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9th June 2014

Real Estate Companies' Brief

CapitaLand set to gain 100% of CMA under compulsory acquisition

It crosses threshold a day after meeting delisting mark

Source: Business Times / Top Stories

[SINGAPORE] CapitaLand has cleared the final hurdle in its bid to gain 100 per cent control of shopping malls unit CapitaMalls Asia (CMA). It has accumulated a large enough stake to be able to force-buy any remaining shares it does not own when the offer closes at 5.30pm today.

Last Friday, CapitaLand's stake in CMA crossed the 97.02 per cent threshold required for it to compulsorily acquire all the CMA shares it does not already own. This was a day after CapitaLand hit the 90 per cent stake threshold it needed to delist CMA.

CapitaLand said yesterday that as at 5pm last Friday, shareholders holding about 15.7 per cent of CMA's issued share capital had accepted its offer to buy CMA at $2.35 a share. This brought CapitaLand's total stake in the malls unit to 97.1 per cent.

CMA shareholders whose valid acceptances are received by 5.30pm today will be paid within 10 days from the date of receipt. Any remaining CMA shareholders who do not accept the offer will receive a letter from CapitaLand about the compulsory acquisition of their stock.

CMA will also be suspended from trading on both the Singapore and Hong Kong bourses tomorrow, pending delisting.

This brings to a close the privatisation bid that CapitaLand first launched on April 14 at a lower offer price of $2.22.

CapitaLand wanted to delist CMA - which manages 105 shopping malls worth about $34.3 billion - to simplify the group's organisational structure and make its business units more nimble in reacting to opportunities for integrated projects.

But shareholders voiced their unhappiness that the first offer price was just 4.7 per cent above CMA's initial public offering price of $2.12 when it was listed in 2009.

However, the independent financial adviser to the deal found the offer to be "fair and reasonable", since CapitaLand was already CMA's majority shareholder with a 65.3 per cent stake when it launched the bid, and no change of control would result.

Even so, after a closed-door discussion that the Securities Investors' Association (Singapore) (SIAS) organised between shareholders and CapitaLand's management, CapitaLand decided to better its offer, hiking the offer price to a final one of $2.35 a share.

That new price is at a 31.5 per cent premium to the last traded price on April 11 before the bid was launched, up from the 23 per cent premium implied by the initial $2.22 price.

For CapitaLand's shareholders, the deal will be immediately earnings accretive, raising its return on equity to 6.7 per cent from 5.4 per cent.

-By Teh Shi Ning

CapitaLand to acquire remaining CapitaMalls shares

Source: Channel News Asia / Singapore

SINGAPORE: Singapore property giant CapitaLand has crossed the shareholding threshold that will allow it to compulsorily acquire the remainder of CapitaMalls Asia (CMA).

As at 5pm on 6 June, CapitaLand and concert parties own or have agreed to buy 97.1 percent of CMA's issued share capital -- above the 97.02 percent level that will allow the compulsory acquisition, a spokeswoman said on Sunday.

CMA shares will be suspended from trading on Tuesday, and CapitaLand has submitted an application to the Singapore Exchange to de-list its shopping mall arm.

CapitaLand wants 100-percent control of its shopping mall arm to simplify its group structure so that it can more easily embark on mixed development projects.

Before it began its privatisation bid, the Singapore developer owned about 65 percent of CMA, which has interests in more than 100 shopping malls across Singapore, China, Malaysia, Japan and India. 

- CNA/xq

CapitaLand to acquire remaining CapitaMalls Asia shares

Source: Today Online / Business

SINGAPORE — CapitaLand yesterday announced it had acquired a 97.1 per cent stake in CapitaMalls Asia (CMA), crossing the threshold to compulsorily acquire shares that it does not own.

This will enable CapitaLand, South-east Asia’s largest listed developer, to take full control of its shopping mall arm and delist it.

CMA shares will be suspended from trading from tomorrow and CapitaLand has submitted an application to the Singapore Exchange for its delisting.

CapitaLand first offered to take CMA private in April by buying over the 35 per cent of the shares it did not already own for about S$3.06 billion, or S$2.22 a share.

CapitaLand said then that the move would allow it to better navigate its core markets amid an increased focus on mixed developments.

Since then, it has steadily increased its stake in CMA and also raised its offer to S$2.35 per share. The offer ends at 5.30pm today.

“CMA shareholders whose valid acceptances are received by the closing date will be paid within 10 days from the date of receipt. The remaining CMA shareholders who have not accepted the offer will receive a letter from CapitaLand on the compulsory acquisition of their CMA shares,” CapitaLand said in a statement yesterday.

Mr Lim Ming Yan, the company’s president and group chief executive officer, said the delisting and full integration of CMA will simplify CapitaLand’s organisational structure and enhance its ability to undertake and optimise integrated developments.

“It will also allow us to further leverage Asia’s consumption and China’s urbanisation trends,” said Mr Lim.

Construction veteran lays foundation for his new role

Source: Straits Times

See Hup Seng's (SHS) newly appointed chief executive, Mr Henry Ng, is facing the challenge of integrating steel construction firm Hetat with SHS' existing, well-established businesses, which include corrosion prevention and petroleum distribution.

Views, Reviews & Forum

3Gen flats? No thanks, we'd rather live on our own

Source: Straits Times

Young couples taking part in a dialogue on housing were largely against living in new jumbo-sized flats with their parents after marriage, echoing the preliminary results of an online poll that showed most young couples would rather live on their own.

Housing conversation: Courting couples say absolute priority a no-go

Source: Channel News Asia / Singapore

SINGAPORE: Those applying for a public flat in the same estate as their parents should not receive absolute priority, said 20 courting couples.

This is despite them saying that they wished to stay near their parents, who are currently living in non-mature estates.

The couples (aged between 22 and 34) were attending a discussion on public housing organised by the National Development Ministry on Saturday.

Key reasons cited by the participants preferring to live apart from their parents included the desire for privacy and to avoid conflicts.

But they also want to live near enough to parents, for support.

Participant Ding Ming Wei said: "As young couples, when you started out, marriage is a huge cost. You spend a lot on your renovation and also on your wedding.

"So I think if you stay near parents, you can have some financial support. So for example, some of the nights, my parents can stay with me, or I can stay with my parents, so we can cut costs such as electricity and meal costs.

"The savings may not be very significant, but I think when you start out, it is good to save when you can."

Other reasons cited included support in bringing up children and a shorter travelling time required to visit parents.

Participants also said parents' health and mobility could be some of the reasons why they may move in with their parents.

But outweighing the desire to live near their parents is the opportunity to stay in a mature estate.

More than half of the participants currently live in a non-mature estate.

And most of them said they do not agree to giving absolute priority to those who apply for a flat in the same estate as their parents, although they agree that more ballot chances should be given to these applicants.

Participant Geraldine Wong said: "The resale value of a flat in the mature estates is substantially higher than those in the non-mature estates. So in giving absolute priority to those whose parents live in a mature estate, it is unfair to those whose parents are not (living) in a mature estate."

Senior Minister of State for National Development Lee Yi Shyan said: "The policies as they are, already favour children living with their parents. The question is how far more we want to tilt the incentive system. But our whole intent is really to support family formation, to support intergenerational support."

Two other sessions will be held in the following weeks.

They will involve married couples with young children or no children, and seniors with children above the age of 21.

Those who wish to take part in the discussions can sign up at 

- CNA/ir

3Gen flats should be bigger, occupied by S’poreans only

Source: Today Online / Voices

I refer to the report “S’poreans favour policies that help families live closer together: Survey” (June 5).

I applaud the National Development Ministry for conducting the online survey and holding Housing Conversations on closer families, so young families can give ideas on living with or near their parents. Families who have been unable to do so, for various reasons, should be given help.

The three-generation (3Gen) flats should be bigger. They should be occupied by Singapore citizens only and any resale should be to another local, extended family. Applicants should also not pay any resale levy on their existing flats to take up a new 3Gen flat.

-By Yang Chun Hong

Couples seeking homes near parents prefer higher grants to getting priority

Source: Today Online / Singapore

SINGAPORE — Giving priority to all young couples wanting to buy a home near their parents would be unfair. Instead, a higher housing grant for such couples would be enough.

This was the general view of 20 unmarried couples at a discussion held by the Ministry of National Development (MND) last Saturday on policy changes that could be taken to help more young families live close to their parents.

Official survey statistics showed that, last year, 50 per cent of couples wanted to live near their parents, but only 37 per cent managed to do so, prompting National Development Minister Khaw Boon Wan to throw up possible changes to bridge the gap in a recent blog post.

Couples at the discussion — the first in a three-part series dubbed Housing Conversations — felt it would be unfair, unsustainable and impractical to grant absolute priority, or priority to all couples applying for a home near their parents, especially in non-mature estates, as it ignores the needs of other families.

Civil servant Ng Cheen Kian, 26, said: “People can be given priority, but not absolute priority, because living together with (or close to) your family is something we’re encouraging at a state level — and I can see good reasons for it — but everybody has competing priorities, so everything should be seen in that light.”

Couples whose parents live in mature estates will also have an unfair financial advantage as resale values there are substantially higher than those in non-mature estates, added training executive Geraldine Wong, 25.

Ms Tai Jing Yi, a writer who recently purchased a flat in Telok Blangah with her boyfriend, said moving into her parents’ Buona Vista estate is “nice but not a must-have”, since Singapore is a small country.

Others also cautioned about creating an “alumni effect” — clans of families developing in estates.

Senior Minister of State (National Development) Lee Yi Shyan, who attended the session, acknowledged that fairness was a complex issue. “The sense of fairness runs somewhat in an opposite direction from how much a resource-allocation process should have a social purpose in it. There’s always a tension between pure economic efficiency and social objectives.”

Apart from debating on giving first dibs to all couples who want to buy homes near their parents’, the discussion last Saturday also touched on providing even higher grants to such couples — currently S$40,000, S$10,000 more than other first-time home buyers — as well as building more three-generation (3Gen) flats.

The majority of participants agreed that higher grants would represent substantial aid, but felt they would not sway those who did not intend to live close to their parents.

Factors such as parents’ ailing health in old age and help in caring for their children were bigger motivators for couples to move closer to their parents.

3Gen flats also did not appear to be a popular option. Rather, dual-key flats were a bigger draw, participants said, because they allow each family to retain privacy while staying close together.

At the end of the discussion, Mr Leesaid it would take some time before any changes could be incorporated into Build-to-Order projects.

He added: “We need to bear in mind the different groups that are represented here. We will continue to calibrate this to the extent that it will strike a very good balance between the needs of different groups.”

-By Laura Elizabeth Philomin

Global Economy & Global Real Estate

S. Korean home lease system hit by property slowdown

Source: Straits Times

Christie-Backed Housing to Flood Rail With Tunnel Killed

Source: Bloomberg / Luxury

All that Courtney Belton really wants is a seat and on-time arrivals as she commutes aboard a New Jersey Transit train. The Northeast Corridor, the busiest U.S. rail line, doesn’t always accommodate.

The inconveniences are bound to worsen: A block from the New Brunswickstation where she waits, a 238-unit apartment building is being marketed to those eager to trade cars for mass transit. At least 26,000 such homes have been built or are planned across the state in what are called transit villages.

Four years after Governor Chris Christie killed the Access to the Region’s Core tunnel that was to more than double train capacity to Manhattan, his administration is using $1.4 billion in developer tax incentives and grants to stoke a commuter boom on a strained rail system. The clashing priorities threaten New Jersey’s ability to serve growing numbers of suburbanites who want to break free of reliance on automobiles.

“Transit villages aren’t just a policy decision -- it’s also a convergence of what people want today,” said Martin Robins, the tunnel’s original project director and director emeritus of the Alan M. Voorhees Transportation Center at Rutgers University in New Brunswick. “It makes the Christie administration’s decision to kill ARC that much more egregious a mistake.”

Rush Hour

Transit-oriented design is seen as a remedy for suburban sprawl, a way to lessen carbon pollution and it’s part of studies for post-bankruptcy rebirth in Detroit and Stockton, California. In theU.S. Senate, legislation introduced by Hawaii Democrat Brian Schatz on May 1 would provide loans and credit lines to local governments that plan around mass transportation.

Even as New Jersey Transit spends hundreds of millions of dollars on station improvements, it isn’t adding multi-level rail cars. And while a pair of 100-year-old tunnels beneath the Hudson River operate at capacity, the transit system is expected to absorb even more riders.

“They’ll say it’s coming, and it’s 10 minutes late, 15 minutes late, and no explanation,” Belton, a 24-year-old postal worker, said June 3. “Then it’s so very crowded and there aren’t enough trains.”

Christie, 51, a potential 2016 presidential candidate who favors less government spending, in October 2010 canceled the tunnel project, which had been in planning since 1995. The Republican cited potential cost overruns that would leave New Jerseyans, with the highest property taxes in the U.S., on a “never-ending hook.”

Cost Overruns

A March 2012 report by the U.S. Government Accountability Office found that Christie overstated the price tag, and the cancellation cost the state $9 billion in business activity and $1.5 billion in federal, state and local tax revenue.

“Christie killed the project because he knew he was going to run for president and wanted to hang a giant trophy that the Republican primary folks could rally toward,” said Matt Walters, a resident of Montclair, a transit village since 2010.

A 33-year-old voice actor, Walters uses the Twitter Inc. (TWTR) handle @Delayed on NJTransit to rally support for infrastructure spending, a remedy to what he calls “constant delays.”

“If I have a big recording job, I can’t trust New Jersey Transit to get me to New York on time,” Walters said in a telephone interview. “I go the night before and I stay with friends in Manhattan.”

Clock Ticking

In 2030, about 760,000 riders will need to cross the Hudson, a 38 percent increase from 2005, the report found. The two rail tunnels that connect New Jersey and Manhattan can function for just two more decades, and may be out of service in as little as seven years, Joseph Boardman, president and chief executive of Amtrak, the U.S. national rail operator, said at a transportation conference in New York in April.

As those tunnels age, and with no financing for an ARC alternative, Christie is pushing transit villages, part of the New Urbanism design movement to center communities on walking, biking and mass transportation.

The concept took hold in New Jersey in 1998, with planning help for towns and financing and tax incentives for builders. The state’s first was in Pleasantville, near Atlantic City, in 1999. Today there are 28, including East Orange, Morristown and Elizabeth, with eight made since Christie took office. Four more are under consideration.

Spreading Costs

The governor in 2011 broadened the scope of aid for such development to entice business and jobs under the Urban Transit Hub Tax Credit program. Of a maximum $1.75 billion of incentives, about $1.4 billion is committed, according to the New Jersey Economic Development Authority.

Fewer than 10 percent of Americans want to reside in suburbs that rely on cars, though 40 percent live in those areas, according to an online survey released April 30 by the American Planning Association, a Washington-based not-for-profit group that represents city planners.

Christie understands the need for more Hudson River rail capacity and would be interested in projects that “spread the cost among all beneficiaries,” Stephen Schapiro, a spokesman for the transportation department, said in an e-mail.

“In the meantime, New Jersey Transit is maximizing capacity of the existing train lines through the use of multi-level train cars,” Schapiro said.

Adding residential housing within a half-mile of a transit station increases ridership more than any other type of development, according to the transportation department website.

Big Box

New Jersey Transit, operator of the third-largest bus, rail and light-rail system in the U.S., has no estimates of how passenger ranks will swell as a result of the transit villages, according to William Smith, an agency spokesman.

Of its 1,113 rail cars, 429 are multilevel, with as much as 20 percent more seating capacity than single-level models. The double-deckers are being upgraded to add 459 seats, and the agency has “no short-term plans to order additional cars,” Smith said in an e-mail.

In North Brunswick, where transit-village construction is under way on 212 acres formerly owned by Johnson & Johnson (JNJ), key rail components have yet to be built to serve a planned 1,875 residential units, 375 hotel rooms and big-box retail anchors. The project requires New Jersey Transit to build a $30 million station. A loop to ease train turnarounds, whose cost Smith could place only in the hundreds of millions of dollars, is still in the planning stages.

Two Penthouses

Christie has called the North Brunswick station “an investment in your town and our entire region.”

“Your new train station will shorten commutes, reduce congestion and pollution and improve access to Trenton, Newark, New York City and numerous other destinations,” the governor wrote in a March 1, 2013, letter posted to, the Internet site for the project, called Main Street North Brunswick.

“The administration really doesn’t care if people take trains -- they’re just using this as an excuse for more development,” said Jeffrey Tittel, director of the New Jersey chapter of the Sierra Club, a nonprofit conservation group. “Otherwise they’d be investing in transit as well.”

Even those who say New Jersey mass transportation needs improvement agree that an imperfect train ride is preferable to driving in the most densely populated U.S. state.

A fast commute was part of the reason Hana Aviv and her husband sold their home in Essex Fells and bought and combined two penthouses in the Vue, a 192-unit New Brunswick high-rise in the transit-village district whose developer received state and federal grants and tax credits.

Aviv, a 59-year-old associate pathology professor at Rutgers-Robert Wood Johnson Medical School, now walks to work, and her husband takes the train to his office in Newark.

“We had two cars, and now we have just one,” she said in a telephone interview. “We just use it on the weekends. I’m very happy to leave it in the garage.”

-By Elise Young