot will, for example, look into time-of-use pricing, which offers lower electricity charges during off-peak hours.

Other options to be studied are the Home Energy Management System (HEMS), which provides energy usage data on-the-go via a smart phone application, and energy-aggregation models, which offer a way to aggregate solar energy and electricity from the grid and supply this to HDB buildings and households.

A memorandum of understanding (MOU) was inked yesterday at the World Cities Summit.

-By Lynette Khoo

Court rules concrete maker had reason to halt supplies to construction firm

Contracts between the firms were ‘discharged by frustration’ due to Indonesia’s ban on sand exports in 2007

Source: Today Online / Singapore

SINGAPORE — The Court of Appeal has agreed with a concrete maker that a ban by Indonesia on sand exports to Singapore in 2007 was reason enough to halt supplies to a construction firm, ending a long-running dispute between the two companies.

The export ban was “a supervening event” and not “within the reasonable control” of Alliance Concrete Singapore and Sato Kogyo, making it impossible for the contracts between the two firms to be carried out, the court held.

In 2006, Alliance, a manufacturer of ready-mix concrete (RMC), agreed to provide the material to Sato Kogyo for three construction projects. However, on Jan 23, 2007, Indonesia, citing environmental reasons, announced that it would stop exporting sand — a key ingredient for producing RMC — to Singapore.

Following the ban, Sato Kogyo was unable to procure enough sand from the Building and Construction Authority’s (BCA) sand stockpile to pass to Alliance to enable the concrete maker to produce the amount of RMC that had previously been agreed upon.

In February 2007, Alliance informed Sato Kogyo that the original contract costs were affected by the export ban. Alliance proposed that a new contract be signed, as the prices they had previously agreed upon no longer applied due to the ban having given rise to force majeure.

Alliance stopped supplying RMC to Sato Kogyo from Feb 25, 2007, but told the construction firm in April that it would be able to resume supplies and sent a quotation revising the prices of RMC for two of the projects.

On May 29, Alliance informed Sato Kogyo that its credit limit had been exceeded and requested payment. Sato Kogyo then halted all orders of RMC from Alliance.

On July 27, Alliance sued Sato Kogyo for failing to pay for the RMC that had already been supplied, but the construction firm counter-sued for losses incurred in seeking alternative suppliers when the sand export ban took effect.

The High Court ruled last year that the ban was not a reason for Alliance to stop supplying RMC to Sato Kogyo. Justice Tan Lee Meng held then that there were alternative sources of sand, noting that the BCA had a supply system to offset any shortfall.

However, Judge of Appeal Justice Andrew Phang overturned the High Court’s decision last Friday, ruling that the contracts were “discharged by frustration” when the export ban took full effect on Feb 6, 2007.

Justice Phang found that no viable alternative source of sand seemed to be available from Feb 16 until the end of April that year, especially as one of Sato Kogyo’s clients preferred Indonesian sand to be used to produce the RMC.

He also held that Alliance had acted reasonably in informing Sato Kogyo of the shortfalls in the deliveries of sand from the construction firm.

The Court of Appeal ruled that Sato Kogyo must make a lump-sum payment to Alliance for the RMC supplied, but the cost of procuring sand for the concrete maker to produce the RMC will be deducted from that sum.

Real Estate Companies' Brief

Offerors' stakes in CapitaMalls Asia, Hotel Prop up

Source: Business Times / Companies

TWO offerors have upped their respective shareholdings in CapitaMalls Asia (CMA) and Hotel Properties Limited (HPL).

Sound Investment Holdings, a wholly owned subsidiary of CapitaLand, said that as at Monday, it and concert parties owned, controlled or have agreed to acquire an aggregate of about 3.46 billion shares representing about 88.7 per cent of the issued share capital of CMA.

On April 14, CapitaLand said it sought to take complete ownership of its 65 per cent owned subsidiary CMA with a view to taking it private. Sound Investments Holdings, together with its concert parties, had then agreed to acquire 2.5 billion CMA shares, representing approximately 65.4 per cent of CMA's issued share capital.

Yesterday, CapitaLand shares added 0.31 per cent to close at $3.20, while CMA shares fell 0.42 per cent to the revised offer price of $2.35.

-By Jacquelyn Cheok

Views, Reviews & Forum

Review rules on takeovers and privatisations

Source: Business Times / Editorial & Opinion

MICHAEL Dee has written two very good analyses on the recent takeover offer for CapitaMalls Asia (CMA) by Capitaland (CL): "CMA shareholders should stand their ground against 'fair offer'" in BT of April 22 and "Offer for CMA is still undervalued" in BT of May 29. All his points are very pertinent and can be equally applied to other recent takeover attempts, including that of LCD Global Investments (LCD) by RDL Investments (RDL).

It is the minorities who are greatly impacted by all these takeover attempts, and they have to protect their own interests. They have to let their voices be heard and not leave it to others to speak up for their rights. They should be wary of the advice of the "independent directors" who invariably follow the advice of the "independent financial advisors" (IFA), the independence of which may need to be questioned.

The Securities Investors Association (Singapore) (SIAS), being the watchdog for retail investors, should fight for a higher offer price for them. It should maintain a neutral stand and not advise retail investors to either accept or reject a takeover offer. Besides, SIAS does not hold a financial advisor licence, and is in no position to offer financial advice.

The same "conflict of interest" issue cited by Mr Dee in CL's takeover for CMA also resurfaces in RDL's takeover of LCD, as the two major shareholders of RDL are also majority shareholders of LCD. This is also manifested in other recent takeover attempts of other listed companies.

Global Economy & Global Real Estate

Cushman & Wakefield sets up office in Malaysia

Source: Business Times / Singapore

CUSHMAN & Wakefield, the world's largest privately-held real estate services firm, has expanded into Malaysia, seeing "tremendous opportunities in Iskandar".

The company's new Kuala Lumpur office is its 35th in the Asia-Pacific.

"This move is in line with our five-year strategic plan, which contains an aggressive expansion plan for our business in Asia Pacific," said Sanjay Verma, CEO for the Asia-Pacific in a statement. "This new office in Kuala Lumpur will help us further increase the depth and breadth of our service offerings to our global clients."

Arsh Chaudhry, executive managing director for C&W in South-east Asia, said that Malaysia is a key market for both the company's investor and occupier clients, and that he sees Iskandar complementing Singapore just as Shenzhen complements Hong Kong.

-By Raphael Lim

Malaysian developers' Q1 profits in downtrend

Property sales still moderating after October's cooling measures

Source: Business Times / Malaysia

THE quarter to end-March performance of developers indicates that, sequentially, earnings are on a downward trend, with most posting weaker profits on lower revenues and margins.

However, builders that focus on landed properties and mid-range condominiums fared better than those in the mid to high-end apartments or integrated developments, according to Affin Investment.

Pricing and product mix will be key given the margin squeeze where cost pressures are rising as a result of higher land, building materials, labour and compliance costs. But developers are limited in their ability to pass on the full costs because of stringent competition and bank lending as well as weaker market sentiments.

The quarter to end-March saw property companies recording a mixed bag of results, with the overall performance slightly below expectations.

-By Pauline Ng in Kuala Lumpur

GLP inks 3 new China lease pacts

Source: Business Times / Companies

GLOBAL Logistic Properties (GLP) has signed three new lease agreements with three companies in China. Of the 44,000 sq m, 20,000 sq m was leased to a leading third-party logistics provider at GLP Park Yantian in Shenzhen; 13,000 sq m to a global electronics manufacturer at GLP Park Waigaoqiao in Shanghai; and 11,000 sq m to one of China's largest integrated IT services providers at GLP Park Daxing in Beijing.

Britain's house prices rise at fastest pace in 7 years

Source: Business Times / World

[LONDON] Britain's house prices rose at their fastest annual pace in nearly seven years last month, while signs of bottlenecks in the construction sector underscored the upward pressures on the market, surveys showed yesterday.

House price growth picked up to an annual pace of 11.1 per cent in May, mortgage lender Nationwide said, fanning concerns that the property market could be overheating.

A separate industry survey showed that the construction sector cooled a bit in May from a six-and-a-half-year high in January.

But supply shortages and wage growth at a 17-year high raised questions about how long the sector could keep up its strong growth. "With supply constraints still persisting, there are some concerns about how this prolonged period of growth can be sustained over the course of 2014," said David Noble, chief executive at the Chartered Institute of Purchasing & Supply.

-From London, UK

Sydney luxury home sold for over A$30m

Source: Business Times / World

[SYDNEY] A Sydney harbourfront mansion with 180-degree views of the city's Harbour Bridge and Opera House was snapped up for more than A$30 million (S$34.9 million) in the biggest home sale in Australia this year.

The six-bedroom mansion at 130 Wolseley Road in Point Piper, where the median house price is A$7.4 million, sold on Monday after a four-week sales campaign, said Michael Pallier, managing director of Sotheby's International in Sydney, which handled the sale.

A combination of record-low interest rates, rising share prices and demand from overseas buyers, particularly from China, has boosted luxury home sales in Australia.

Monday's transaction follows the listings of two other properties in the eastern suburbs of Sydney in the second half of last year, which are competing to become Australia's most expensive sales.

-From Sydney, Australia

Non-bank loans needed for Asia's infrastructure

Source: Straits Times

Citic Pacific gets nod to acquire parent's assets

US$36b purchase approved by 99% of votes at yesterday's meeting

Source: Business Times / Companies

[HONG KONG] Minority shareholders of Hong Kong-listed Citic Pacific Ltd have approved a landmark deal to acquire US$36 billion of assets from its state-owned parent Citic Group Corp, China's biggest and oldest financial conglomerate.

The go-ahead clears the way for the purchase of practically all of the conglomerate's assets.

In doing so, shareholders endorsed not just China's ambition to reform its state-owned enterprises (SOEs). They also backed a plan to give Citic Pacific direct exposure to the mainland's banking sector - and along with that, the country's bad loans problems.

"This landmark transaction will transform our company, giving our shareholders enhanced return, better earnings visibility and a much bigger-scale platform," Citic Pacific chairman Chang Zhenming said in a statement.

-From Hong Kong, China

Frasers Enters Australand Battle With A$2.6 Billion Offer

Source: Bloomberg / Luxury

Frasers Centrepoint Ltd. (FCL) offered to buy Australian developer Australand Property Group (ALZ) for A$2.6 billion ($2.4 billion) in the Singapore real-estate company’s biggest proposed acquisition, trumping a bid by Stockland.

Frasers offered A$4.48 per share, Sydney-based Australand said today in a regulatory filing, compared with Stockland’s A$4.43 all-share bid. Shares of Australand, whose board said it intends to recommend the offer in the absence of a superior proposal, posted their biggest gain since December 2012 in Sydney. Frasers shares had the biggest drop in four months in Singapore.

The acquisition would give Frasers control of Australand’s A$2.4 billion of office and industrial properties and A$9.3 billion of developments in Australia, where the Singapore company is already building the 2,000-apartment Central Park project in downtown Sydney. Frasers is seeking to boost its operations in faster-growing overseas markets, which contributed 38 percent of earnings as of March 31 from 10 percent a year earlier, and has flagged Australia and China as preferred destinations.

“Australia is a market that Frasers understands well,” said Goh Han Peng, a Singapore-based analyst at DMG & Partners Securities Pte.“This bid helps them diversify further out of the challenging Singapore market.”

Australand rose 5.6 percent to A$4.55 at the close of trading in Sydney. Frasers shares declined 3.9 percent to S$1.85, the biggest drop since Feb. 4.

Home Prices

Private home prices in Singapore dropped by the most in almost five years in the first quarter following a campaign that started in 2009 to curb property speculation. Dwelling prices in Australia’s biggest cities rose 10.7 percent in May from a year earlier, according to the RP Data-Rismark Home Value index.

CapitaLand Ltd. (CAPL), formerly Australand’s biggest shareholder, sold its 39 percent stake in the company in March.

Australand was a financial investment for CapitaLand, which shifted its focus to Singapore and China after Chief Executive Officer Lim Ming Yan took over in January 2013, DMG’s Goh said. Australia is one of Frasers’s core markets, so an expansion is logical, he said.

Stockland Offer

Stockland bought 19.9 percent of the Sydney-based company on CapitaLand’s exit, and followed that with an all-share bid equivalent to A$4.20 a share, which Australand rejected on April 23. It returned with a sweetened bid that equated to A$4.35 a share on May 28 and A$4.43 based on yesterday’s closing price, gaining access to Australand’s books.

Australand revoked that access today, saying it has granted Frasers a four-week period of exclusivity. Under Frasers’s offer, Australand shareholders would retain their expected first-half dividend of 12.75 Australian cents per share, the Sydney-based company said. They would also receive an additional payout equal to the same amount pro-rated from July 1 until the offer becomes unconditional, it said.

“The board concluded that the conditional proposal would deliver a compelling value outcome for Australand securityholders and is superior to the final and conditional proposal received from Stockland (SGP),” Australand Chairman Paul Isherwood said in the statement.

Biggest Bid

Frasers’s offer is subject to approval by Australia’s Foreign Investment Review Board, and the backing of Frasers shareholders.

Stockland will consider its options and provide an update in due course, it said separately today.

Frasers’s offer “is a very full price so it’s a great outcome for Australand shareholders, but I would be surprised if Frasers gets much additional value out of it,” said Tony Sherlock, Sydney-based head of property research at Morningstar Australasia Pty. “In the context of Stockland, I would be very surprised if they kept raising, as they’d have to go a fair bit higher than their current offer to trump this.”

The bid is the biggest for Frasers Centrepoint, according to data compiled by Bloomberg, since it was spun off from Fraser & Neave Ltd. and began trading independently in January. The company, whose businesses include residential development, commercial property management and a hospitality unit, is seeking to expand in Australia and China as Singapore’s housing market slows, Lim Ee Seng, chief executive officer of Frasers Centrepoint, said in a May 9 statement.

“The proposal will catapult Frasers Centrepoint to being one of Australia’s leading real estate companies with a portfolio of scale and quality,” Lim said in a separate statement today. “We already have an established platform and good brand recognition in Australia, but real estate is a business where scale and depth matters.”

GPT Offer

Australand’s board in December 2012 rejected a bid by GPT Group, Australia’s second-biggest property trust, to acquire Australand’s industrial and commercial property divisions. GPT dropped its pursuit in May last year after failing to agree on a price that would compensate Australand shareholders for being left with a standalone residential property developer.

Australand shares are up 18 percent this year, and 7.6 percent since Stockland’s sweetened bid on May 28. Frasers’s shares have gained 25 percent since they began trading Jan. 9.

-By Nichola Saminather and Pooja Thakur

Prologis Property Raises $541 Million in 1st Mexico IPO of 2014

Source: Bloomberg / News

Prologis Inc. (PLD)’s Mexico real estate investment trust closed the day almost unchanged in its trading debut after raising about 7 billion pesos ($541 million) in the nation’s first initial public offering this year.

Prologis Property Mexico SA (FIBRAPL), as the Mexico City-based REIT is formally known, rose 0.1 percent to 27.02 pesos in Mexico City trading today, after earlier climbing as much as 4.1 percent. The BMV Fibras index of Mexico REITs fell 0.2 percent, while the nation’s benchmark equity index, the IPC, retreated 0.4 percent. Prologis Property sold 258 million shares for 27 pesos apiece yesterday, according to a statement.

With manufacturing and logistics space for rent across the country, Prologis Property is positioning itself to benefit from rising demand after President Enrique Pena Nieto overhauled the constitution last year to lure investment.

To complete the offering, the REIT braved a market that hasn’t had an IPO since the U.S. Federal Reserve began reducing a record stimulus program. The company also proceeded with a share sale amid waning interest in real estate trusts.

Among the four REITs to raise a record $1.82 billion in Mexico last year, only office building and mall-owner Concentradora Fibra Danhos SA is trading above its IPO price. Administradora Sendero SA, the shopping-center company that was the last REIT to attempt an IPO, pulled its 5.3 billion peso sale on pricing day in November.

Parent company Prologis, based in San Francisco, rose 0.8 percent today to $41.48, giving it a market value of about $21 billion. The company manages more than $27 billion of assets in the Americas, Europe and Asia, according to its website.

-By Jonathan Levin

Willis Tower Debt Put in Special Servicing, Fitch Says

Source: Bloomberg / News

Debt on Willis Tower, formerly the tallest U.S. building, was put in special servicing after the borrower requested a loan modification, Fitch Ratings Inc. said.

“The borrower anticipates significant capital costs going forward in order to secure additional new leases,” the rating company said in a report yesterday, citing commentary from the servicer. The Willis Tower debt, which was packaged and bundled into commercial mortgage-backed securities, was transferred to special servicing because of “imminent monetary default,” Fitch said.

The building has almost $499 million of senior debt that was sliced up and packaged into four commercial-mortgage bond deals, according to Barclays Plc. The total loan balance is $774 million, according to Fitch. The property was appraised at $1.22 billion in May 2013, Barclays analysts led by Keerthi Raghavan said in a report today.

Occupancy at the tower has climbed to 84 percent from 74 percent at the end of 2012, according to Barclays. The property is performing well financially compared with other office buildings in Chicago that have been put into special servicing this year, the analysts said.

“Based on this performance, there is no reason to assume that the valuation of the property has fallen considerably” since the appraisal last year, the Barclays analysts said.

A loan on a 1.5 million-square-foot (139,000-square-meter) office building in downtown Chicago that’s facing climbing vacancies was sent to a special servicer last month, according to Barclays. The property at 131 South Dearborn St. may be half empty by 2017, the analysts said.

CWCapital Asset

Special servicers are firms that negotiate with borrowers on behalf of commercial-mortgage bond holders. CWCapital Asset Management LLC is managing the Willis Tower loan, according to Fitch.

Brian Rehme, a Willis Tower spokesman, said yesterday he had no comment on the debt transfer.

There is a chance that the owners of the building, including New York-based investors Joseph Chetrit and Joseph Moinian, could receive a rate modification on the current loan, according to Barclays.

Willis Tower, which used to be known as Sears Tower, lost its title as tallest U.S. building in November, when the Council on Tall Buildings and Urban Habitat determined that 1 World Trade Center in New York, which is almost fully developed, had surpassed it. Willis Tower had been the nation’s tallest tower since its 1973 completion.

-By Brian Louis and Sarah Mulholland