Real News‎ > ‎2015‎ > ‎March 2015‎ > ‎

18th March 2015

Singapore Real Estate


Property fund manager buys dormitory for S$127m

Market watchers say dormitories, even with short leases left, can be viable investments

Source: Business Times / Real Estate

Property fund manager Pamfleet Group has inked a deal to buy Homestay Lodge for slightly above S$127 million. The dormitory of about 6,000 beds in Kaki Bukit Avenue 3 sits on two plots of land totalling about 200,000 sq ft. There are about 14 years left on the lease.

-By Kalpana Rashiwala

Moderate interest, cautious bids expected for Tampines condo plot

Analysts expect 3-7 bids, with top bid tipped to be lower than that received for nearby plot in 2013

Source: Business Times / Real Estate

A 99-YEAR private residential site on Tampines Avenue 10 on the confirmed list launched by the Urban Redevelopment Authority (URA) on Tuesday is expected to generate moderate interest and conservative bids from developers due to substantial supply in the location and the generally soft housing market, property consultants say.

-By Kalpana Rashwiala


URA releases new residential sale site in Tampines for private housing

The release of a residential sale site at Tampines Avenue 10 will yield around 490 housing units, the Urban Redevelopment Authority says.

Source: Channel News Asia / Singapore

SINGAPORE: Home buyers will have a greater variety of private housing choices with the release of a residential sale site at Tampines Avenue 10 on Tuesday (Mar 17), the Urban Redevelopment Authority (URA) said.

Under the Confirmed List of 1st Half 2015 Government Land Sales Programme, the residential sale site (Parcel D) can yield about 490 residential units, with a lease period of 99 years.

With a site area of 15,660.4sqm, Parcel D has a maximum Gross Floor Area of 43,850sqm and a maximum building height of 64m Above Mean Sea Level.


According to URA, the location offers benefits such as good connectivity around Singapore and to the city, as it is situated near major expressways: Tampines Expressway and Pan Island Expressway.

Options for schools include various institutes located around Tampines Avenue 10 such as St Hilda’s Primary and Secondary Schools, Temasek Polytechnic and United World College of South East Asia (East Campus).

The tender for Parcel D will close at noon on Apr 28.

- CNA/eg                  

Yields falling, but shophouses still attractive: Colliers

The properties can capture spill-over tenants from CBD; contiguous rows also allow for master leases

Source: Business Times / Real Estate

Even though yields of shophouses are falling as their rental growth lags the rapid increase in their capital values, investment firms continue to like them, especially when they are available in a contiguous row and allow for master lease arrangements. A Colliers White Paper released on Tuesday noted that the median rent of shophouses had increased 36 per cent from below S$4 per sq ft (psf) per month before 2012 to a record high of S$5.42 psf in Q4 2014.

-By Lee Meixian

2007: Penthouse bought for $28m; 2015: Sold at record $15.8m loss

Source: Straits Times

The owner of a penthouse at St Regis Residences booked an eye-popping loss of $15.8 million when he sold the apartment last month. It is the biggest loss ever made on an apartment sale here. The two-storey unit in Tanglin Road, with a swimming pool on the upper floor and views over Nassim Road greenery, first made headlines in 2007 when Japanese billionaire Katsumi Tada shelled out a record-smashing $28 million - or $4,653 per sq ft - for it.

Shopping malls here are ‘too many, too similar’

Regional head of Dubai-based conglomerate, which manages several big-name brands here, warns that retail sector is unsustainable

Source: Today Online / Singapore

SINGAPORE – The Republic has “far too many” shopping malls that are too similar to one another, and this is unsustainable for the retail sector here, said the regional head of Al-Futtaim Group which manages brands such as Robinsons, John Little and Marks & Spencer.

The Dubai-based conglomerate, which hires more than 20,000 people across over a dozen countries, became the first major casualty of the manpower crunch in the retail sector, when it announced last week that it will close two John Little stores - in Marina Square and Tiong Bahru - and a Marks & Spencer outlet at Centrepoint in the months ahead.

Speaking to TODAY in an interview, Mr Kesri Kapur, Al-Futtaim’s head of business in Asia, said: “I personally believe that Singapore is ‘over-retail’. There are far too many stores, far too many malls in Singapore and not enough shoppers - and these are similar types of stores.”

He added: “There is not enough differentiation in the stores. For such a small market, if it’s to be viable in the longer-term and sustainable, there has to be some differentiation (among) the stores.”

Al-Futtaim had said that the closures of its stores here would allow it to consolidate its resources. Mr Kapur said none of the affected employees will be laid off. Instead, they will be re-deployed to the remaining stores or given the option to take up other roles within the conglomerate.

Apart from the shortage of manpower, rising business costs here and changing consumer habits have also contributed to the company’s decision to shutter the stores, Mr Kapur said. “Customers are going online as well for shopping, especially the younger ones. Consumers are also becoming more knowledgeable, they want to make decisions only after doing more research,” he said.

He also noted that with more shopping malls sprouting up in the suburban areas, such as in Jurong East, Orchard Road has lost some of its allure as a major shopping belt here even as rentals continue to rise. 

To better cope with the challenges in the retail scene here, the Al-Futtaim Group aims to improve its quality of service and widen its product offerings. Among other things, it plans to renovate some stores, including Robinsons Raffles City and the Marks & Spencer outlets at Paragon and Raffles City. A new Zara boutique at Changi Airport Terminal 3 will also be opened in May.  

Earlier this month, Minister of State (Trade and Industry) Teo Ser Luck noted that Singapore lags behind the likes of South Korea, China and Japan when it comes to e-commerce, and said the Government has taken steps to give retailers a stronger push in this area. 

Mr Kapur said his company is venturing into e-commerce, and by the end of this year, consumers could have the option of buying goods online from its stores . “It’s not just a cost cutting exercise for us. Operational efficiency and customer engagement are important, but customer engagement happens when they see something new either in terms of distribution channel or the type of products that we’re selling… it’s our intention to make (it) as convenient as possible for the consumers,” he said.


Mr Kapur also said the Republic is losing its lustre as the region’s top shopping destination, with its position under threat from other Southeast Asian cities whose population and spending power are growing faster.

As a result, many major brands that used to be based here only have also set up shop in places such as Bangkok, Kuala Lumpur and Jakarta, he noted.

“In the past, availability of brands, flagship stores and products were more concentrated in Singapore. Now, if you want to access a top brand, you will be able to get it in the other areas also. There are world class malls in Bangkok, Kuala Lumpur, Jakarta as well,” Mr Kapur said.

He added that the manpower crunch and rising business costs, among other factors, have led to falling service standards – another area that Singapore is losing out to its regional competitors. Nevertheless, Mr Kapur said Singapore remains one of the better places to shop given its clean and safe environment. “It’s also convenient and accessible, so Singapore still has some advantages… I believe the perception that Singapore is expensive will change in the minds of the consumers. That may be the reality when we had a stronger Singapore dollar, but now, the Singapore dollar is going down against the US dollar,” he said.

-By Lee Yen Nee            

Companies' Brief


Business trusts' YTD total returns average 5.4%, ahead of Reits' 2.8%

Five best performing include First Ship Lease Trust, Ascendas India Trust and Asian Pay Television Trust

Source: Business Times / Companies & Markets

Business trusts listed on the Singapore Exchange (SGX) have achieved an average total return of 5.4 per cent so far this year, close to twice that of the real estate investment trust (Reit) sector's 2.8 per cent. The 11 SGX-listed business trusts - which allow investors to invest in cash-generating assets such as infrastructure, real estate and transportation assets - have a combined market capitalisation of S$14.8 billion, just over a fifth of the Reit sector's.

-By Teh Shi Ning

Keppel Corp now owns 86.2% of Keppel Land

Source: Business Times / Companies & Markets

Keppel Corp's stake in Keppel Land has grown to 86.2 per cent as at 5pm on Tuesday, up from 85.9 per cent on Monday evening, the company said in a Singapore Exchange filing. Keppel Corp needs to own more than 90 per cent of Keppel Land to delist the company, according to listing rules. But it needs at least 95.5 per cent to complete the buyout by compulsorily buying the remaining shares it does not own.

Global Economy & Global Real Estate


February housing starts down at year's low

Source: Business Times / Government & Economy

Chinese investment firm Fosun said to be mulling over bid for Cushman

Source: Business Times / Real Estate

Evergrande gets 100b yuan in credit lines

Source: Business Times / Real Estate

Philippine billionaire Razon to buy Korean island in casino push

Source: Business Times / Real Estate

Blackstone acquires former Sears Tower in Chicago for US$1.3b

Source: Business Times / Real Estate

California’s Housing Costs Endanger Growth, Analyst Says

Source: Bloomberg

(Bloomberg) -- California’s high housing costs threaten the state’s economy as workers increasingly struggle to afford a roof over their heads, the state Legislative Analyst’s Office said in a report released Tuesday.

“The state’s high housing costs make California a less attractive place to call home, making it more difficult for companies to hire and retain qualified employees, likely preventing the state’s economy from meeting its full potential,” Chas Alamo and Brian Uhler, senior fiscal and policy analysts with the office, said in the study.

California was home to four of the five most expensive U.S. metropolitan markets for single-family home sales in the fourth quarter of last year, led by a median home price of $855,000 in the San Jose, Sunnyvale and Santa Clara area, according to the National Association of Realtors. San Francisco ranked second, with Honolulu and the California cities of Anaheim and San Diego rounding out the top five. The suburbs north of New York City and greater Los Angeles followed.

In California, housing construction has fallen behind population and job growth. Last year, builders were authorized to start 37,000 single-family homes and 49,000 multifamily units, the seventh consecutive year permits totaled less than 100,000, according to the state Department of Finance.

“The state probably would have to build as many as 100,000 additional units annually -- almost exclusively in its coastal communities -- to seriously mitigate its problems with housing affordability,” according to the Legislative Analyst’s Office, which provides fiscal and policy advice to the California legislature, including analysis of the state budget.

Less Funding

State funding for low-cost housing has fallen about $1.5 billion a year since 2012 due to depletion of state bond funds and the demise of local redevelopment agencies, according to Matt Schwartz, president of California Housing Partnership Corp., a San Francisco-based advocacy group.

“We’ve got to get that back,” he said in a telephone interview Tuesday. “There’s been a double whammy of rapidly rising costs, particularly in the rental area, and stagnation of median incomes.”

In addition to efforts to promote affordable housing through bond funds and tax credits, which have “historically accounted for only a small share of new housing built each year,” state lawmakers should also consider programs to encourage more market-rate residential construction, according to the Legislative Analyst’s Office report.

More Jobs

The number of civilian jobs in California climbed to 17.4 million last year, about 436,000 higher than the pre-recession peak in 2007, according to the state Employment Development Department. The state population is 38.9 million, up 1.55 million since 2010, according to the Department of Finance.

In coastal areas, where home costs and demand are highest, “community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction,” according to Tuesday’s report.

High housing costs for employees is the most important challenge facing businesses in Silicon Valley, according to 72 percent of executives surveyed last year by the Silicon Valley Leadership Group, poll data cited in the report show.

The median California household spends 27 percent of its income on housing, compared with 23 percent for the U.S. as a whole, according to the report. The median Los Angeles County household devotes 30 percent of its income to shelter.

Residents of coastal cities in California spend an average of 60 minutes a day commuting to and from work, 10 percent more than the U.S. average, according to the report. The average in the San Francisco area is 72 minutes.

-By John Gittelsohn

MetLife Pushes Into Ireland Real Estate With Kennedy Wilson Deal

Source: Bloomberg

(Bloomberg) -- MetLife Inc., the largest North American life insurer, is pushing into Ireland real estate with mortgage loans to Kennedy Wilson Holdings Inc.

The insurer is providing 131 million euros ($139 million) to finance three multifamily residences and an office building in the Dublin area, MetLife said Tuesday in a statement.

MetLife is among life insurers that are lending more funds as they seek investments beyond corporate bonds and government debt with yields near record lows. The New York-based company lent a record $12.1 billion on commercial properties last year, an increase of 5 percent from 2013, and has been expanding in regions outside the U.S. including the U.K. and Mexico.

“These loans are the first for us in Ireland and we look forward to growing our portfolio in that market,” Paul Wilson, head of MetLife Real Estate Investors’ in London, said in the statement.

MetLife slipped 0.7 percent to $51.56 at 10:05 a.m. in New York. Beverly Hills, California-based Kennedy Wilson dropped 0.1 percent.

-By Doni Bloomfield

MGM Resorts Urged to Pursue REIT by Land & Buildings’ Litt

Source: Bloomberg

(Bloomberg) -- MGM Resorts International should split into a separate real-estate investment trust and hotel-management company, said Jonathan Litt, an activist hedge-fund manager who has proposed four nominees to the casino company’s board. The shares jumped.

Litt’s Land & Buildings Investment Management values MGM Resorts at $33 a share, more than 50 percent above the current price, and says it could reach $55, according to a statement Tuesday. The company, the largest casino operator on the Las Vegas Strip, hasn’t announced a date for its annual meeting.

“MGM’s high-quality real estate portfolio is substantially undervalued in the public markets,” said Litt, who has held talks with the company. “We have been attempting to work collaboratively with MGM management to find an optimal corporate structure for the company.”

MGM Resorts could cut its debt in half and boost the share price, Litt said. He recommends selling U.S. casinos outside of Nevada and its half of the Crystals Mall at the CityCenter property on the Strip. MGM China could take advantage of tax credits the parent company has and pay a special dividend, he said. Proceeds could be used to pay down about $5 billion of debt maturing through 2016.

MGM Resorts rose 11 percent to $21.74 at the close in New York, the biggest gain since August 2011.

MGM Resorts said in February it evaluates options including a REIT as part of an ongoing process. The casino operator will “carefully review the proposal and the nominees,” Mary Hynes, a spokeswoman, said in a phone interview.

“We agree our company is undervalued,” she said.

Board Nominees

The activist’s nominees to the board are Matthew J. Hart, former president of Hilton Hotels Corp., Richard Kincaid, former chief executive officer of Equity Office Properties Trust, and Marc Weisman, an investor, lawyer and former investment banker.

REIT fever has swept the casino industry since Penn National Gaming Inc. boosted its stock by spinning off the bulk of its real estate into Gaming & Leisure Properties Inc. in 2013.

Investors like REITs because, by law, they must pay out at least 90 percent of taxable earnings to shareholders as dividends. REITs don’t pay federal income taxes on those earnings in exchange.

Since Penn’s spinoff, Caesars Entertainment Corp. and Pinnacle Entertainment Inc. have announced plans to create REITs. Boyd Gaming Corp. has said it’s considering such a plan.

“The concept of converting gaming assets to REITs is not a new one,” MGM Resorts’ Chief Financial Officer Dan D’Arrigo said in February on a conference call. “We look at this all the time. We believe that our assets are undervalued.”

Record Spinoffs

Carlo Santarelli, an analyst at Deutsche Bank in New York, said in a research note Tuesday he thought Litt’s calculations were “aggressive” and that MGM could achieve similar gains without a spinoff. He recommends buying MGM shares.

“While we believe shares are undervalued, we see the consummation of a transaction of this nature as a low probability,” he said.

Companies have announced a record number of spinoffs in the year through February, often under pressure from shareholders. The rationale behind spinoffs is that a unit tucked under a diverse company’s umbrella may be worth more if it were a separate publicly traded entity.

Litt has mounted other campaigns in real estate, including pushing for the sale of apartment-building manager Associated Estates Realty Corp. and shopping-mall owner Pennsylvania Real Estate Investment Trust.

Litt released a report in September of 2012 that said Las Vegas Sands Corp.’s share value could almost double by pursuing a REIT structure. The company didn’t take his advice. The shares have risen 19 percent since then.

-By Beth Jinks & Christopher Palmeri

Macerich Rejects Simon’s $16 Billion Mall Takeover Bid

Source: Bloomberg

(Bloomberg) -- Macerich Co. rejected an unsolicited takeover bid of about $16 billion from Simon Property Group Inc., saying it substantially undervalues the mall owner.

Macerich also took measures to thwart its competitor, including staggering the election of directors, which would make it more difficult to oust the board, and adopting a “poison pill” defense that raises the price Simon would have to pay because more shares of Macerich would be issued.

“After careful consideration,” Macerich’s board unanimously determined that the offer “fails to reflect the full value of our portfolio of unique and irreplaceable assets and our positive growth prospects,” Arthur Coppola, the company’s chairman and chief executive officer, said in a statement Tuesday.

Simon, the largest U.S. mall owner, went public on March 9 with its $91-a-share offer after being rebuffed by the Santa Monica, California-based company privately. Macerich shares climbed above that price, closing Monday at $94.89, indicating investors expected a higher bid.

Macerich fell 3 percent to $92.07 at 12:20 p.m. New York time. Simon slipped 0.9 percent to $185.45.

Buying Macerich, which owns or has stakes in more than 50 malls, would expand Indianapolis-based Simon’s reach at a time when high-quality retail centers rarely come up for sale. Macerich’s properties include Tysons Corner Center in Virginia, Fashion Outlets of Niagara Falls in New York and Santa Monica Place in Southern California.

‘Rosy View’

The company’s “scorched earth” rejection of the offer is based on a “rosy view of its future prospects,” Simon Chairman and CEO David Simon said in a statement.

“Shareholders should closely examine Macerich’s history of delivering on its forecasts, which pales in comparison to Simon’s long track record of delivering industry-leading results,” Simon said.

Macerich shareholders would have received the equivalent of $91 a share as 50 percent cash and 50 percent Simon stock under the proposed deal, Simon said in a March 9 statement. The transaction would have been valued at $22.4 billion at the time, including the assumption of about $6.4 billion of debt.

The offer represented a 30 percent premium to Macerich’s closing price on Nov. 18, the day before Simon disclosed it had taken a 3.6 percent stake in the real estate investment trust. Simon said on March 9 that it had made multiple attempts to discuss its interest, and the company refused to engage in talks.

Board Nominations

Macerich said Tuesday that it received a letter from Simon indicating the REIT was contemplating the nomination of five candidates to company’s board.

Macerich said it plans to spend $400 million to $500 million annually on development projects over the next five years “that it expects will materially enhance stockholder value.”

Macerich’s decision to stagger its board without shareholder approval “would be poor corporate governance at any time, but it is particularly egregious given that we recently notified Macerich that, should the need arise, we would nominate a number of candidates that would constitute only a minority of their board,” David Simon said in Tuesday’s statement. “Macerich clearly does not believe its shareholders can be trusted to decide the composition of its board when the value of their investment hangs in the balance.”

General Growth

In connection with the completion of the proposed buyout, Simon agreed to sell certain Macerich assets to Chicago-based General Growth Properties Inc., the No. 2 U.S. mall landlord.

The deal with General Growth “raises serious antitrust concerns as it is a concerted effort by the two largest companies in the industry to acquire the number three company,” making it necessary to adopt takeover defenses, Macerich said in a separate statement Tuesday.

David Keating, a spokesman for General Growth, didn’t immediately return a call seeking comment. Simon said it is comfortable that there are no legal issues with the plan.

Before Simon disclosed its Macerich stake last year, Macerich said it bought the share of five U.S. shopping malls it didn’t already own from a subsidiary of the Ontario Teachers’ Pension Plan Board for $1.89 billion, including the assumption of debt. The purchase price included $1.22 billion of stock issued to the pension plan, or an ownership of almost 11 percent, at $71 a share.

Higher Bid

Simon likely will make a higher bid, said Jeffrey Langbaum, a REIT analyst with Bloomberg Intelligence.

“I would expect they would come back with a higher offer, then shift the response back to Macerich to either accept or refuse,” he said.

Simon has been developing outlet malls around the world while refurbishing and expanding some of its biggest U.S. malls to boost returns. Simon has also been active in transactions outside the U.S. In 2012, the company acquired an interest in European mall owner Klepierre, based in Paris.

The REIT hasn’t always been successful in trying to complete deals. Simon failed in an effort to take over General Growth after its smaller competitor filed for bankruptcy in 2009. General Growth left bankruptcy in November 2010 with financing from a group that included Brookfield Asset Management Inc. and Pershing Square Capital Management after fending off an attempted takeover by Simon.

-By Brian Louis

Investcorp Acquires U.S. Real Estate Portfolio for $300 Million

Source: Bloomberg

(Bloomberg) -- Investcorp Bank BSC, a Bahrain-based manager of alternative assets, bought a portfolio of residential properties in the U.S. for about $300 million.

The company’s real-estate unit bought assets in Washington DC, Orlando, San Diego and Baltimore, taking the value of property bought this year to $850 million, Investcorp said in an e-mailed statement Tuesday. The purchases include about 1,900 multifamily and student housing units and were bought through joint ventures with four different partners, it said.

Investcorp’s real-estate group had approximately $1.5 billion in assets under management at the end of December, with properties in the 30 largest markets in the U.S. In September, the company acquired a portfolio of office and industrial properties in Durham, NC, Seattle, WA and Jacksonville, FL, for about $250 million, according to a statement at the time.

Investcorp reported a 5 percent rise in fiscal-first half profit through December of $45.3 million.

-By Arif Sharif

Additional Articles of Interests - Local & Overseas Real Estate


Local & Overseas Real Estate - Full Article