Real News‎ > ‎2014‎ > ‎March 2014‎ > ‎

1st March 2014

Top Stories 

S'pore is at frontier of skyrise greenery movement: Khaw Boon Wan

Source: Channel News Asia / Singapore

SINGAPORE: National Development Minister Khaw Boon Wan is hoping to see more skyrise greenery in Singapore, especially within the public housing estates in Singapore.

In a blog post on Saturday, Mr Khaw shared that a project in Milan, which is due for completion next year, aims to create a vertical forest within a residential concrete tower.

This, he said, is history in the making.

Mr Khaw added that Singapore is also a pioneer in the skyrise greenery movement.

He said the super trees in Gardens by the Bay broke new ground and created something endearing.

Mr Khaw noted that there are 61 hectares (ha) of rooftop gardens in Singapore.

He said this is no mean feat considering that the country only actively embarked on greening roofs in the last five years.

Comparing Singapore's track record to Chicago's, Mr Khaw noted that the American city has 50 ha of rooftop gardens even though it has a longer history in greening roofs.

Singapore's achievements in this field have been documented in a book by National University of Singapore's Professor Dr Tan Puay Yok titled "Vertical Garden City, Singapore".

Mr Khaw said Singapore will continue to contribute to this emerging global effort to green upwards.

Singapore is getting more buildings with bolder skyrise greenery designs -- for example, the recently completed Park Royal@Pickering and the upcoming CapitaGreen building.

In the public housing sector, Mr Khaw shared that the new integrated development project located next to the Admiralty MRT Station will soon "ground-break and show what can be achieved within HDB estates".

- CNA/fa

Singapore Real Estate

Development charge rates up from today

Modest rise in residential DC rates 'in line with softening home prices'

Source: Business Times / Top Stories 

DEVELOPMENT charge (DC) rates - payable for enhancing the use of some sites or to build bigger projects on them - have been raised from today by an average of 15 per cent for commercial use and 13 per cent for hotel/hospital use.

For landed and non-landed residential uses, the average increase is about one per cent each, while rates for industrial use have been left completely untouched.

The Ministry of National Development, in consultation with the Chief Valuer, revises DC rates based on current market values twice a year - on March 1 and Sept 1. The rates are stated according to use groups across 118 geographical sectors in Singapore.

DC rates for the major use groups are expressed as per square metre of gross floor area.

Property consultants said the modest rise in residential DC rates was in line with softening home prices in the past half year.

Signs of incipient softening in the industrial property market were probably behind the decision to leave DC rates for the use group unchanged. This was despite ample evidence of industrial sites fetching prices at state tenders that were higher than land values implied by the previous DC rates, argued Colliers International director Chia Siew Chuin.

Jones Lang LaSalle's (JLL) head of SE Asia research, Chua Yang Liang, said the DC rate hike for hotel use was supported by the active hotel investment market.

"Typically, DC is payable for sites where the development potential has not been fully maximised (mostly privately held sites)," explained Karamjit Singh, head of investments and residential at JLL. "Even for sites where the gross floor area has been maximised, DC rates are still relevant for the amount of money payable to the state to build the 10 per cent bonus GFA for balcony and other use. This applies even to 99-year condo sites bought at state tenders," he added.

During the heyday of collective sales, DC rates were closely monitored by property agents and owners with en bloc potential. However, the impact of this round of DC rate revisions on residential en bloc sales is very minimal, said Mr Singh. "In any case usually less than half of en blocs attract DC and even then DC forms a relatively small component of the entire land cost."

This round, non-landed residential DC rates have been raised in only 15 geographical sectors (by 6 to 10 per cent), with no changes in the remaining 103 sectors. The largest increase at 10 per cent is in Sector 101 (Paya Lebar/Aljunied/Macpherson/

Sims Avenue/Eunos Link). The increase was supported by the sale of a 99-year private housing site in Geylang East Avenue 1 at a state tender in January at $776 per square foot per plot ratio (psf ppr) - or 67 per cent above the land value implied by the-then prevailing Sept 1, 2013, DC rate, explained Colliers' Ms Chia.

She suggested that a 9.1 per cent rise in Sector 100 (including Sengkang/Punggol) could have been due to the sales of two adjoining sites in Upper Serangoon View in December for $522 psf ppr - 33 per cent more than the Sept 1, 2013, DC rate-implied land value. The other locations that saw higher non-landed residential DC rates include the sectors that include Kallang, Upper Boon Keng, Geylang Bahru, Tampines, Bedok Reservoir, Kembangan, Pasir Ris, Choa Chu Kang, Woodlands, Sembawang, Seletar, Bukit Batok, Mount Emily, Bendemeer and Whampoa.

Commercial use DC rates were raised for 89 geographical sectors (by 14-29 per cent), with no changes in the other 29.

The biggest hike of 29 per cent was for Sector 108 (which includes Sixth Avenue, Holland Road, Commonwealth Avenue Tanglin Road, Adam Road). This was supported by the sale of 100 Taman Warna which, based on JLL's analysis, was 54 per cent above the previous DC rate-implied land value. In Upper Thomson, the transaction of Long House at 41 per cent premium to the previous DC rate-implied land value probably supported a 22 per cent hike for Sector 107.

The same percentage rate hike was seen in Sector 53 (which includes Little India), in the light of Serangoon Plaza's sale at 169 per cent above the DC rate-implied land value - producing a knock-on effect on the neighbouring Sector 58, which posted a 21 per cent rise.

Tang Wei Leng, executive director (investment sales) at Colliers International, said DC rates remained unchanged for the two major commercial en bloc sales she is working on - The Arcade in Collyer Quay and Tanglin Shopping Centre. "In the past six months, there have been no significant commercial property deals in these locations to justify any change in DC rates."

For landed residential use, DC rate were upped in 13 sectors by 9-10 per cent, with no change for the remaining 105 sectors. For hotel/hospital use group, the biggest jump of 31 per cent is arein Sectors 93 & 94 (Changi Road/East Coast/Marine Parade area).

From today, the Urban Redevelopment Authority's website offers a new free e-service that allows information on DC rates to be accurately retrieved for any site on a Geographical Information System-enabled digital map.

-By Kalpana Rashiwala

Non-landed completed home prices slip 0.5% in January: flash estimate

Prices of completed non-landed private homes slipped 0.5 per cent in January, going by the flash estimates of the Singapore Residential Price Index (SRPI) of the National University of Singapore (NUS), even as prices of homes (excluding small units) in the non-central region edged up 0.1 per cent. For January, the overall index was dragged down by the prices of homes (excluding small units) in the central region, which dipped 1.1 per cent month-on-month.

Yen set to fall further, property buyers told

Slide of 5% against Singdollar by year-end: analysts

Source: Business Times / Top Stories

[SINGAPORE] Local investors considering buying Japanese property should consider the currency exposure as the yen is poised to slide further due to economic reforms, said Bank of Tokyo-Mitsubishi UFJ (BTMU) analysts.

The yen is expected to depreciate against the Singapore dollar around 5 per cent by the end of 2014, while the slide against the US unit will be a steeper 8 per cent, they said.

Pension liberalisation reforms and stepped up overseas asset buying will lead to more than 10 trillion yen (S$124 billion) outflows from April, said Takahiro Sekido, BTMU Japan strategist.

Yen will fall to 110 to US$1 by December 2014 and 115 in 3-5 years' time, said Mr Sekido.

-By Siow Li Sen

Loan growth eases on fear of rate rise

Source: Straits Times 

Banks here again issued more loans in January, though the rate of growth eased amid concerns that interest rates could rise. Total loans for January amounted to $582.2 billion, a 1.4 per cent rise from December, preliminary data released yesterday by the Monetary Authority of Singapore showed.

Bank lending eases for 2nd straight month

Weaker growth in loans to manufacturers in January comes on the back of concerns over the recovery in the sector

Source: Business Times / Top Stories

BANK lending in Singapore in January grew at a slower clip for the second straight month, dragged down by softer growth in the business loan segment.

The weaker growth in loans to manufacturers comes on the back of concerns over the recovery in the manufacturing sector and as banks in Singapore brace for slower loan growth this year.

Preliminary figures released by the Monetary Authority of Singapore yesterday showed that domestic banking unit (DBU) loans stood at $582 billion in January, up 1.4 per cent from December. This was slightly weaker than the 1.5 per cent month-on-month growth registered in December.

The gains refer to net growth, that is, new loans which have been granted after deducting loans which have been paid off.

Banks, while forecasting tepid loan growth, expect to fire their cylinders this year through business loans, which should cushion an easing in mortgage loans. The DBU figures refer to loans denominated in Singapore dollars. As a gauge, Sing-dollar loans made up 40 to 56 per cent of the loan book of OCBC, DBS and UOB as at end-2013, a recent Credit Suisse report showed.

Trade finance growth is not fully reflected in DBU numbers, since many of such loans are denominated in the greenback. US dollar loans constituted 15-34 per cent of the three banks' loan book last year.

On a yearly basis, the value of DBU loans rose 16.5 per cent in January, a slight dip from the 17 per cent growth in December. This is the second consecutive dip in growth on a year-on-year basis, and was dragged by weaker numbers in both the business and consumer loan segments. Business loans grew 22.5 per cent in January, weaker than the 22.9 per cent gain in December.

On a month-on-month basis, business loans in January grew 2.1 per cent to $356 billion. This is a narrower expansion compared with the 2.3 per cent growth posted in December.

The main drags came from softer growth in loans to the manufacturing and general-commerce segments. The value of loans to manufacturers grew 0.5 per cent over the month in January, compared with a 0.9 per cent expansion in December.

Analysts appear split on the prowess of the manufacturing sector this year. In a research note this week discussing the weaker-than-expected industrial production (IP) numbers in January, UOB economist Alvin Liew pointed to the growth potential from the recovery in consumption demand in the advanced economies. This is in spite of near-term weakness possibly extending into February.

Citi economist Kit Wei Zheng is less sanguine. "The lacklustre January IP performance, though possibly exaggerated by the earlier Chinese New Year, shows that a convincing pick-up in external demand remains to be seen," he said in a report.

One bright spot in loan growth was in the building and construction sector, which makes up the largest loan portfolio of all DBU loans. This was up 1.4 per cent in January, a shade stronger than the 1.2 per cent rise in December.

The month-on-month growth in consumer loans of $226 billion was 0.4 per cent in January, a slight bump compared with the 0.3 per cent gain in December. Still, on a yearly comparison, growth for consumer loans stood at 8.2 per cent, which was weaker than the 8.9 per cent expansion in December.

-By Jamie Lee

Prince Charles Crescent site up for tender

The prime plot is expected to yield some 655 residential units

Source: Business Times / Singapore

A 99-year leasehold residential site at Prince Charles Crescent (Parcel B) has been put up for sale in a public tender by the government, with analysts saying that this will stoke healthy interest from many developers given its prime location.

The parcel, which is expected to yield some 655 residential units, is part of the confirmed list of the Government Land Sales (GLS) programme for the first half of this year.

The land parcel has a site area of 24,964 square metres with a permissible gross floor area of 52,426 sqm, the Urban Redevelopment Authority said yesterday.

It is located within an established residential estate and a 10-minute drive to Orchard Road and the city centre. Schools located within the vicinity include Crescent Girls' School and Gan Eng Seng School.

-By Lynette Khoo

First Courtyard branded hotel to open in S'pore in 2017

Marriott International is partnering Hoi Hup Sunway Novena in this joint venture

Source: Business Times / Wealth

GLOBAL hotel chain Marriott International will partner local joint venture Hoi Hup Sunway Novena to open its first Courtyard branded hotel here in 2017.

The new hotel is part of a 33-storey mixed-use development, which includes restaurants, shops and medical suites at the upcoming Royal Square at Novena, said Hoi Hup yesterday.

Located at the junction of Thomson and Irrawaddy Roads, Courtyard by Marriott Singapore Novena will feature some 250 guest rooms.

-By Raphael Lim

UIC gets boost from SingLand offer

Source: Straits Times

One surprise emerging from the proposed privatisation of Singapore Land (SingLand) is that the offeror, United Industrial Corporation (UIC), has enjoyed a fillip in its share price too. On Monday morning, UIC said it was launching an unconditional cash offer to buy up the rest of SingLand at $9.40 a share.

Developer dangles carats to lure buyers

Firm posts 11% fall in Q4 profit as property development earnings decline

Source: Business Times / Companies

WITH softening property prices and sales volumes, City Developments (CDL) chairman Kwek Leng Beng expressed hope yesterday that this year, the government will tweak or even remove the rules on qualifying certificates (QCs), which bind developers with foreign stakeholders to strict timelines to complete and sell a residential development.

Speaking at the group's full-year results briefing, he noted that the QC rules put the heat on developers which purchase private land to push projects out quickly, depleting their land bank. These developers then have to turn to Government Land Sales sites and put in high bids to secure the land needed to replenish their land bank.

Mr Kwek said: "I believe that with the QC in place, bidding for every site will be competitive. To a developer, land is our stock-in-trade. Without sites, business will come to a standstill, so there is no choice but to bid at higher prices."

Paying top dollar for land means developers need to sell the units at a high-enough price, but current market conditions do not allow for this, he said.

-By Felda Chay

Productivity challenge stumps builders

Source: Straits Times 

Builders are used to meeting complex challenges - just look at the Marina Bay Sands or any MRT station - but lifting productivity in the construction sector seems to stump them at every turn. It is not for want of trying, however, or due to a lack of incentives - whether carrot or stick - from the Government.

'Remove all risk of workplace accidents'

Source: Straits Times 

Reducing the chance of workplace accidents is no longer enough, said Acting Manpower Minister Tan Chuan-Jin. Companies must now try to eliminate risks altogether, he told some 800 business managers and professionals yesterday.

Real Estate Companies' Brief

OUE's full year dented by fair-value losses

Source: Business Times / Companies

OUE sank into the red for the full year ended Dec 31, dragged down by net fair value losses on its investment properties.

It posted a a net loss of $36.6 million, compared with a net profit of $90.1 million a year earlier. Excluding the non-cash item of $76.8 million, OUE made an attributable pre-tax profit of $57.5 million.

Revenue for fiscal 2013 grew 4.5 per cent to $436.56 million on the back of higher contributions from the group's Property Development division. The segment's revenue almost doubled to $62.7 million from $31.4 million as it recognised more sales of residential units for Twin Peaks, its flagship residential project.

-By Lynette Khoo

Divestment gain boosts UEL full-year bottom line

Source: Business Times / Companies

UNITED Engineers Limited's (UEL) net profit for the full year ended December jumped 64 per cent to $118.1 million from $72.2 million a year ago, helped mainly by a divestment gain.

Revenue surged to $2.01 billion from $595.7 million due mainly to the consolidation of WBL Corp Ltd's revenue of about $1.37 billion, as well as increased rental from the group's income-producing properties, revenue recognised from Eight Riversuites, and higher contribution from UE E&C Ltd.

Gross profit rose 61 per cent to $313.5 million.

-By Mindy Tan

Yeo Hiap Seng's Q4 profit more than doubles to $17m

Source: Business Times / Companies

YEO Hiap Seng (YHS) reported a net profit of $17.07 million for the fourth quarter ended Dec 31, 2013, up from $7.75 million in the corresponding quarter a year earlier, thanks in part to strong contributions from its food and beverage (F&B) business.

Revenue for the quarter, however, slipped from $106.4 million previously to $103.42 million while earnings per share for the quarter under review worked out to 2.97 cents, up from 1.35 cents previously.

For the full year, net profit slumped to $87.63 million from $98.8 million on the back of lower profits from the property division, while revenue dropped from $566.4 million to $515.33 million.

-By Nisha Ramchandani

UOL logs 3% dip in profit to $785.8m

It will be 'much more selective and niche' in its land banking

Source: Business Times / Companies

UOL Group posted a 3 per cent fall in net profit to $785.8 million for the financial year ended Dec 31 as weaker sales of residential units offset stronger hotel revenue and higher rental income from offices and shopping malls.

The group revenue for fiscal 2013 slipped 8 per cent from a year ago to $1.06 billion while fair value gains on the group's investment properties and associated companies fell by nearly 9 per cent to $500.9 million.

Given the recent softness in the residential market, the group will be "much more selective and niche in its acquisition of land bank", Liam Wee Sin, president of UOL Group's property division said at a briefing yesterday. "We have gone into investment in properties with recurring income. That strategy remains," he said.

-By Lynette Khoo

Fair-value gains boost Centurion's Q4

Net profit soars from $5.2m to $26.9m

Source: Business Times / Companies

FAIR-VALUE gains from the investment properties of Centurion and its joint venture, stemming from a change in accounting policy from a cost to fair-value model, boosted Centurion Corp's fourth-quarter net profit to $26.9 million for the three months ended Dec 31.

A year ago, it was just $5.2 million.

Excluding fair-value gains, the accommodation assets manager said that Q4 net profit would have been a rise of 19 per cent to $5.6 million.

-By Lee Meixian

Source: Business Times / Wealth

Croesus Retail Trust (CRT) announced that it has acquired two Tokyo properties for 14,250 million yen (S$176.3 million), comprising S$43 million for Luz Omori, which was acquired from strategic partner Marubeni Corp, and S$134 million for NIS Wave I, which was acquired from a third party vendor, Godo Kaisha Wave I. Collectively, the acquisition price represents a 4.7 per cent discount to total assessed valuation.


DBS Group Research | Feb 28 |

Close: $0.89 |

Global Economy & Global Real Estate

HK property developers targeting middle-class, first-time buyers

Source: Business Times / World

[Hong Kong] WHEN things get choppy at the top of the property ladder, it pays to have your feet planted on the middle rungs, which makes developers Cheung Kong (Holdings) and Sun Hung Kai Properties the best bets to weather the storm brewing in Hong Kong.

These powerful property developers are targeting middle-class, first-time buyers who are exempt from the impact of government cooling measures at a time when secondary home transactions are hovering at a 17-year low.

"This represents a large potential market for developers launching new projects, so long as they price units affordably and draw first-time buyers from the secondary to the primary market," said Raymond Liu, a property analyst at brokerage Macquarie. First-time buyers comprised 70 per cent of the market last year, up from 53 per cent in 2011, he said.

-From Hong Kong, China

Fourth-quarter GDP growth cut to 2.4%

Source: Business Times / Top Stories

[Washington] THE US government has slashed its estimate for fourth-quarter growth as consumer spending and exports were less robust than initially thought, leaving the US economy on a more sustainable path of modest expansion.

Gross domestic product (GDP) expanded at a 2.4 per cent annual rate, the Commerce Department said yesterday. That was down sharply from the 3.2 per cent pace reported in January and the 4.1 per cent logged in the third quarter.

It is not unusual for the government to make sharp revisions to GDP numbers, as it does not have complete data when it makes its initial estimates. In fact, the latest figures will be subject to revisions next month as more information is received.

-From Washington, US

London Tube Station Used to Repel Nazi Blitz Sold for Homes

Source: Bloomberg / Luxury

London subway station that served as a command center during Nazi air-raids on the British capital in World War II was sold for 53 million pounds ($89 million) to be used for homes.

The property at 206 Brompton Road, about a five-minute walk from Harrods department store in Knightsbridge, has 28,000 square feet (2,600 square meters) of space above ground and some subterranean areas that haven’t been used since the war, the Ministry of Defence said in a statement today. It didn’t identify the buyer.

The MOD is selling assets to raise cash amid budget cuts. The site of the former Brompton Road Underground Station was offered to potential buyers in September, the ministry said. Jones Lang LaSalle Inc. (JLL), a Chicago-based broker, advised on the sale.

“The property will now be used for a predominantly residential development and the money raised will be plowed back into the defense budget,” the MOD said.

The tube station, designed by British architect Leslie Green, opened in 1906. It was closed 28 years later and the War Office used the site as the headquarters of southern England’s anti-aircraft operations, according to the MOD. The building above ground contains a drill hall, garages, offices and a mess hall. Until recently, it was used by military trainees.

War Relic

Below ground, a large map of London is one of the few relics left over from the war, MOD spokesman Robert Mead said by phone. The ministry said it’s working with the National Archives to ensure the map is recorded. The station platform itself and the tube line weren’t commandeered by the military and weren’t included in the transaction. The new owner won’t have access to either, the MOD said.

Residential property prices in London’s most expensive locations, which include Knightsbridge and other parts of the West End district, outperformed the rest of the U.K. market in recent years as overseas investors sought a haven for their money.

The London Underground is the world’s oldest subterranean rail network, according to Transport for London.

-By Andrew Blackman

Deutsche Annington to Buy 41,500 Apartments for $3.3 Billion

Source: Bloomberg / Luxury

Deutsche Annington Immobilien SE (ANN) agreed to buy 41,500 apartments valued at about 2.4 billion euros ($3.3 billion) with debt from owners including Blackstone Group LP (BX) and Equity Residential. (EQR)

Deutsche Annington will acquire Vitus Immobilien Sarl and homes owned by DeWAG in separate deals that will increase its residential portfolio by 24 percent, the Bochum-based company said in a statement today. Deutsche Annington plans to finance the acquisitions by selling new shares and issuing bonds.

German publicly traded landlords are buying apartments to take advantage of favorable financing conditions. Investors bought 15.8 billion euros of homes in 2013, the most since 2005, according to data compiled by Chicago-based broker Jones Lang LaSalle Inc. Deutsche Annington’s deals will create “substantial cost advantages,” Chief Executive Officer Rolf Buch said.

“The portfolios are very complementary, so it seems credible that they will have cost savings,” said Peter Papadakos, an analyst at Green Street Advisors in London. “The real estate pricing seems fair.”

Vitus owns 30,000 German apartments and DeWAG has 11,500 homes.

Public Offering

Deutsche Annington fell as much as 2.5 percent to 19.5 euros in Frankfurt trading, the biggest drop in two months. The stock has gained about 12 percent since the company first sold shares to the public in July. That’s about the same as the EPRA/FTSE Nareit Index of German property stocks.

The acquisitions will add to Deutsche Annington’s funds from operations and net asset value, the company said. They will also increase its loan-to-value ratio to 51 percent from 50 percent in the “mid-term.”

FFO excluding profit from apartment sales, a measure of a property company’s ability to generate cash, climbed 32 percent to 223.5 million euros last year after borrowing costs fell, Deutsche Annington said in a separate statement. NAV rose 39 percent to 4.8 billion euros.

Vitus, founded in 1869, owns and manages homes in western German cities including Dusseldorf, Kiel and Bremen, according to its website. Blackstone bought the company in 2004 for 1.39 billion euros and later sold a majority stake to funds managed by Round Hill Capital, Deutsche Bank AG (DBK) and Aviva Plc. (AV/)

Archstone Deal

DeWAG is owned by Equity Residential and AvalonBay Communities Inc. (AVB) The U.S. companies acquired Stuttgart, Germany-based DeWAG as part of their purchase of Archstone Inc. from Lehman Brothers Holdings Inc. in 2012. DeWAG owns homes in German cities including Cologne, Munich and Frankfurt, according to its website.

Deutsche Annington will finance the acquisitions with about 1.3 billion euros in debt, according to data in a company presentation to analysts.

The debt will include taking on about 400 million euros of existing obligations from Vitus and DeWAG, about 500 million euros in new corporate bonds, and part of a new hybrid-bond issue of about 500 million euros. In addition, Annington will pay Vitus about 200 million euros in new shares and will sell another 250 million euros to 350 million euros in new stock to raise cash, Buch said on a conference call. About 500 million euros will be paid from the company’s cash reserves.

Profit Boost

The acquisitions will increase funds from operations per share by about 8 percent starting in 2015, when both portfolios will have been absorbed, Buch said. The company will probably revise its 2014 earnings forecast when the impact of the acquisitions has been analysed, Buch said.

Deutsche Annington today said funds from operations in 2014 will be between 250 million euros and 265 million euros.

-By Dalia Fahmy

BlackRock Converts Stake in Affiliate of PennyMac Into Shares

Source: Bloomberg / News

BlackRock Inc. (BLK) converted part of its stake in an affiliate of PennyMac Financial Services Inc. (PFSI) into shares of the parent mortgage company that’s run by former Countrywide Financial Corp. executives.

BlackRock Mortgage Ventures LLC, a wholly owned unit of the world’s largest money manager, traded 1.8 million of its shares in Private National Mortgage Acceptance Co. into a similar amount of stock in PennyMac Financial, according to a filing today with the U.S. Securities and Exchange Commission.

The exchange authorized under an earlier agreement occurred Dec. 13, leaving BlackRock with 13.8 million stock units in Private National Mortgage Acceptance Co. that can also be converted into shares in PennyMac Financial, the filing shows.

“The December conversion was done for corporate financial purposes,” Brian Beades, a spokesman for New York-based BlackRock, said by e-mail. “We continue to see PennyMac as a long-term strategic investment.”

BlackRock helped former Countrywide President Stanford Kurland found Private National Mortgage Acceptance in 2008. The money management firm and its clients own 47 percent of PennyMac shares under a calculation that includes the stake in the affiliate, according to the filing. It holds 512,631 shares on behalf of clients, the filing states.

Christopher Oltmann, a spokesman for Moorpark, California-based PennyMac, declined to comment.

Sole Asset

PennyMac Financial’s sole asset is its stake in Private National Mortgage Acceptance Co., which it controls and which engages in mortgage banking and investment management, according to an SEC filing in November.

Highfields Capital Management LP also is a strategic partner in Private National Mortgage Acceptance Co., which is structured as a limited liability corporation, according to its website.

“BlackRock continues to maintain a 20 percent economic interest in PFSI,” said Beades. “The higher number is calculated based on SEC rules which assumes the conversion of LLC units held by BlackRock for shares in the publicly traded parent -- there are also other holders of LLC units.”

-By Jody Shenn

Elderly Housing Deals Make Capital Senior Next: Real M&A

Source: Bloomberg / Personal Finance

Capital Senior Living Corp. (CSU), an operator of communities for the elderly, may be an attractive consolation prize for buyers that missed out on the industry’s latest takeover.

Brookdale Senior Living Inc.’s $1.4 billion purchase of Emeritus Corp. announced last week followed acquisitions of Sunrise Senior Living Inc. and Assisted Living Concepts Inc. in 2013. While other suitors may emerge for Emeritus, the deal will likely close, Stephens Inc. said. That leaves Capital Senior, which jumped 7.4 percent after the Emeritus deal, as a takeover candidate, said Jeffrey Langbaum of Bloomberg Industries.

Private-equity firms and health-care real estate investment trusts have been buying senior communities as a growing elderly population and improving economy lift demand. Capital Senior is forecast to boost revenue almost twice as fast as Emeritus in the next two years, according to data compiled by Bloomberg. The $713 million company could fetch at least a 21 percent premium from possible suitors Health Care REIT Inc. (HCN) or Ventas Inc., eyeing the real estate Capital Senior owns, JMP Group Inc. said.

“The senior housing sector is pretty hot these days,” Rob Mains, a Saratoga Springs, New York-based analyst at Stifel Financial Corp., said in a phone interview. “Capital Senior is a well-run company that anyone wanting to get scale in senior housing would be interested in.”

Ralph Beattie, chief financial officer of Dallas-based Capital Senior, didn’t respond to requests for comment on whether his company would be open to a sale.

Brookdale Deal

Brookdale agreed to buy Emeritus to add to its senior-living locations in California, New York, New Jersey and Massachusetts. Shares of the two companies fell yesterday after ProPublica reported the federal government is investigating Medicaid billing practices at Seattle-based Emeritus.

While it’s possible a REIT or a private-equity firm could emerge with a higher offer, Brookdale (BKD) is offering a reasonable price and will probably take control of Emeritus without having to increase its bid, according to Dana Hambly, a Little Rock, Arkansas-based analyst at Stephens. Brookdale’s offer represents a 33 percent premium over Emeritus’ Feb. 20 closing price, data compiled by Bloomberg show.

After the deal is completed, Capital Senior will be one of the last remaining publicly traded acquisition candidates, according to Langbaum, a REIT analyst at Bloomberg Industries. Health Care REIT acquired Sunrise last January, and private-equity firm TPG Capital bought Assisted Living Concepts in July.

Last Available

“If you look down the list, that’s all that’s left,” Langbaum said of Capital Senior in a phone interview. “Is it a takeout candidate? Yeah, I’m sure it is.”

Capital Senior, which closed yesterday at $24.74, could lure interest from Health Care REIT or Ventas (VTR), in part because of the real estate it owns, according to Peter Martin, a San Francisco-based analyst at JMP. He estimated Capital Senior could get more than $30 a share in a sale.

The stock climbed 2.8 percent to $25.42 today, reaching the highest price since July.

“To be honest with you, I thought it would have been the first target,” he said in a phone interview. “It has a very clean capital structure and it has a very concentrated portfolio from Texas to Michigan, right up the middle of the country. It’s a great target.”

Representatives for Toledo, Ohio-based Health Care REIT and Chicago-based Ventas didn’t respond to requests for comment on whether they would be interested in buying Capital Senior.

Baby Boomers

REITs have taken an increasing interest in senior residence communities as the Baby Boomer population, those born in the U.S. from 1946 to 1964, ages and the pickup in the U.S. economy gives the elderly and their families more income to pay for housing, said Mains of Stifel. Gross domestic product has expanded every quarter since March 2011, data compiled by Bloomberg show.

“It’s a health-care sector that’s drawn a lot of interest,” he said.

By 2050, the number of people over 60 years old globally will exceed the number of people under 15 for the first time, according to a PricewaterhouseCoopers LLP report released this month. The average occupancy rate for senior housing properties last quarter was 89.7 percent, up from 89 percent a year earlier, according to the National Investment Center for the Seniors Housing & Care Industry.

That should help Capital Senior increase its revenue to $432 million in 2015, up from $350 million in 2013 that the company reported yesterday, according to analysts’ estimates compiled by Bloomberg. Emeritus (ESC) is forecast to boost sales by about 13 percent over the same period.

Emeritus Probe

Investigators have been exploring allegations of improper Medicaid billing at Emeritus, ProPublica said, citing a person with direct knowledge of the matter that it didn’t identify. Karen Lucas a spokeswoman for Emeritus told the website that the company was cooperating fully with authorities and described the investigation as a routine civil probe.

A representative for Emeritus didn’t immediately have further comment on the investigation or the status of the deal with Brookdale. A representative for Brentwood, Tennessee-based Brookdale didn’t respond to a request for further comment.

“My takeaway is that this was probably uncovered in their due diligence process,” Hambly of Stephens said in a phone interview. “I’m still of the opinion that this deal will close as announced.”

Capital Senior reduced its exposure to Medicare and Medicaid by repurposing its skilled nursing facilities, removing a potential turnoff for buyers that don’t want to deal with the risk of regulatory changes or cutbacks to the entitlement programs, said Martin of JMP.

REIT Demands

Because some of Capital Senior’s real estate is leased, rather than owned, a REIT buyer may have to sell off the pieces that are owned by other REITs, said Mains of Stifel.

“A REIT acquirer wouldn’t get the full benefit of the entire company,” he said.

That may not be enough to deter REITs that are hungry for acquisitions to help fuel earnings expansion, said Langbaum of Bloomberg Industries. The senior living industry is an attractive place to look, he said.

“You’ve got a big push to own those types of facilities and that type of real estate,” Langbaum said. Capital Senior is “certainly a candidate.”

-By Brooke Sutherland

Sun Hung Kai May Raise $2.9 Billion to Buy Land in Hong Kong

Source: Bloomberg / Luxury

Sun Hung Kai Properties Ltd. (16), Hong Kong’s second-largest developer, said it may raise as much as HK$22.2 billion ($2.9 billion) from issuing convertible warrants to buy land in the city.

The company is interested in most Hong Kong sites that will come up for sale and sees many opportunities for land acquisitions in the next two to three years, Co-Chairmen Thomas and Raymond Kwok told reporters in Hong Kong yesterday after Sun Hung Kai announced first-half earnings.

Property prices, which have more than doubled since the start of 2009, may drop as much as 20 percent this year on expectations of rising interest rates, according to Standard & Poor’s. The government will sell land this fiscal year that could yield 11 percent more private homes, as it seeks to bring down prices in the world’s most-expensive residential market.

“There are a lot of opportunities to bid for land in the coming two years,” Raymond Kwok said. “We are active in land acquisition and the competition is tense as many mid and smaller developers, and Chinese developers hold optimistic views on land prices in Hong Kong.”

The developer booked a lower profit from apartment sales as the government maintained measures to prevent a bubble. Underlying profit, which excludes property revaluations, fell 8 percent HK$10.6 billion for the six months ended Dec. 31, the company said yesterday. That compares with the HK$10.05 billion median estimate of four analysts surveyed by Bloomberg.

“The market sentiment has not been easy for developers, and Sun Hung Kai didn’t complete many major projects in the first half,” Joyce Kwock, a Hong Kong-based property analyst at Credit Suisse Group AG, said before the announcement. “With its plan to market projects in the next months and portfolio of different types of properties, the developer should have a better second half of the year.”

Raising Funds

The developer will supply projects every month this year, company Deputy Managing Director Victor Lui said.

The stock rose 0.2 percent to HK$99.30 in Hong Kong yesterday. Sun Hung Kai’s shares are up 1 percent this year after losing 15 percent last year.

Sun Hung Kai will issue one bonus warrant for every 12 shares held, which entitles holders to subscribe to one new share at HK$98.60 each, according to a separate statement. The new shares will represent 7.69 percent of the enlarged capital upon full subscription.

The Kwok family will convert their portion of the warrants issue into shares, Thomas Kwok said.

Sun Hung Kai will actively bid for every mid- and big-size plot that comes up for sale in Hong Kong, Raymond Kwok said. The government will sell land for as many as 15,500 private homes for the fiscal year ending March 2015, up from the 14,000 units expected this year, Financial Secretary John Tsang said in his budget speech this week.

China’s land prices are starting to be expensive and the company will focus on current developments, Thomas Kwok said. The developer paid 21.8 billion yuan ($3.5 billion) for a site in Shanghai in an auction in September, a record for the city.

-By Bloomberg News

Pending Sales of Existing Homes in U.S. Rose 0.1% in January

Source: Bloomberg / Luxury

Contracts to purchase previously owned U.S. homes rose less than forecast in January, adding to signs housing was weakening in early 2014.

The index of pending home sales climbed 0.1 percent after a 5.8 percent drop the prior month that was smaller than previously estimated, figures from the National Association of Realtors showed today in Washington. The median forecast of 41 economists surveyed by Bloomberg called for sales to rise 1.8 percent.

Faster gains in hiring and consumer confidence are needed to sustain the housing recovery. Home construction fell last month amid harsh winter weather, which combined with a lack of supply, strict lending rules and waning affordability to also reduce existing-home sales that are tabulated when a contract closes.

“There’s a broad trend of cooling in the housing market,” Yelena Shulyatyeva, New York-based U.S. economist at BNP Paribas, said before the report. BNP was the best forecaster of pending home sales the past two years according to data compiled by Bloomberg. “An increase in mortgage rates and home prices has hurt those who want to buy.” The outlook is “just more of the same, for housing and for the economy.”

Estimates in the Bloomberg survey ranged from a drop of 5 percent to a rise of 5 percent. The Realtors’ group revised December data from a previously reported decline of 8.7 percent.

Two of four regions, the Northeast and the South saw an increase from the previous month, today’s report showed.

Weather Effect

“Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping,” Lawrence Yun, NAR chief economist, said in a statement. “Limited inventory also is playing a role, especially in the West, while credit remains tight and affordability isn’t as favorable as it was a year ago.”

Contract signings decreased 9.1 percent from a year earlier on an unadjusted basis, after a 6.1 percent drop in the prior 12-month period.

Economists consider pending home sales a leading indicator because they track contract signings. Existing home sales are tabulated when a contract closes, typically a month or two later.

Recent data indicate adverse weather was one reason for depressed housing activity. Purchases of previously-owned houses fell 5.1 percent to a 4.62 million annual rate last month, the fewest since July 2012, the Realtors group reported on Feb. 21. Home construction fell 16 percent to an 880,000 annualized rate in January, the biggest plunge since 2011, according to the Commerce Department.

Purchasing a home has become less affordable as borrowing costs and home values increase. The 30-year fixed mortgage rate averaged 4.37 in the week ended Feb. 27, up from 3.51 percent around the same time a year ago, according to McLean, Virginia-based Freddie Mac. The S&P/Case-Shiller index of home prices in 20 cities climbed 13.4 percent in December from the same month in 2012, after rising 13.7 percent in the year ended in November.

D.R. Horton Inc. (DHI), a Fort Worth, Texas-based homebuilder, is among companies counting on improving demand.

“Housing market conditions continue to improve across most of our operating markets,” Chief Executive Officer Donald Tomnitz said on a Jan. 28 earnings call. “Our weekly sales pace accelerated in January, as compared to the first quarter, which could be an early sign of strong demand to come in the spring.”

-By Shobhana Chandra