Marina View site may fetch up to $1.6b

Marina View site may fetch up to $1.6b
At least 60% of GFA must be zoned for office space: URA
By UMA SHANKARI
 

A 99-YEAR-LEASEHOLD ‘white’ site at Marina View, launched for sale yesterday by public tender, could fetch as much as $1.6 billion, analysts reckon.
The site, which can be developed for a range of uses, was released by the Urban Redevelopment Authority (URA) - and could sell for $900-$1,300 per square foot per plot ratio (psf ppr), adding up to $1.1-$1.6 billion.

‘Right now, prime office space in the central business district, even that with a 99-year lease, is selling for a high price,’ said Donald Han, managing director of Cushman & Wakefield. ‘This site can sell for $1,300 psf ppr.’

The tender for the new site - which URA terms parcel B at Marina View - closes on Nov 13. Market watchers expect bidders to take a cue from an adjacent site offered by URA. The tender for that site - parcel A at Marina View - closes on Sept 19. It is expected to fetch about $1,100 psf ppr.

The latest site is expected to attract keen interest as office rents in Singapore look set to keep climbing amid a supply crunch.

‘This site could attract four to eight bids from major developers, investment funds and joint ventures of developers and investment funds,’ said Knight Frank’s director for research & consultancy Nicholas Mak. ‘It would also attract foreign property players.’
 
The site is about 0.9 of a hectare, has a gross plot ratio of 13 and can yield a maximum gross floor area (GFA) of 1.2 million sq ft.

Land that is zoned ‘white’ can be put to various uses including hotel, retail, office and residential space. But this site comes with a URA requirement that at least 60 per cent of the maximum GFA be office space. URA said this is to help meet demand for prime office space.

The successful developer will also need to set aside at least another 25 per cent of GFA for hotel use, yielding about 550 hotel rooms.

‘This is to contribute to the supply of hotel rooms to meet the expected increase in demand arising from the Singapore Tourism Board’s target of attracting 17 million visitors by 2015,’ URA said.

The remaining 15 per cent of the GFA can be used for any other permitted purpose. If it is used for residential units, the space could yield 190 to 200 apartments and several large penthouses, said MrMak.

URA hopes the project that goes up on the site will help create a critical mass of office space and hotel rooms in the Marina Bay area, so the precinct becomes an international business and financial hub.

The site will be connected to surrounding developments One Raffles Quay, Marina Bay Financial Centre and the future development One Shenton, URA said.
Source : Business Times - 01 Aug 2007

Keppel Land sells 2 upmarket blocks to overseas fund

Keppel Land sells 2 upmarket blocks to overseas fund
Al-Nibras Islamic Real Estate Fund pays $286m for 56 homes
By UMA SHANKARI
KEPPEL Land has sold two apartment blocks in its upmarket Reflections at Keppel Bay to an overseas fund for about $286 million, the developer said yesterday.
‘Reflections at Keppel Bay will definitely attract investors from the Gulf Cooperation Council countries.’
- K Salman Younis, managing director of Kuwait Finance House (Malaysia)
BT understands that the 56 waterfront homes in the two blocks were sold for $2,000-$2,500 per square foot (psf).

The two blocks were sold to the Al-Nibras Islamic Real Estate Fund, which was set up by Kuwait Finance House, an Islamic banking unit in Kuwait, and Amanah Raya Berhad, a Malaysian government-owned entity.

The 56 apartments range from two-bedroom units of an average size of 1,076 sq ft each to 5,000 sq ft penthouse units.

Reflections at Keppel Bay, designed by architect Daniel Libeskind, has 1,129 units, of which 558 have been sold.

The US$200 million Al-Nibras Fund has started to make inroads into Singapore and the rest of the Asean region, the fund and KepLand said in a joint statement.

K Salman Younis, managing director of Kuwait Finance House (Malaysia) Berhad, a unit of Kuwait Finance House, said that the fund sees Reflections at Keppel Bay as an ‘ideal investment’.

‘A premium waterfront development like Reflections at Keppel Bay will definitely attract investors from the Gulf Cooperation Council countries,’ he said.

Developers launching upmarket residential projects in Singapore have of late reported receiving offers from both local and overseas funds to buy entire blocks in their developments.

While some companies have taken up the funds on their offers, others have preferred to sell the apartments to individual buyers instead.

Singapore’s private home prices have climbed some 13.5 per cent since the start of the year, boosted by developers selling luxury apartments at record prices.

KepLand’s shares lost five cents to end at $8.35 yesterday - after hitting a high of $8.55 earlier in the day. The stock has climbed 21.0 per cent since the start of the year.

Source : Business Times - 01 Aug 2007

CapitaLand will use conservative gearing strategy

CapitaLand will use conservative gearing strategy
This maintains a war chest, positioning it to be aggressive on sizeable deals
CAPITALAND indicated yesterday it will adopt a conservative gearing strategy to maintain a fat war chest to swoop aggressively on sizeable deals.
The group now has financial capacity exceeding $5 billion based on its end-June 2007 equity of $10.74 billion and net debt of $4.56billion.

The net debt-to-equity ratio of 0.43 at June 30 - down from 0.55 a year earlier - is one of the lowest among listed property companies in Singapore, giving the CapitaLand ‘enormous capacity to grow’, said group president and CEO Liew Mun Leong.

End-June 2007 net debt of $4.6 billion was lower than the $5 billion figure a year earlier. The interest cover ratio - earnings before interest tax depreciation and amortisation divided by net interest expense, excluding revaluation gains - improved to 10.4 times in first-half 2007, from 6.8 times in first-half 2006. CapitaLand CFO Olivier Lim said: ‘We will be conservative on DE (debt-equity ratio) but aggressive in business posture. I think one helps the other, as opposed to being aggressive on both ends of the scale. That can get us into trouble.

‘Maintaining strong financial capacity gives the group a tremendous competitive advantage as it allows us to act fast and with confidence when profitable and sizeable opportunities arise.’

The cost of business opportunities continues to grow in Asia, as seen in CapitaLand’s $1.3 billion winning bid for the Farrer Court collective sale site, Mr Lim said.

‘Thus, we should never operate continuously at high gearing as it restricts the ability to seize worthwhile opportunities confidently when they present themselves.

‘We remain very confident in this up cycle and will continue to invest. But we will also do everything we can to avoid the ‘risk of ruin’ from ‘unknown unknowns’.

‘The best way to protect ourselves from these ‘Black Swan’ events is to maintain financial flexibility and a good margin of safety in respect of our gearing levels.’

Source : Business Times - 01 Aug 2007

CapitaLand Q2 profit hits a quarterly record of $912.6m

CapitaLand Q2 profit hits a quarterly record of $912.6m
H1 earnings soar to $1.52b, surpassing $1.02b record profit for whole of 2006
By KALPANA RASHIWALA

CAPITALAND’S second-quarter group net profit jumped almost six-fold to a quarterly record of $912.6 million, fuelled by fair value and portfolio gains and higher profits from development projects.
 
Mr Liew: Says the Singapore office sector will remain a core holding to the group 
The $912.6 million net earnings - against $157.2 million for the previous corresponding quarter - boosted the property giant’s half-year net profit from $286.7 million in H12006 to $1.52 billion in H12007, surpassing its $1.02 billion record net profit for the whole of last year.

The fair value gains came from the group’s investment properties portfolio. They resulted from the adoption of Financial Reporting Standard 40 on Investment Property which requires fair value gains to be recognised in the income statement.

CapitaLand booked fair value gains of $645.4 million in Q22007 and $647.4 million (including from the Temasek Tower office block which has since been divested in April) in H12007. But even stripping out these revaluation gains, H12007 net profit would still have been $873.3 million, three times the $286.7 million for the corresponding period last year. Similarly, Q2 net earnings excluding the revaluation gains would have been $267.2 million, a 70 per cent year-on-year improvement.

The bulk of H1 revaluation gains were for Singapore properties amounting to $599.3 million.
CapitaLand booked net divestment gains of $85.5 million in Q22007, up from $8.1 million in Q22006. For H12007, the group’s divestment gain was $166.3 million, up 150 per cent from $66.4 million in H12006.

Earnings before interest and tax (Ebit) from residential strategic business unit (SBU) jumped 71.7 per cent to $492.5 million in H12007, with Singapore (residential) operations posting a 146 per cent increase in Ebit.

Commercial SBU’s H12007 Ebit of $1.11 billion was almost 11 times the $101.4 million figure for the same year-ago period, due to improved operating results, divestment gain from Temasek Tower and unrealised fair value gains from the revaluation of investment properties.

Ebit from financial services rose 78 per cent in H1 to $45.4 million. Ebit margins for the Singapore residential business increased from 13.9 per cent in H12006 to 39.6 per cent in H12007, while China residential Ebit margins rose from 30.4 per cent to 39.9 per cent over the same period.

CapitaLand China CEO Lim Ming Yan said that going forward, a more sustainable Ebit margin from China residential business would be in the order of 25-30 per cent. Singapore accounted for 69 per cent of H12007 Ebit, up from a 29 per cent share in H12006.

On the group’s bid last week for the former NCO Club site, CapitaLand Group president and CEO Liew Mun Leong indicated that if CapitaLand is successful, it could rope in partners for the project’s different components - office, hotel, residential and retail. ‘But as the party fronting it, we are prepared to take the whole thing,’ he added.

Mr Liew stressed that ‘the Singapore office sector will remain a core holding’ to the group but that it will reconstitute its portfolio by divesting some existing office assets and investing in new developments. An example would be the group’s divestment of Temasek Tower earlier this year and its bid last week for the former NCO Club and Beach Road Camp grounds.

CapitaLand chief investment officer Kee Teck Koon observed that for a few of the group’s office buildings which are held through joint ventures, such as Hitachi Tower, Chevron House (formerly Caltex House) and 1George Street, CapitaLand will have to work with its respective partners on any divestment. ‘What I can say is that at this point, because the market is so buoyant, obviously there are partners who are keen to look at the possibility (of divesting) but it is not conclusive.’

Earnings per share (EPS) rose from 5.7 cents in Q22006 to 32.6 cents in Q22007. First-half EPS rose from 10.4 cents to 54.4 cents. Net asset value per share increased from $2.65 as at Dec31, 2006 to $3.12 as at June30, 2007. Revenue increased 21.2 per cent to $935.6 million for Q2 and by 9.9 per cent for the first half to $1.57 billion.

In Singapore, the group sold 1,260 homes for a total $2.9 billion in H12007.

Source : Business Times - 01 Aug 2007

Another plot at Marina View for sale

Another plot at Marina View for sale 
By Joyce Teo, Property Correspondent 
A SECOND prime plot at Marina View with a price tag expected to exceed $1 billion was launched for sale yesterday in a move to help meet the demand for office space.
The 0.9ha site is adjacent to another plot that was launched for sale in late May. Both sites are behind the One Shenton condominium and Shenton House, and both are expected to attract major property developers and funds.

Knight Frank’s Mr Nicholas Mak expects the new site to fetch bids of $1.1 billion to $1.3 billion or $900 per sq ft to $1,060 per sq ft of potential gross floor area.

Both plots are ‘white sites’, meaning they can be used for a variety of uses, although the Urban Redevelopment Authority (URA) can impose conditions.

In this case, the URA said the new 0.9ha site can yield a gross floor area of 113,580 sq m but at least 60 per cent must be earmarked for office. And at least 25 per cent has to be set aside for hotel use. This area could yield about 550 rooms. The rest may be used for residential and other commercial uses such as retail.

The site will be connected to nearby projects such as One Raffles Quay, Marina Bay Financial Centre and One Shenton through a network of covered and underground walkways and second-storey links. Its tender closes on Nov 13.
Separately, industrial landlord JTC Corporation said it saw strong demand for its ready-built factory space in the second quarter. Net allocation for ready-built facilities - which include factories, warehouses and technopreneur space - reached 58,200 sq m, up from 6,700 sq m in the first quarter. This helped raise the occupancy of such facilities by 1 per cent to 89 per cent.

But demand for prepared industrial land - which allows tenants to build their own facilities - fell from a high of 95.7ha in the first quarter to 64.4ha in the second quarter.

Source : Straits Times - 01 Aug 2007

CapitaLand issues active following robust results

CapitaLand issues active following robust results 
TRADING of covered warrants on CapitaLand soared yesterday, as traders shrugged off its recent price weakness, following a sterling set of second-quarter results from the property giant.
The buoyant mood on CapitaLand was lifted further by news that the Government would adopt a ‘light touch’ in tackling the roaring property market.

Yesterday, the most actively traded warrant was a CapitaLand call issued by Deutsche Bank. It gained one cent to 18 cents on a volume of 26.1 million shares.

‘CapitaLand is a popular counter, and with the recent fluctuations, both the call and put warrants on CapitaLand issued by Deutsche Bank have attracted heavy trading,’ said Deutsche Bank vice-president Sandra Lee.

An investor will need five of these warrants and the strike price of $7.80 to get one CapitaLand share before they expire in February. At CapitaLand’s $7.50 close, the issue is just out of the money.

OCBC Securities said that CapitaLand posted a ‘very strong second-quarter results, with revenues rising 21.2 per cent to $936 million and after-tax profit improving 5.8 times to $913 million’.

But it noted that the strong profit was ‘mainly due to the recognition of revaluation surplus from its commercial assets’.

Excluding the revaluation surplus, OCBC Securities said that CapitaLand’s earnings would work out to about $265 million.

Source : Straits Times - 01 Aug 2007

CapitaLand income soars to $913m in second quarter

CapitaLand income soars to $913m in second quarter 
Home sales give a huge boost; overseas revenue accounts for 70% of group’s total
By Fiona Chan, Property Reporter 
BRISK SALES: CapitaLand sold 123 out of 175 units at The Orchard Residences in the first half, with a penthouse fetching a record price. — PHOTO : CAPITALAND
 
RISING property values and sizzling home sales in Singapore and in China sent second-quarter net profits at CapitaLand soaring nearly fivefold to a record $912.6 million.
Net profits in the second quarter lifted CapitaLand’s first-half earnings to $1.52 billion - already surpassing the firm’s record full-year profit last year of $1.02 billion.

Almost half of this first-half gain came from an upward revaluation of CapitaLand’s portfolio, an exercise the developer will now undertake every six months.

The revaluation, mostly for office properties, amounted to a $647.4 million gain. Excluding this, profit for the first half would have been $873.3 million - still three times more than the $157.2 million recorded in the same period last year.

Revenue for the three months to June 30 rose 21.2 per cent to $935.6 million. The first-half figure, meanwhile, rose 9.9 per cent to $1.57 billion.

Much of these gains came from strong home sales, specially in China, said CapitaLand. The company has sold 1,130 homes there worth $550 million this year.

For the first half, overseas revenue made up 69.7 per cent of the group’s overall revenue, CapitaLand said yesterday.

CapitaLand’s Singapore residential unit also did well, recording a 146 per cent rise in pre-tax earnings. The developer has sold 1,260 homes in Singapore worth $2.87 billion so far this year.

These include 123 out of 175 units at The Orchard Residences, where prices have hit a high of $5,500 per sq ft (psf) for a penthouse unit, CapitaLand said.

Its other project in Singapore - The Seafront on Meyer in Katong - had 252 units sold out of 327 in all. Prices range from $1,400 psf to $2,000 psf.

The rest of CapitaLand’s other segments also turned in good performances.

In particular, pre-tax earnings for its commercial division jumped 10 times to $1.1 billion in the first half, partly due to asset revaluation and the sale of Temasek Tower.

For its retail unit, pre-tax earnings more than trebled to $144.2 million on the back of higher fee income and contributions from Clarke Quay, and portfolio revaluations.

CapitaLand president and chief executive Liew Mun Leong said yesterday that all of the company’s units have done ‘exceptionally well’ across different countries.

‘More importantly, they have put in place future growth plans,’ he said.

These include ‘having a pipeline of assets to grow their portfolio’, such as for the office and retail segments. CapitaLand also has more than five million sq ft of landbank for residential development in Singapore.

One of the sites to be launched this year is Latitude in Jalan Mutiara, on the former Dragon View Park estate.

Earnings per share for the second quarter jumped nearly six times to 32.6 cents, from 5.7 cents a year earlier.

Group net asset value per share rose to $3.12 as at June 30, from a restated $2.65 as at Dec 31. 
 

Source : Straits Times - 01 Aug 2007

Property market less jittery for now but uncertainty lingers

Property market less jittery for now but uncertainty lingers 
Despite Govt’s reassurance, sector still wary about steps it might take
By Fiona Chan, Property Reporter 
THE Government’s assurances on Monday that it is not inclined to cool the property sector for now has gone some way to soothe market jitters.
But it has not eliminated the uncertainty in the air over eventual government action, say industry watchers.

In fact, some add that the latest comments may be seen as mixed signals that could lead to confusion and volatility in the market.

National Development Minister Mah Bow Tan said on Monday that the Government would not intervene in the sector and would ‘let market forces work’ instead.

‘We will try to avoid interfering…if we can,’ he said.

Some property consultants see this as a guarantee that the Government will not step in to calm the market, at least for the time being.

‘I think we are safe for now until the next set of Urban Redevelopment Authority price statistics comes out in October,’ said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Indeed, property stocks rallied yesterday after Mr Mah’s comments. City Developments gained 60 cents to close at $15.20, while United Overseas Land and GuocoLand were up 10 cents each at $5.40 and $5.15 respectively.

But not all property experts were convinced that the Government’s words should be taken at face value.

‘It did say it would lay off cooling measures for now but I think in reality it is leaving the door open,’ said Citigroup economist Chua Hak Bin. ‘I think the measures aren’t so far away.’

Some analysts noted there had been little warning before the Government raised development charges (DC) two weeks ago, a move that caught the market by surprise and sent investors into a tizzy.

Although the actual impact of the hikes was minimal, the market pulled back as it tried feverishly to guess the Government’s next step.

But one analyst, who declined to be named, suggested that the pullback was actually good for the market.

‘After the DC hikes, the market sat up and started to worry, which generally meant people moderated their expectations,’ he said.

‘That was good because we need moderate, sustainable growth.’

He added that ‘just the perception of potential intervention itself is a very strong soft measure. That’s what we need now’.

Mr Mah also said on Monday that the current tightness of home and office space is a short-term problem, and the Government would not ‘use long-term solutions to try to solve short-term problems’.

But analysts found it difficult to determine what exactly ’short-term’ and ‘long- term’ solutions might translate into.

On the one hand, most short-term steps, such as transitional sites and temporary homes for lease, have already been used and may impact only certain segments of the market, they said.

Yet long-term solutions such as changing the masterplan to intensify land use will have little immediate effect.

The measures that most concern market watchers fall somewhere in between. They include changes to deferred payment schemes for homes and capital gains taxes - both could apply immediately and have long-term consequences, making it hard to decide which category they fall into.

‘When it comes down to it, anything that can be introduced immediately and removed the next day can be seen as a short-term solution,’ noted CIMB-GK economist Song Seng Wun.
 
Source : Straits Times - 01 Aug 2007