Singapore URA releases sales conditions for reserve hotel site at Short Street

Singapore URA releases sales conditions for reserve hotel site at Short Street

By Nicholas Fang,

SINGAPORE: The Urban Redevelopment Authority (URA) has released detailed sales conditions for a reserve site at Short Street for hotel development.

The site, located within the Bras Basah and Bugis district, is one of two new hotel sites scheduled for release for application under the reserve list of the Government Land Sales programme for the second half this year.

Developers interested in purchasing the site can now apply to the URA for it to be put up for tender.

Under the reserve list system, a site on the list would only be put up for tender if a developer’s indicated minimum bid price in his application is acceptable to the government.

The land area of the site is about 0.12 hectare and can generate a maximum permissible gross floor area of 4,077 square metres.

This makes it ideal for boutique hotel development, URA said.

It has a maximum building height of 12 storeys and will be for lease for 99 years.

- CNA/yb

Source : Channel NewsAsia - 26 Aug 2008

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Strong pipeline of projects to help buffer Singapore economy

Strong pipeline of projects to help buffer Singapore economy

By Desmond Wong,

SINGAPORE: Singapore attracted S$12.9 billion of fixed asset investments while business spending hit S$4.8 billion in the first half of this year.

These investments are expected to generate 10,000 skilled jobs, said Trade and Industry Minister Lim Hng Kiang in Parliament on Monday.

He also said Singapore’s flagging manufacturing sector, hit by slowing global demand, can remain competitive in terms of the value generated by its high-end services.

The minister also noted that there is a strong pipeline of projects for the coming years, adding that these will help buffer the economy while the manufacturing sector recovers from declining output.

The pharmaceuticals sector is expected to remain volatile due to the cyclical effects endemic to the business. But Mr Lim was confident that there would be no large-scale job losses.

“In fact, employment went up 144,000 in the first half of this year, of which 22,000 were attributed to the manufacturing sector,” he said.

- CNA/ir

Source : Channel NewsAsia - 26 Aug 2008

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Vendors drop prices of Asia-Pac commercial properties

Vendors drop prices of Asia-Pac commercial properties

These assets have been priced down by 25-100 bps in last few months: DTZ
By UMA SHANKARI

COMMERCIAL properties in the Asia-Pacific region have been priced down by 25-100 basis points in the past three to four months, more in line with investor expectations, property firm DTZ said yesterday.
 
Reality check: The re-pricing of commercial assets has been greater in some markets, such as Tokyo (above) and Aussie cities 
‘The number is an average figure - it varies from market to market,’ said John Stinson, DTZ’s regional director for sales and investments and capital markets for Asia-Pacific.

Mr Stinson, who was speaking to reporters at a seminar, said the re-pricing has been greater in some markets, such as Tokyo and Australian cities.

For Singapore, it is hard to pin a number to the drop in the asking prices for commercial properties, mainly because of a low number of transactions, he added. But some sellers have marked down their commercial assets about 10 per cent, said Shaun Poh, DTZ’s senior director for investment advisory services and auction in Singapore.

Mr Stinson identified Singapore as one of the ‘gateway cities’ that international investors will look at when increasing their exposure in the Asia-Pacific area.

‘In the next two-three quarters, core (prime) products in gateway cities - Hong Kong, Singapore, Tokyo and Sydney - will see some interest,’ Mr Stinson said.

In Singapore, the opportunities for investors are increasing as vendors price their assets lower, he noted.

DTZ’s executive director and regional head for consulting and research Ong Choon Fah said: ‘Owners are a bit more realistic now than they were previously.’

Right now, there are still more sellers than buyers in Singapore, according to a recent survey of investors by DTZ. More than 10 per cent of investors had ’selling priorities’ while less than 5 per cent had ‘buying priorities’, the survey found.

‘Buyers are sitting on their hands, waiting for the markets to adjust,’ said David Green-Morgan, DTZ’s Asia-Pacific research director.

DTZ’s research also showed that across the Asia-Pacific region, investors with ‘buying priorities’ outnumber those with ’selling priorities’ when it comes to industrial and hotel properties.

Mr Green-Morgan noted that investments into Singapore and the region are likely to continue to be driven by private equity.

In July, DTZ predicted that the value of investment transactions worldwide will fall to US$500 billion this year, from a high of US$730 billion in 2007 and US$600 billion in 2006.

The decline assumes that after a weak first half in 2008, there will be a relatively modest pick-up, likely to be driven mainly by the Asia-Pacific market.

Source : Business Times - 26 Aug 2008

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Singapore Eng Wah sells 4 properties to founder, MD for $100m

Singapore Eng Wah sells 4 properties to founder, MD for $100m

Sale of assets will facilitate cinema operator’s reverse takeover by Transcu
By CONRAD TAN
ENG Wah Organization has agreed to sell four of its properties to its founder and controlling shareholder Goh Eng Wah, and his daughter, managing director Goh Min Yen, for $99.48 million.
 
What lies ahead? The property sale to EW.G Pte Ltd, an investment vehicle owned in equal parts by Mr Goh (above) and his daughter Ms Goh, is subject to the approval of Eng Wah’s shareholders at a meeting on Sept 10 
The cinema operator and film distributor said yesterday that a search by property consultants Jones Lang Lasalle for other buyers had been unsuccessful, likely due to a depressed market environment.

The sale of the four properties to EW.G Pte Ltd, an investment vehicle owned in equal parts by Mr Goh and Ms Goh, will facilitate Eng Wah’s reverse takeover by Singapore-based Japanese biomedical firm Transcu first announced last year, Eng Wah said yesterday.

Disposing of the assets is a key condition for the reverse takeover by Transcu. ‘If the properties are not sold, the reverse takeover will not take place,’ said Eng Wah. And if the reverse takeover falls through, EW.G will not buy the properties, it added.

The property sale is subject to the approval of Eng Wah’s shareholders at a meeting on Sept 10. Both Mr Goh - who has a deemed interest in 70 per cent of Eng Wah’s shares and is also executive chairman of the company - and Ms Goh will abstain from voting on the transaction. That means Eng Wah’s minority shareholders will have the final say on whether the sale takes place.

The four properties left in the portfolio that Eng Wah put up for sale last November are the Jubilee Entertainment Complex in Ang Mo Kio, Toa Payoh Entertainment Centre, Empress Theatre in Clementi and the 16th floor of Orchard Towers. A fifth property, the Mandarin Theatre at Kallang Bahru, was sold in June for $13 million to an outside party.

The search for buyers has proved controversial. Last week, the Securities Investors Association of Singapore (SIAS), which represents retail investors here, called on Eng Wah to be more transparent in the sale of its properties, asking it to ‘ensure that the sale price is maximised’.

SIAS president David Gerald said at the time: ‘In our view, the company must ensure that its assets are sold at a fair price and not at a sub-optimal price to the controlling shareholder.’

Yesterday, Eng Wah was keen to stress that the proposed sale price of the properties to EW.G was based on the value of the assets determined by property consultants Chesterton International and CB Richard Ellis.

Eng Wah said Jones Lang Lasalle’s efforts to sell the properties since it was appointed marketing agent last November had resulted in several offers, but only one property - the Mandarin Theatre - was sold. This was ‘primarily due to what Jones Lang Lasalle believes to be negative market sentiment and a depressed credit environment’, said Eng Wah.

In a separate announcement, the company said independent director Foo Kok Swee has retired. Eng Wah has appointed Christopher Martin George Brown, chief executive of private real estate fund Develica Asia-Pacific and former executive chairman of Jones Lang LaSalle Asia-Pacific, as a new independent director.

Eng Wah has recently disposed of other assets, including the former Crazy Horse cabaret premises and assets, which it sold to club operator St James for $2.75 million earlier this month, and a condominium unit in Kuala Lumpur, which was bought by two of Mr Goh’s nephews for RM525,000 (S$220,271) last week.
Source : Business Times - 26 Aug 2008

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Singapore Property subsales - who wins and who loses

Singapore Property subsales - who wins and who loses

For those who sold in the first seven months of this year, close to 97% came out ahead

By KALPANA RASHIWALA

(SINGAPORE) Sentiment in the Singapore property market is now far from bullish, but data shows that nearly 97 per cent of those who have sold private apartments and condos in the subsale market in the first seven months of this year have made profits.

Only 3 per cent incurred losses, an analysis of caveats by Savills Singapore shows.

For those who turned a profit, the average gain per unit came to $417,563 or 36.5 per cent. Generally, the longer the holding period, the bigger the gain.

Subsale deals are seen as a proxy for the level of speculative activity in the market. On average, those who had bought their units in 2004 and sold them in the subsale market this year made the biggest gain, averaging nearly $692,000, or an 84 per cent profit. They are followed by those who had picked up units in 2005, who recorded an average gain of about $645,200 or 62 per cent from selling their homes in the subsale market this year.

In absolute dollar terms, the smallest average gain of around $175,600 was by those who bought their units this year, reflecting a holding period of just a few months.

The profit or loss in the calculation is the difference between sale and purchase prices and does not take into account stamp duty and other expenses.

‘The fact is that longer holding periods allow for larger gains, shorter holding periods for smaller gains. This is consistent with the fact that real estate is a long-term investment. Investors with short exit time frames should look for alternative instruments,’ said Savills Singapore’s director of marketing and business development Ku Swee Yong.

Savills’ analysis was based on 1,040 caveats for subsale transactions from Jan 1 to July 31 this year captured by Urban Redevelopment Authority’s Realis system as at Aug 19. Of these, 821 had previous caveat records dating back to 2003 and Savills compared the latest subsale price of each unit with the earlier price paid by the seller to work out the profit or loss.

Citylights, Varsity Park Condo and The Sail @ Marina Bay had the most subsales in the first seven months of this year - 63, 47 and 45 respectively. The Sea View and City Square Residences had 30-plus subsales each. Park Infinia at Wee Nam, The Calrose, Icon and The Raintree each had 20-odd subsales.

Subsales, often seen as a gauge of speculative activity, refer to secondary market deals in projects that have yet to receive their Certificates of Statutory Completion. This may be anywhere from three to 12 months after the project receives its Temporary Occupation Permit (TOP).

Market watchers note that many of the projects topping the subsale chart this year had either received TOP or are close to receiving TOP. Some of the units that changed hands in the subsale market could have been purchased on deferred payment schemes from developers in the past. Typically, such schemes run out when the projects get their TOP and that is when buyers have to pay the chunk of the purchase price to developers.

The deferred payment scheme was scrapped in October last year to discourage speculative buying.

Of the 25 loss cases for subsale deals done this year, sellers of about half the units had themselves bought theirs in the subsale market, while the other half had made direct purchases from developers. For instance, the four units sold in the subsale market at a loss this year at City Square Residences had all been picked up in the subsale market last year.Looking ahead, Savills’ Mr Ku expects subsales to maintain at current levels, that is, about 150 units a month. Those who want to sell now will have to expect lower profits, he said.

‘Whether in good or bad times, there will still be subsale losses from people being forced to make untimely sales due to corporate liquidation, bankruptcy, divorce,’ Mr Ku added.

In cases where investors are sitting on potential losses, Jones Lang LaSalle Singapore’s head of residential, Jacqueline Wong, said: ‘My advice to my clients, who are usually foreigners, have bought in prime districts and are well off, would be, ‘If you can, hang on. It will be just a temporary paper loss. Singapore has a lot of things going for it in the mid term’.’

Another seasoned property consultant said: ‘A lot will depend on your entry price vis-a-vis other owners, especially in a big development. If a lot of them bought at say $1,000 psf from the developer and you got your unit later for $1,800 psf in the subsale market from an earlier buyer, you’re in a disadvantageous position. If the market dives, the earlier buyers could offload their units at much lower prices than your cost price.

‘On the other hand, everybody may be in the same boat. Say, if you’ve bought into a small project of 30 units and everyone’s bought at about the same price, and if there’s not much competition from surrounding projects, chances of prices going down substantially may be lower because everyone’s locked in at the same threshold.’

Source : Business Times - 26 Aug 2008

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Singapore Subsale property gains top out at $4.2m

Singapore Subsale property gains top out at $4.2m

But Cosmopolitan penthouse seller nurses $463,400 loss

By KALPANA RASHIWALA

(SINGAPORE) The biggest profit in absolute dollar terms from a subsale deal in the first seven months of this year was $4.2 million, reaped for a 22nd-floor unit at The Grange.

It was offloaded in the subsale market in April for $11 million, compared with a $6.8 million purchase price in September 2005 paid to the developer.

In fact, on an average basis too, The Grange has seen the most profitable subsale deals this year, with the 13 units sold in the project between Jan 1 and July 31 generating an average profit of slightly over $2 million per unit.

In percentage terms, the average subsale gain at The Grange worked out to 52 per cent, according to Savills Singapore, which analysed caveats for subsale transactions from Jan 1 to July 31 captured by the Urban Redevelopment Authority’s Realis system as at Aug 19.

The biggest subsale loss was $463,400 for a penthouse unit at The Cosmopolitan at Kim Seng Road. It was sold in April for about $2.3 million, against the $2.8 million purchase price paid in July last year.

Other projects with sub sale losses included two units at Soleil @ Sinaran, four at City Square Residences, three at Citylights and one each at One St Michael’s, Park Infinia at Wee Nam and Marina Bay Residences.

Percentage-wise, some of the biggest subsale profits were recorded for The Sail @ Marina Bay. The seller of a unit on the 49th floor reaped a 178 per cent return when he disposed of it in May for $1.43 million, compared with the $510,400 he paid to buy the apartment from the developer in late 2004.

Owners of 14 other units at The Sail also doubled their money or more, when they sold their properties in the subsale market this year. However, there was also a unit in the development that chalked up a $63,000 subsale loss.

Among prime district projects, profitable sub- sales included a 17th floor unit at St Regis Residences, which yielded a handsome $2.78 million return for its seller in June, after a two- year holding period. A sub- sale deal at The Orchard Residences also generated a $1.44 million profit.

Over in the waterfront housing district of Sentosa Cove, four subsales of The Azure condo resulted in gains of at least $1 million per unit. One unit, in fact, generated a $3 million profit for a two-year-plus holding period.

However, the owner of another unit in the 99-year leasehold condo incurred a $106,000 loss when he sold his unit in the subsale market in April for about $3.4 million after a 10- month holding period.

Analysts note that, given the current weaker market sentiment, profits from subsales can be expected to shrink in the days ahead, or there may be even more loss cases, particularly for those who bought at the peak of the market in the first half of last year.

Savills Singapore director of marketing and business development Ku Swee Yong suggests that there is no reason for panic selling if investors consider that interest rates are still very low.

‘So owners who have not lost their jobs can still afford to hold on to their mortgages,’ he said.

Also demand for rental properties should increase by early 2009 as the Marina Bay Sands resort boosts its employment drive ahead of its planned opening late next year.

A seasoned developer highlighted the fact that subsale transactions, whether at a gain or loss, are still taking place, is a good thing.

‘There’s diversity of different sellers, with varying financial strengths and abilities to hold, and similarly, there’s a diversity of buyers. There’s still liquidity out there. That’s a good thing.

‘If we didn’t have this diversity of behaviour and ability to buy, sell or hold, we’d have a very uni-dimensional and monolithic market.

‘That wouldn’t be a good thing because, then, you may have everybody wanting to sell at the same time (and nobody wanting to buy). Then the market would grind to a halt,’ he said.

Source : Business Times - 26 Aug 2008

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Singapore Property subsales - who wins and who loses

Singapore Property subsales - who wins and who loses

For those who sold in the first seven months of this year, close to 97% came out ahead

By KALPANA RASHIWALA

(SINGAPORE) Sentiment in the Singapore property market is now far from bullish, but data shows that nearly 97 per cent of those who have sold private apartments and condos in the subsale market in the first seven months of this year have made profits.

Only 3 per cent incurred losses, an analysis of caveats by Savills Singapore shows.

For those who turned a profit, the average gain per unit came to $417,563 or 36.5 per cent. Generally, the longer the holding period, the bigger the gain.

Subsale deals are seen as a proxy for the level of speculative activity in the market. On average, those who had bought their units in 2004 and sold them in the subsale market this year made the biggest gain, averaging nearly $692,000, or an 84 per cent profit. They are followed by those who had picked up units in 2005, who recorded an average gain of about $645,200 or 62 per cent from selling their homes in the subsale market this year.

In absolute dollar terms, the smallest average gain of around $175,600 was by those who bought their units this year, reflecting a holding period of just a few months.

The profit or loss in the calculation is the difference between sale and purchase prices and does not take into account stamp duty and other expenses.

‘The fact is that longer holding periods allow for larger gains, shorter holding periods for smaller gains. This is consistent with the fact that real estate is a long-term investment. Investors with short exit time frames should look for alternative instruments,’ said Savills Singapore’s director of marketing and business development Ku Swee Yong.

Savills’ analysis was based on 1,040 caveats for subsale transactions from Jan 1 to July 31 this year captured by Urban Redevelopment Authority’s Realis system as at Aug 19. Of these, 821 had previous caveat records dating back to 2003 and Savills compared the latest subsale price of each unit with the earlier price paid by the seller to work out the profit or loss.

Citylights, Varsity Park Condo and The Sail @ Marina Bay had the most subsales in the first seven months of this year - 63, 47 and 45 respectively. The Sea View and City Square Residences had 30-plus subsales each. Park Infinia at Wee Nam, The Calrose, Icon and The Raintree each had 20-odd subsales.

Subsales, often seen as a gauge of speculative activity, refer to secondary market deals in projects that have yet to receive their Certificates of Statutory Completion. This may be anywhere from three to 12 months after the project receives its Temporary Occupation Permit (TOP).

Market watchers note that many of the projects topping the subsale chart this year had either received TOP or are close to receiving TOP. Some of the units that changed hands in the subsale market could have been purchased on deferred payment schemes from developers in the past. Typically, such schemes run out when the projects get their TOP and that is when buyers have to pay the chunk of the purchase price to developers.

The deferred payment scheme was scrapped in October last year to discourage speculative buying.

Of the 25 loss cases for subsale deals done this year, sellers of about half the units had themselves bought theirs in the subsale market, while the other half had made direct purchases from developers. For instance, the four units sold in the subsale market at a loss this year at City Square Residences had all been picked up in the subsale market last year.Looking ahead, Savills’ Mr Ku expects subsales to maintain at current levels, that is, about 150 units a month. Those who want to sell now will have to expect lower profits, he said.

‘Whether in good or bad times, there will still be subsale losses from people being forced to make untimely sales due to corporate liquidation, bankruptcy, divorce,’ Mr Ku added.

In cases where investors are sitting on potential losses, Jones Lang LaSalle Singapore’s head of residential, Jacqueline Wong, said: ‘My advice to my clients, who are usually foreigners, have bought in prime districts and are well off, would be, ‘If you can, hang on. It will be just a temporary paper loss. Singapore has a lot of things going for it in the mid term’.’

Another seasoned property consultant said: ‘A lot will depend on your entry price vis-a-vis other owners, especially in a big development. If a lot of them bought at say $1,000 psf from the developer and you got your unit later for $1,800 psf in the subsale market from an earlier buyer, you’re in a disadvantageous position. If the market dives, the earlier buyers could offload their units at much lower prices than your cost price.

‘On the other hand, everybody may be in the same boat. Say, if you’ve bought into a small project of 30 units and everyone’s bought at about the same price, and if there’s not much competition from surrounding projects, chances of prices going down substantially may be lower because everyone’s locked in at the same threshold.’

Source : Business Times - 26 Aug 2008

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Lian Beng wins coveted Singapore Ritz-Carlton Residences job

Lian Beng wins coveted Singapore Ritz-Carlton Residences job

By Jessica Cheam

The Ritz-Carlton Residences has already seen some units sold at more than $5,000 psf. — PHOTO: HAYDEN PROPERTIES

HOME-GROWN contractor Lian Beng Group has clinched the contract to build Singapore’s most prestigious brand-name residences.
The mainboard-listed firm yesterday announced it has won a $99.5 million award to build the Ritz-Carlton Residences - the five-star hotel brand’s only such project in Asia.

The award marks Lian Beng’s entry into the high-end, luxury property market. The firm has set up a new unit, Millennium International Builders, which will build the project and focus on expanding into the luxury property market.

Lian Beng’s managing director, Mr Ong Pang Aik, told The Straits Times there is a perception that ultra-luxury construction projects go only to foreign companies.

‘So we’re proud that a local firm has won this award. It’s the first of many to come for Millennium,’ he said.

There was strong competition for the tender, with many foreign contenders, said Mr Ong.

‘But we have 30 years of experience, and in recent years handled many technically challenging projects, and I believe this - and our attractive tender price - gave us an edge,’ he added.

All the 56 units at the Ritz-Carlton Residences in Cairnhill will come with designer fittings and appliances.

Mr Ong said this is an opportunity for Lian Beng to expand its foothold in the construction of niche projects which require specialised technical knowledge in dealing with challenging design features.

Among the features of the property, located on the site of the former Horizon View, are a lap pool, a library, a wine cellar, a kitchen and a 24-hour concierge service managed by the Ritz-Carlton.

The 32-storey project, which offers three- and four-bedroom units and two penthouses, has already sold some units - at more than $5,000 psf last year.

Lian Beng’s latest foray is a marked contrast from the basic HDB flats it started building when it was set up in 1973.

Although it still builds HDB flats, Lian Beng has moved on to private mass-market condos and commercial projects.

It has also moved selectively into property development, such as Kovan Residences, of which it has a 19 per cent stake.

This latest contract will boost Lian Beng’s order book to about $770 million.

The firm recently reported a tripling of its full-year net profit to $11.9 million, up from $3.5 million a year ago, on the back of the recent building boom.

Mr Ong said yesterday that surging construction costs will not be a factor in building the Residences as the firm has already ‘locked in’ the supply of materials needed.

The Ritz-Carlton project is a partnership between Ritz-Carlton and Hayden Properties, which is a 50-50 joint venture between real estate firm KOP Capital and Emirates Investment Group unit Emirates Tarian Capital.

Hayden’s group chief executive, Ms Ong Chih Ching, said yesterday the new partnership is ‘a reflection of our belief in working with homegrown companies’.

Lian Beng said it will begin construction this quarter. The project is due for completion by the end of 2010.

Source : Straits Times - 26 Aug 2008

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Sharp fall in Singapore property prices unlikely

Sharp fall in Singapore property prices unlikely 

But there are more people keen to sell than buy now, says DTZ study 

By Fiona Chan, Property Reporter 

SINGAPORE’S property market presents plenty of buying opportunities for institutional investors now that it has cooled somewhat, according to a study by property firm DTZ Debenham Tie Leung.
But buyers waiting for a major price correction will be disappointed.
While the growth in prices may slow, there is unlikely to be a significant fall in property prices here, said Mr John Stinson, DTZ’s regional director of sales and investments for Asia-Pacific’s capital markets.

‘Singapore hasn’t had a long boom, unlike some other countries… I don’t think there will be a repricing,’ he told reporters yesterday at a briefing on Money Into Property, DTZ’s latest research report about investing in Asia-Pacific property.

The report is directed at institutional property investors, who can have a significant impact on the property market, given that they buy and sell large numbers of properties.

Mr Stinson also said the Government’s measures to boost Singapore’s population could prop up demand for property and support prices.

So far, no recent transactions by institutional investors have reflected a repricing in the market, added Mr Shaun Poh, DTZ’s senior director for investment advisory services and auctions.

‘Sellers here have become more realistic and lowered their expectations,’ he added.

But because their expectations were so high previously, this has not necessarily led to lower transacted prices, he said.

What it has actually resulted in is more investors coming back to look at properties that may have previously been overpriced but are now open to negotiation, Mr Poh said.

Currently, there are many more people interested in selling Singapore properties than in buying them, DTZ’s study showed.

It polled investors and found that 12 per cent of them intend to sell their properties in Singapore soon, while fewer than 5 per cent plan to buy properties here.

This is creating a situation quite different from the one last year, when there was no lack of demand for properties but very few available for sale.

Now, growth funds and some opportunistic investors are pulling out of the plateauing Singapore market, at a time when owners - including banks, foreign firms and opportunistic funds - are becoming more willing to sell.

‘There is an increasing number of buying opportunities in gateway markets such as Singapore, Hong Kong and Tokyo,’ said Mr Stinson.

‘Six months ago, it wasn’t about whether you wanted to buy property, but whether you were lucky enough to win the race.’

Interest in Singapore properties remains high, however, especially in the logistics and industrial market. This sector still offers a ‘decent return’ as growth has not been as rapid as in other sectors, said Mr Poh.

Commercial assets in Singapore are also in demand to some extent, but the residential sector is likely to turn in a weak performance in the investment market this year, DTZ said in its report.

‘Given the cautious economic outlook, investor focus for the rest of the year would be on occupier fundamentals in the commercial and industrial sectors,’ it added.

These fundamentals include, for example, the quality of the buildings and their tenants.

While repricing is not an apparent risk in Singapore’s property market, the Asia-Pacific region is facing an average repricing of 25 to 100 basis points, or 0.25 per cent to 1 per cent, Mr Stinson said.

The markets that will be the worst hit include Japan, Australia and New Zealand.

 
Source : Straits Times - 26 Aug 2008

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Eng Wah to sell theatre assets - Singapore

Eng Wah to sell theatre assets - Singapore 

Founding Goh family agrees to pay $99.5m for the properties 

By Lee Su Shyan, Assistant Money Editor 
  
Eng Wah, a household name with movie goers, will venture into biotechnology. Last year’s pharma deal left investors hopeful that it had secured a new lease of life. — ST PHOTO: KEVIN LEONG

CINEMA operator Eng Wah Organization is selling its cinema-related properties for $99.5 million to the founding Goh family - whose history of showing movies here dates back to the 1940s.
The sale is part of a $675 million deal that would radically transform mainboard-listed Eng Wah from a cinema company into a pharmaceuticals player.

This is being done by a reverse takeover of Eng Wah by Japanese biotech firm Transcutaneous Technologies inked in May last year - and part of that deal requires the sale of the cinema assets.

Yesterday, Eng Wah said it was selling Empress Theatre, Toa Payoh Entertainment Centre, Jubilee Entertainment Complex and the 16th floor at Orchard Towers for $99.5 million. The buyer is a company owned by Eng Wah founder Goh Eng Wah and his daughter, Eng Wah’s managing director Goh Min Yen.

A separate film distribution business owned by Eng Wah remains unsold.

Investors had initially welcomed the reverse takeover, involving a fresh, exciting business, as proceeds from the asset sale will be distributed to minority shareholders. Kim Eng Research has put a target price of $1.19 on the shares.

But investors have become increasingly concerned at the time that was being taken by Eng Wah to sell the properties.

Last Friday, the Securities Investors Association of Singapore raised concerns over a potential conflict of interest as the Goh family, the controlling shareholder, was said to be keen on the assets.

To this, Ms Goh told The Straits Times yesterday: ‘It’s up to the minority shareholders to vote as we (the family) are not voting. All these measures are safeguarding their interests.’

‘Our approach has been very transparent. We had engaged international firm Jones Lang Lasalle (JLL) to handle the sale. Some potential buyers couldn’t get financing because of the credit crunch. We are sticking our necks out and buying the properties at valuation and these were prices as of June,’ she added.

Ms Goh said: ‘Shareholders need to look at the big picture. We are doing the reverse takeover to unlock the value of the shares. One of the conditions is that we need to dispose of the properties and the cinema business. If we don’t do that, the deal cannot go through.’

Mr Goh, 85, a well known name in film circles, started showing movies at the now-defunct Gay World in Geylang back in the 1940s. Eng Wah was listed on the stock exchange in 1994.

In recent years the cinema industry has become tougher. Eng Wah still screens films at its own Toa Payoh and Jubilee cineplexes and at rented premises at Suntec, West Mall and Sun Plaza.

Last year, Eng Wah’s share price was languishing at about 35 cents.

This was not helped by Eng Wah’s ill-fated $7 million venture of bringing the Paris-based Crazy Horse risque stage show franchise to Clarke Quay.

However, last year’s pharmaceutical deal left investors hopeful that Eng Wah had secured a new lease of life.

Eng Wah would issue new shares to the Japanese shareholders who would pump the business into Eng Wah. The business involves ‘transdermal drug delivery’ - where drugs are administered via a skin patch instead of painful injections.

Once the deal is sealed, the Gohs will own only about 5 per cent of Eng Wah.

The firm blamed poor market sentiment for the delayed asset sales.JLL was appointed marketing agent last November for all properties. It approached global and local buyers but it seems only a buyer could be found for the Mandarin Theatre at $13 million. The poor response was due to what JLL ‘believes to be negative market sentiment and a depressed credit environment’.

When asked about the film business, Ms Goh said ‘the family has expressed interest in buying the movie business’.

Eng Wah will get a boost to its earnings per share of about 52.18 cents from this sale. Earlier this month, Eng Wah shareholders approved a capital distribution of 18.3 cents a share. Yesterday, the counter rose one cent to 95 cents.

Source : Straits Times - 26 Aug 2008

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