Marina Bay Sands on target to top out hotel towers next month

Marina Bay Sands on target to top out hotel towers next month

By May Wong,

SINGAPORE : Marina Bay Sands integrated resort has said it is on target to top out its hotel towers early next month.

The company said the towers have passed level 50, just five floors away from the peak of 55 storeys.

Las Vega Sands’ Chairman Sheldon Adelson will attend the topping out ceremony.

The integrated resort will feature facilities like casino, convention and exhibition halls, a 2,600-room luxury hotel and an ArtScience Museum.

Marina Bay Sands said that once the development’s three hotel towers reach 55 floors, it will begin to lift and fit together the one-hectare Sands SkyPark.

SkyPark, a rooftop garden 200 metres from the ground, will offer a public observation deck with panoramic views of the city.

The US$5.4 billion Marina Bay Sands is scheduled to open by year-end.

General Manager and Vice President of Singapore Development, Marina Bay Sands, George Tanasijevich, said: “Marina Bay Sands will be a magnificent destination.

“Topping the hotel towers is a big step, but it is just one of the significant achievements for us in the next few months. We are putting the roof on the Expo & Convention Centre and we are lining up luxury brands and cutting-edge designers for our retail stores.” - CNA/ms

Source : Channel NewsAsia - 10 June 2009

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URA launches site in Woodlands Industrial Park for sale

URA launches site in Woodlands Industrial Park for sale

By May Wong

SINGAPORE : The Urban Redevelopment Authority (URA) has launched a site at Woodlands Industrial Park and Woodlands Avenue 4 for sale by public tender.

It said a developer has committed to bidding at least S$12.5 million for the land parcel.

The parcel has a site area of about 2.5 hectares and a gross plot ratio of 2.5 with a lease period of 60 years.

It can be developed for a range of clean, light and general industrial uses.

The tender is expected in about two weeks and will close on July 7.

URA is offering the site for sale through the Reserve List of the government land sales programme.

Under the system, a site is put up for sale if a developer agrees to bid a minimum price acceptable to the government. - CNA/ms

Source : Channel NewsAsia - 10 June 2009

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South Beach project back on track after securing S$1.2b in fresh funds

South Beach project back on track after securing S$1.2b in fresh funds
By Ng Baoying,

SINGAPORE : The iconic South Beach development project along Beach Road is back on track, after a City Developments-led consortium secured S$1.2 billion in new funds.

The South Beach Consortium will get money in the form of an S$800 million bank loan, and S$400 million in secured convertible notes.

The South Beach project came about after a hot contest for a land parcel at Beach Road.

The South Beach consortium, led by City Developments, eventually trounced the competition with its bid of S$1.68 billion for the 3.5-hectare site.

The new development is estimated to cost around S$2.5 billion. It will include two towers of over 40 storeys each, as well as some conserved military buildings of the old Beach Road Camp which would have to be restored.

The plan is to have premium office space, two hotels, shops and residential units.

But last November, the consortium announced that it was delaying the project due to the economic turmoil and high construction costs. It said it would wait until building costs fell to what it felt were “reasonable levels”.

Some analysts saw it as an inability to raise sufficient funds for the massive project due to the global credit crunch late last year. But the crunch appears to be over.

The consortium has now secured a two-year loan of S$800 million through Singapore’s three local banks, as well as HSBC and Sumitomo Mitsui Banking Corporation.

As for the S$400 million secured convertible notes, City Developments will take up S$195 million, while the rest will be subscribed by a new partner, Hong Kong-based Nan Fung Group, one of the region’s leading property developers.

The funds will be used to refinance a S$1.2 billion bridging loan facility maturing this month.

The South Beach consortium has up to 2016 to complete the development under terms signed with the government. - CNA/ms

Source : Channel NewsAsia - 10 June 2009

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10 US banks get nod to repay govt funding

10 US banks get nod to repay govt funding

WASHINGTON: - Ten of the largest United States banks have been approved to repay the government a total of US$68 billion (S$99 billion) for capital injections made to stabilise the financial system, the Treasury said yesterday.
The Treasury, without naming any specific banks, made the announcement a day after the Federal Reserve said the 10 banks ordered to raise new capital following stress tests have developed sufficient programmes to shore up their finances.

‘Following consultation with the primary banking supervisor of each institution, Treasury has notified the institutions that they are now eligible to complete the repayment process,’ a Treasury statement said. ‘If these firms choose to do so, Treasury will receive US$68 billion in repayment proceeds.’

Combined with repayments from smaller banks, the Treasury will have received some US$70 billion in repayments under the Capital Purchase Programme, formerly known as the Troubled Asset Relief Programme.

‘These repayments are an encouraging sign of financial repair, but we still have work to do,’ said Treasury Secretary Timothy Geithner.

Some banks are hoping to repay the government by the end of this month.

A number of major banks - including Goldman Sachs, Morgan Stanley and Bank of America - have said they would seek early reimbursement of the capital aid injections that began last year to shore up a financial system reeling from a housing meltdown and economic slump.

The Fed had said the banks must demonstrate an ability to access the long-term debt markets without government guarantees and must successfully demonstrate access to public equity markets. Some banks had argued that the capital programme was forced on them, had imposed conditions like limits on executive compensation, and raised fears about government meddling in bank operations.

These stress tests, of whether 19 big banks could survive a further slump in the economy, may have relied on too rosy a scenario, the Congressional Oversight Panel for the government’s US$700 billion financial rescue effort said yesterday.

AGENCE FRANCE-PRESSE, REUTERS

Source : Straits Times - 10 June 2009

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Marina IR’s progress on track

Marina IR’s progress on track

CONSTRUCTION of the hotel towers at the Marina Bay Sands integrated resort (IR) is on target for completion by next month.
The three hotel towers have been built past level 50 - just five floors away from the 55-storey peak for hotel rooms, Marina Bay Sands announced in a statement yesterday.

The developer said it will hold an official topping-out ceremony early next month, presided over by Las Vegas Sands Corp chairman Sheldon Adelson.

The towers will contain around 2,600 luxury hotel rooms that are simultaneously being fitted out.

The US$5.4 billion (S$7.9 billion) IR will open by the end of the year, though likely not fully.

When completely open, it will comprise a casino, hotel rooms, convention and retail space, as well as various entertainment facilities.

Once the hotel towers reach 55 floors, Marina Bay Sands can start construction of the 56th floor and the 1ha Sands SkyPark on the 57th floor.

The SkyPark, which will stand some 200m from the ground, will have a public observation deck in the world’s largest building cantilever.

Mr George Tanasijevich, general manager and vice-president of Singapore development at Marina Bay Sands, said the topping out will be one of many significant achievements over the next few months.

‘We are putting the roof on the Expo and Convention Centre and are lining up luxury brands and cutting-edge designers for our retail stores.’

Last year, there were concerns that the project would not progress smoothly given the credit crunch. But Las Vegas Sands has assured investors that the Singapore IR is its top priority.

Source : Straits Times - 10 June 2009

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Rent my office: Cash perks thrown in

Rent my office: Cash perks thrown in

Landlords resorting to ‘golden hellos’ to draw tenants in quiet market

By Joyce Teo

With companies putting expansion plans on hold, demand for office space is seen as still weak.

COMPETITION for tenants is so intense in the quiet office sector that landlords are resorting to offering cash or capital contributions to attract new business.
Also known as capital expenditure, or capex subsidies, these ‘golden hellos’ are said to range from half a million dollars to a couple of million dollars and are often used for the fitting out of offices, according to consultants.

A few deals in the works involve one-off lump-sum cash incentives - largely unheard of here - although most landlords prefer to spread the capital contributions over the lease period.

‘It shows that there’s a certain amount of pressure in terms of occupancy. This hasn’t been done since 2003,’ said Jones Lang LaSalle’s head of markets, Singapore, Mr Chris Archibold.

‘The biggest problem today is the lack of cash outlay to fund the fit-out process in a relocation,’ said Cushman & Wakefield managing director Donald Han.

Mr Han was recently involved in a 20,000 sq ft anchor tenant lease where the landlord agreed to a fit-out loan to be paid back over the period of the lease.

Fit-out costs can range from about $35 per sq ft (psf) to more than $100 psf.

Capital contributions seem to be more the exception than the rule, with landlords of mostly new space offering them, and then only to certain tenants.

‘The tenants have to be big enough to anchor a building. It’s got to be a good size to get a leasing campaign started,’ said Mr Archibold.

‘These would be Fortune 500 companies, a recognisable brand name.’

Five to six deals involving capital contributions are being negotiated, he said.

CBRE executive director (office services) Moray Armstrong said there had been a few deals with capital contributions during past downturns.

And, in this cycle, it is possible that capital contributions - a common practice in the United States - may be more widespread and some of the funds might be at the forefront of this, he said.

Landlords of new developments have it tougher, given that they have to offer more than just competitive rents to attract tenants who may prefer to stay put.

About 2.5 million sq ft of space will come to the market this year alone, up from 1.4 million sq ft last year.

Straits Trading Company is offering capex subsidies for its Straits Trading Building that will be ready in November and is now one-third pre-committed.

Another new building, Mapletree Anson, is close to securing 35 per cent in pre-committed leases.

A Mapletree spokesman said this was ‘an encouraging take-up rate, given current market conditions, as we understand that new buildings and developments in the vicinity have not secured any pre-commitments to date’.

Indeed, there have been no major leasing deals over the past nine months, against three to four major deals per year during the recent boom, said Jones Lang LaSalle.

But office inquiries have risen recently as landlords are now more competitive, said Mr Douglas Dunkerley of Corporate Locations.

Office rents plunged in the first quarter by up to nearly 30 per cent for Grade A Raffles Place space. Jones Lang LaSalle’s first quarter rent is at $10.75 psf.

Office rents are expected to fall less sharply from now on, with consultants estimating single-digit second-quarter fall for Grade A Raffles Place space.

Nevertheless, with companies putting expansion on hold, demand for office space is still weak. By next year, office vacancy levels are expected to rise to the low teens - a level seen in previous slumps, consultants said.

‘The MNCs that we’ve talked to recently have seen demand levels for their products fall to something that looks like 2003 to 2005 levels,’ said Singapore International Chamber of Commerce chief executive Phillip Overmyer.

‘Yet cost levels - office rentals, operating costs - have only decreased slightly from record levels in 2008.’

Mr Overmyer said he feared this might mean some of the larger companies moving out of Singapore to cheaper locations.

Source : Straits Times - 10 June 2009

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Obama pledges to boost stimulus, save 600,000 jobs

Obama pledges to boost stimulus, save 600,000 jobs

US leader faces souring public opinion over economy

(WASHINGTON) President Barack Obama has promised to ramp up spending from the US$787 billion stimulus fund and create or save 600,000 jobs by the end of the summer. It’s an effort to shift the focus away from persistently rising unemployment and to beat back criticism that the money isn’t flowing fast enough.

‘We’ve done more than ever, faster than ever, more responsibly than ever, to get the gears of the economy moving again. I’m not satisfied. We’ve got more work to do.’

- President Obama

Those promises aren’t new.

Stimulus spending had always been expected to rise sharply this summer, and the White House has been predicting that 600,000 job total for about a month.

Mr Obama faces souring public opinion over his handling of the economy, which has shed 1.6 million jobs since the stimulus was signed in February. That total has far overshadowed White House announcements estimating that the effort has saved 150,000 jobs, a figure that is so murky it can never be verified.

Monday’s announcement sought to reposition Mr Obama in the driver’s seat of America’s recovery. It portrayed the president as revving up the engine of the stimulus, but it was something federal agencies were already planning to do anyway.

Mr Obama spoke about ‘modest progress’ in the economy, citing fewer jobs lost last month than expected. He said he hopes to build on that in the months ahead with stimulus programmes.

‘We’ve done more than ever, faster than ever, more responsibly than ever, to get the gears of the economy moving again,’ he said. But he acknowledged, ‘I’m not satisfied. We’ve got more work to do.’

And for the first time, the administration admitted the economic forecasts it used to sell the stimulus were overly optimistic.

‘At the time, our forecast seemed reasonable,’ said vice-president Joe Biden’s top economic adviser, Jared Bernstein, explaining that the White House underestimated the scope of the recession. ‘Now, looking back, it was clearly too optimistic.’

By this point, according to earlier White House economic models, the US unemployment rate should be on the decline. The forecasts White House advisers used to drum up support for the plan projected that today’s unemployment rate would be about 8 per cent. Instead, it sits at 9.4 per cent, the highest in more than 25 years.

By any measure, spending US$44 billion in four months - and with unprecedented transparency - is an uncharacteristic feat in Washington. But the expectations have been even higher, and restoring the economy has proven tougher than the administration expected.

Several economists said on Monday that the economy is unlikely to see any boost from the stimulus before next year.

‘It takes time to organise projects, to get the bids in, the funds out and the work started,’ said Nigel Gault, chief US economist at IHS Global Insight.

Mr Obama’s disapproval rating on the economy has risen from 30 per cent in February to 42 per cent, according to a Gallup poll completed on May 31. Sensing weakness on a signature issue of Mr Obama’s presidency, congressional Republicans are renewing their criticisms that the stimulus plan has not shown results, only mounting debt.

‘This is President Obama’s economy, and his administration must provide results and specifics rather than vague descriptions of success that seem to change by the week,’ said House Republican Whip Eric Cantor of Virginia.

‘The administration looks dramatically out of touch as they highlight the creation of temporary summer employment in the face of job losses unseen in decades, record unemployment and massive deficits.’

Mr Obama shot back at sceptics during Monday’s Cabinet meeting.

‘Now, I know that there’s some who, despite all evidence to the contrary, still don’t believe in the necessity and promise of this recovery act,’ he said.

‘And I would suggest to them that they talk to the companies who, because of this plan, scrapped the idea of laying off employees and, in fact, decided to hire employees. Tell that to the Americans who received that unexpected call saying, ‘Come back to work’.’ - AP

Source : Business Times - 10 June 2009

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Hedge funds on the way to recovery

Hedge funds on the way to recovery

(NEW YORK) Hedge funds are beginning to recover from the huge losses they suffered last year, as May turned into one of the best performing months in history.

On average, hedge funds climbed 5.23 per cent last month, leaving them up 9.43 per cent this year, according to an index of monthly returns compiled by Hedge Fund Research. Major funds including Moore Capital Management, Paulson & Co, SAC Capital Advisors and the Tudor Investment Corp scored big gains across sectors using nearly all strategies as confidence slowly crept back into the equity and debt markets.

‘May has been a remarkably strong month as it relates to hedge fund performance across the board,’ said Andrea Gentilini, director of prime services for Barclays Capital. ‘Even the strategies that have been under severe stress over the course of the last two years have continued to post strong performance.’ One of the most striking turnarounds has been from the Citadel Investment Group, the Chicago-based firm run by the 40-year-old billionaire Kenneth C Griffin. The firm’s flagship Kensington Global Strategies Fund was up 20.37 per cent in the first five months of this year after plummeting 54.49 per cent last year, according to performance numbers sent to investors.

Mr Griffin is known for his talents in convertible arbitrage trading, which involves buying securities that convert into a company’s common stock while shorting, or betting against, the shares of the same company. That strategy, which brought Mr Griffin’s investors immense financial pain last year, has gained 19.48 per cent this year, according to the Credit Suisse/Tremont Hedge Fund Index.

Carl C Icahn, the activist investor, has also experienced a reversal of fortune. After being down 37 per cent last year and being forced to inject US$500 million of his personal money into his fund, Mr Icahn, who manages US$5.5 billion, has gained 16 per cent this year, according to investors.

Paulson & Co, the US$28 billion fund run by John A Paulson, has continued to outperform the overall markets with big bets on gold companies and distressed debt. Paulson gained 8.75 per cent through May in its flagship fund after an impressive 24.11 per cent profit last year.

SAC Capital Advisors, the US$7 billion fund run by Steven A Cohen, is up 13.93 per cent through May after dropping 18.53 per cent in 2008.

Moore Capital, run by Louis M Bacon, which lost a modest 4.7 per cent last year, has gained 6.3 per cent this year.

‘After historical lows in 2008, risk appetite has quickly returned over the last eight weeks, suggesting that hedge fund investors are again looking past month-to-month volatility and focusing on the longer-term performance merits of the industry,’ said Kenneth J Heinz, president of Hedge Fund Research.

While most investors in hedge funds are pleased with the performance this year, many are still cautious about putting new money in risky strategies. — NYT

Source : Business Times - 10 June 2009

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Tender for URA’s Woodlands plot closes on July 7

Tender for URA’s Woodlands plot closes on July 7

By KALPANA RASHIWALA

THE Urban Redevelopment Authority (URA) yesterday launched the tender for an industrial site at the corner of Woodlands Industrial Park E5 and Woodlands Avenue 4. The tender closes on July 7.

This follows URA’s May 26 announcement on the successful application for the site, which is on the government’s reserve list. The successful applicant, which has not been named, has undertaken to bid at least $12.5 million or $18.57 per square foot (psf) of potential gross floor area (GFA).

The 2.5 hectare plot is being offered on 60-year-leasehold tenure with a maximum 2.5 plot ratio, which means it can be built up to a GFA of 673,077 square feet. The maximum building height is 10 storeys. The site is zoned for Business 2 development, suitable for a range of uses such as clean/light industry, general industry and warehousing.

BT’s earlier story in late May quoted Colliers International director (industrial) Tan Boon Leong as saying that the plot is likely to draw a handful of bidders, with the top bids at around $20-23 psf per plot ratio (ppr).

The site is next to a plot sold at a state tender that closed in July last year (before Lehman’s collapse) to Soilbuild Group Holdings for $30.10 psf ppr.

Soilbuild is expected to launch for sale later this year a flatted factory and terrace factory project on the plot.

Source : Business Times - 10 June 2009

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Nan Fung Group invests in South Beach project

Nan Fung Group invests in South Beach project

Entities linked to HK-based group pumping in $205m in refinancing deal

By KALPANA RASHIWALA

HONG KONG developer Nan Fung group has emerged as an investor in Singapore’s South Beach project.

South Beach project: CDL will take a leading role for the project, which is on track to be completed by 2016

It will subscribe to $205 million of five-year secured convertible notes under a refinancing exercise for a $1.2 billion loan on the 3.5-hectare site. The plot was sold for almost $1.69 billion in 2007 during the property bull run to South Beach Consortium - a joint venture company equally owned by subsidiaries of City Developments Ltd (CDL), El-Ad Group and Dubai World.

The $1.2 billion loan that matures later this month will be refinanced by a combination of an $800 million two-year secured bank loan and $400 million of secured convertible notes.

A fully owned unit of CDL will subscribe for $195 million of the notes, with entities associated with the Nan Fung group of companies taking the rest. The notes may be converted into equity in the joint venture company any time during their five-year duration, subject to conditions and terms that have not been disclosed.

If CDL converts its notes, it will emerge as the leader of the consortium. And if Nan Fung follows suit, it will become a shareholder in the consortium.

The $800 million secured term-loan facility announced yesterday has been provided by a syndicate comprising DBS Bank, United Overseas Bank, OCBC Bank, The Hongkong and Shanghai Banking Corporation and Sumitomo Mitsui Banking Corporation (Singapore Branch).

These five banks plus Bank of Tokyo Mitsubishi provided the initial $1.2 billion bridging loan facility.

Market watchers note the smaller quantum of $800 million secured for the latest term loan. In a statement, South Beach Consortium noted the ‘ongoing challenging credit environment in the global financial markets’.

In its full-year 2008 results statement released in February, CDL said a recent external valuation of the South Beach project was done and the conclusion is that no provision is required for impairment on the development.

It was in November last year that CDL first announced a deferment of construction of the project until construction costs ease.

The project was originally slated for completion by 2012. Under an agreement signed with the Singapore Government, from whom the consortium bought the 99-year leasehold site, the group has up to 2016 to complete the development. The consortium is now expected to begin construction by late next year.

In a filing with Singapore Exchange last night, CDL said: ‘The consortium . . . is currently taking the opportunity to review and refine its plans for the development so as to maximise the immense potential of this sizeable prime site, making it even more efficient, while in the meantime noting that construction cost is expected to come down further.’

The project, designed by London-based Foster + Partners, will comprise two tower blocks and four conserved buildings housing offices, luxury hotels, retail space and residences.

In late 2007, CDL said that the project would cost some $2.5 billion in all, including the land cost.

CDL will take a leading role developing the South Beach project, which is on track to be completed by 2016, yesterday’s statement said.

Talk surfaced last year that El-Ad and Dubai World were keen to offload their stakes in the project. However, the two yesterday confirmed their commitment to South Beach.

The consortium’s winning bid of $1.69 billion for the plot in the public tender worked out to $1,069 per square foot of potential gross floor area and was reported to be about $500 million lower than the top bid, which was not even short-listed under the two-envelope evaluation system.

The Urban Redevelopment Authority evaluated the various concepts before looking at the price offered for the site.

The South Beach project will be Nan Fung’s first major property investment here.

The group, set up by Chen Din-hwa, has a joint venture with Singapore’s Metro group developing 1 Financial Street in Beijing. Mr Chen, who is in his 80s, made his early fortune in the textile business before moving into property.

Source : Business Times - 10 June 2009

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