Tag Archives: developers

Tanjong Pagar Centre game-changer for GuocoLand

GUOCOLAND, controlled by Malaysian tycoon Quek Leng Chan, recently completed Guoco Tower – the office component of its integrated mixed-development project, Tanjong Pagar Centre, on a 99-year leasehold site above Tanjong Pagar MRT Station.

The mainboard-listed property group has announced that 80 per cent of the 890,000 sq ft net lettable area of office space has been committed, that is either leased or subject of advanced leasing discussions. Guoco Tower obtained Temporary Occupation Permit (TOP) in September.

At the same time, part of Tanjong Pagar Centre’s 100,000 sq ft retail component also received TOP. The rest of the retail space as well as the 222-room Sofitel Singapore City Centre and a 181-unit residential component are slated to receive TOP in stages from late this year to early next year. The retail component is more than 80 per cent committed.

Office and retail tenants have started to move in.

The mixed-development project has an estimated gross development value of S$3.2 billion. GuocoLand paid S$1.708 billion or S$1,006 per square foot of potential gross floor area for the Tanjong Pagar Centre site, which it clinched at an Urban Redevelopment Authority tender in 2010.

Now, Tanjong Pagar Centre is set to transform GuocoLand, significantly boosting its recurring income base. The Business Times’ back-of- the-envelope calculation shows that when the asset is fully operational and has stabilised, it could generate Ebitda (earnings before interest, tax depreciation and amortisation) of around S$93 million per year.

This assumes that the office and retail components have been fully leased at average gross effective monthly rentals of S$9 per square foot for the offices and S$15 psf for the retail space; it also assumes that the hotel commands an average room rate of S$400 per night with 80 per cent average occupancy.

GuocoLand owns 80 per cent of Tanjong Pagar Centre – the Employees Provident Fund of Malaysia holds the balance 20 per cent stake – so GuocoLand would stand to receive an annual Ebitda boost of about S$75 million for its attributable share of Tanjong Pagar Centre.

This will help augment GuocoLand’s pool of recurring income, which currently is pretty small – from sources such as the 20 Collyer Quay office block in Singapore, a few hotels in Shanghai and Malaysia, and a small mall within the Guoson Centre mixed-development in Shanghai.

Once Tanjong Pagar Centre is stabilised, this huge leap in recurring income from the office, retail and hotel components will not only provide ballast to GuocoLand’s earnings, but will also smoothen the volatility in income from property development. As well, the stable cashflow will enhance the group’s resilience and enable it to seize growth opportunities.

Besides anchoring the group’s ambitions of building a strong base of recurring income, Tanjong Pagar Centre will generate property development income from the sale of apartments in the 181-unit Wallich Residence, sitting atop the offices in a 64-storey tower.

Apartments start from level 40, at a height of about 190 metres. So far 16 have been sold – all at above S$3,000 psf. The group will likely launch a fresh marketing campaign when the residential component has been completed around early 2017, to give potential buyers a sense of the views they will enjoy from the height.

Wallich Residence’s 21,108 sq ft super penthouse on the top three levels of the 64-storey tower reaches a height of 290 metres – making it Singapore’s tallest residence.

Through these upmarket residences in the CBD, Tanjong Pagar Centre will reinforce another strategy GuocoLand has been building on in recent years – that of focusing on the high-end residential market.

In Bukit Timah, the group is left with just a three-bedroom penthouse at the 210-unit Goodwood Residence.

At another freehold completed project, the 381-unit Leedon Residence, GuocoLand is left with 109 units. The average price achieved so far is just below S$2,000 psf and the group could be mulling over a bulk sale. The group’s next high-end residential project here will be a 450-unit condo in Martin Place on a site clinched a few months ago.

GuocoLand could tap a modest revival in investment interest in Singapore’s high-end housing market, which took a more severe beating compared to other segments in the initial stages of the current residential downcycle.

In addition to Tanjong Pagar Centre, other drivers of recurring income could be in the offing for GuocoLand. Its Bursa Malaysia-listed subsidiary, GuocoLand Malaysia, is developing Damansara City in Kuala Lumpur. The project is expected to be operational in 2017 and GuocoLand Malaysia has retained within the development an office tower, a hotel and retail mall for recurring income. In the medium term, Singapore-listed GuocoLand itself could develop future phases of its Guoson Centre commercial site in Shanghai and retain them for rental income.

GuocoLand does seem to have some good things going for it. That said, it does not receive much coverage from stockbroking houses, principally because the stock is relatively illiquid. With Mr Quek controlling about 70 per cent of the company, the group has a small free float of about 21 per cent. The average daily volume for the counter over the past one year is 231,000 shares. This may be small for institutional following but could still be comfortable for some smaller funds and retail investors.

GuocoLand’s market cap is S$2.3 billion. As at Sept 30, 2016, its gearing was 0.9 times.

Rumours periodically surface that Mr Quek could take the company private to take advantage of the discount at which it is trading.

Based on Tuesday’s closing price of S$1.915, GuocoLand is trading at 44.5 per cent discount to CIMB analysts Lock Mun Yee and Yeo Zhi Bin’s S$3.45 estimated revalued net asset value per share for the counter.

Keppel Land buys stake in 112 Katong mall for S$51.4m

Keppel Land has acquired a 22.4 per cent stake in 112 Katong mall from BHG, Imagine Properties and Perennial Singapore Investment for S$51.4 million, Keppel Corp announced in a press release on Sunday (Jan 17).

The remaining 77.6 per cent stake is held by Alpha Asia Macro Trends Fund, which is managed by Alpha Investment Partners, a property fund management vehicle of Keppel Land.

Keppel Corp said the transaction is not expected to have any material impact on its net tangible assets or earnings per share for the current financial year.

CEO of Keppel Land Ang Wee Gee said the property management company will focus on strengthening 112 Katong’s positioning as a lifestyle and dining destination in the East.

Keppel Land Retail Management will be appointed as the retail manager for the mall, he added.

Separately, Keppel Corp also announced on Sunday that Keppel REIT has sold its 100 per cent stake in 77 King Street in Sydney, Australia, to a subsidiary of Invesco Asia Core Fund for S$160 million (S$160 million).

The sale price is about 40 per cent above Keppel REIT’s original purchase price of A$116 million in end-2010, and 27 per cent higher than the property’s latest valuation of A$126 million, Keppel Corp said.

Source : Channel NewsAsia – 17 Jan 2016

CDL and Alpha Investment Partners in S$1.1 billion Singapore office venture

Real estate giant City Developments (CityDev) will inject three of its office properties into an investment platform, in a move that will free up hundreds of millions of dollars in funds for new investments.

In a statement on Tuesday (Dec 15), CityDev said the three properties are Central Mall (Office Tower), 7 & 9 Tampines Grande and Manulife Centre.

The properties – valued at around S$1.1 billion – will be sold to a joint office investment platform co-owned by CityDev and Alpha Asia Macro Trends Fund II (AAMTF II), which is managed by Keppel’s Alpha Investment Partners.

CityDev Executive Chairman Kwek Leng Beng said: “Over the past two years, we have been advancing our two-pronged diversification strategy of developing new overseas and investment platforms. By building on the success of our first PPS transaction last year, this new initiative allows us to recycle capital for our growth plans.”

CityDev Chief Executive Officer Grant Kelley said: “Fundamentally the intent with the use of proceeds is to recycle capital for our growth plans both domestic and international. Last week we announced the closing of our first Australian investment in several years. In addition to that in the past month we’ve closed two major deals to the west of London.”

“We’ve been fairly clear in our investment objectives which are to find quality assets in five key markets, Australia, China, Japan, the UK and US, which makes sense for our shareholders on a risk adjusted basis,” he added.

PPS is an acronym for Profit Participation Securities, a sort of investment structure that allows a firm to sell future earnings from its properties while retaining control.

According to CityDev, the total aggregated value of the securities issued in the PPS transaction is S$333.5 million, comprising S$133.3 million of securities subscribed by a wholly-owned subsidiary of CityDev and a contribution of S$200.2 million by AAMTF II.

DBS and Oversea-Chinese Banking Corporation (OCBC) will provide S$750.1 million in senior loan facilities.

CityDev did not say how much new funding it will raise from this transaction. It will, however, continue to manage the three office properties, which currently have a strong occupancy of 98 per cent.

The PPS announced by CityDev on Tuesday is the firm’s second. Last year, it partnered with Blackstone’s Tactical Opportunities Fund and CIMB Bank for a S$1.5 billion PPS that invests in the cash flows of its upscale properties in Sentosa Cove, called the Quayside Collection.

CapitaLand ends discussions to buy Asia Square Tower 1

CapitaLand, South-east Asia’s biggest developer, says it has withdrawn from negotiations to buy Asia Square Tower 1.

The company will continue to explore opportunities that allow it to generate required returns, it said in a statement today (Nov 4). CapitaLand didn’t give a reason for its decision.

A consortium of Norway’s sovereign wealth fund and CapitaLand was chosen as the preferred bidder for the tower being sold by BlackRock Inc, in what may become the biggest office deal in Singapore, people with knowledge of the matter said last month.

The 43-storey tower, located in the new financial district at Marina Bay, could be valued at more than S$3.5 billion, the people said last month. BlackRock, the world’s largest asset manager, said earlier this year that it had received expressions of interest for Asia Square Tower 1 and could get more than S$4 billion for the building, whose tenants include Citigroup.

CapitaLand’s third-quarter profit jumped 48 per cent to S$192.7 million as revenue rose 17 per cent to S$1.08 billion, the company said today. Residential sales in China more than doubled in the quarter from a year earlier. The developer said property cooling measures in Singapore will continue to weigh on its home market.

Singapore home prices have dropped for eight straight quarters, matching the longest losing streak in 13 years, as tighter mortgage lending sapped demand in Asia’s second-most expensive luxury housing market. The Government began introducing residential property curbs in 2009 as low interest rates and demand from foreign buyers raised concerns that the market was overheating.

Source : Today – 4 Nov 2015

CapitaLand confirms talks to buy Asia Square Tower 1

Southeast Asia’s biggest property developer, CapitaLand, on Wednesday (14 Oct) confirmed news reports that it was involved in talks to buy the Asia Square Tower 1 office building.

Its statement to the stock exchange came a day after Bloomberg News said a consortium of Norway’s sovereign wealth fund and CapitaLand has been chosen as the preferred bidder for the 43-storey office building in Singapore’s central business district. Bloomberg said the deal could value Asia Square Tower 1 at more than S$3.5 billion.

CapitaLand said that as discussions are still ongoing, there is no certainty that a transaction will materialise.

Should the deal proceed, CapitaLand said it anticipates drawing upon internal sources of funds and available credit lines. As of Jun 30, 2015, CapitaLand had about S$3.5 billion in cash and cash equivalents and approximately S$3.1 billion in available undrawn credit facilities.

Asia Square Tower 1, which is owned by asset manager BlackRock, counts Citigroup and Swiss private bank Julius Baer among its main tenants.

Source : Channel NewsAsia – 14 Oct 2015

CapitaLand, CapitaMalls Asia, CapitaMall Trust sign option to sell Westgate Tower

CapitaLand, CapitaMalls Asia and CapitaMall Trust have signed an option to sell Westgate Tower for S$579.4 million.

In a filing with the Singapore Exchange, CapitaLand said the option was granted to a consortium comprising Sun Venture Homes and Low Keng Huat (Singapore), which has up to January 24 to exercise it.

Located at Jurong Gateway, Westgate Tower is the office component of the Westgate integrated development which also includes a shopping mall.

The 20-storey prime office tower has a net saleable area of 304,963 square feet, and is targeted to be completed in late 2014.

Source : Channel NewsAsia – 3 Jan 2014

OUE confirms buyer interest in Mandarin hotel and gallery

Singapore-listed property developer Overseas Union Enterprise (OUE) said it has been approached by some potential buyers for its Mandarin Orchard Singapore hotel and the adjoining Mandarin Gallery mall.

In a filing on the Singapore Exchange on Wednesday, OUE said it has offered an unnamed potential buyer exclusivity to conduct preliminary due diligence on the two properties.

The developer added that it is uncertain if any transaction will be concluded at this stage.

According to media reports, Mandarin Orchard Singapore was valued at S$1.18 billion, while Mandarin Gallery was valued at S$520 million as at the end of 2011.

Reports of the potential sale sent OUE’s share price up by some 10 per cent on Wednesday morning to its highest level in over a year.

Source : Channel NewsAsia – 19 Sep 2012

CapitaLand Group to relocate to Westgate Tower from 2015

CapitaLand said Tuesday that the group will relocate to Westgate Tower in Jurong progressively from early 2015.

The group will occupy about 160,000 square feet across 11 floors of the new 20-storey prime office tower. It will also maintain a city office at Capital Tower as a flexible workspace to liaise with clients or business partners, it said.

The group, which includes CapitaMalls Asia, CapitaMall Trust, CapitaCommercial Trust, and Ascott Residence Trust, currently operates from different buildings in Singapore.

Mr Liew Mun Leong, President and CEO of CapitaLand Group, said: “The relocation will be a milestone for CapitaLand Group. For the first time, all business units in Singapore and the corporate office will operate from a single location. We want to create a conducive environment that will help to further improve productivity across the Group and achieve work-life integration.”

He added: “We are pleased that Westgate, sited within Jurong Gateway – the biggest commercial hub outside the Central Business District – will provide the ideal location for the Group to be housed under one roof. We look forward to playing a significant role in transforming the Jurong Lake District into a key regional business hub.”

Westgate, jointly developed by CapitaMalls Asia, CapitaMall Trust Management and CapitaLand, is to comprise a shopping mall and office tower. The 416,000-sq-ft lifestyle and family mall is expected to be opened by end-2013, while the 320,000-sq-ft office tower is slated for completion in end-2014.

Source : Today – 14 Aug 2012

OUE plans to invest in 2 retail malls in CBD: report

Developer Overseas Union Enterprise (OUE) is set to invest in excess of S$140 million on two retail mall projects in the central business district.

Among the plans, OUE will be developing a five-storey retail mall at the existing DBS Building at Shenton Way, according to a source close to the matter.

Built in 1975, DBS Building at Shenton Way will soon be home to a new shopping mall, spanning some 170,000 square feet.

According to a source familiar with the plans, OUE is expected to spend over S$100 million to build the new mall.

It is slated to open in mid-2014, and the mall will offer retail and F&B options as well as a supermarket.

Analysts said a retail development will support an increasing residential population in the downtown area.

Donald Han, special advisor, HSR, said: “On the size of 170,000 (square feet) you would probably expect rents on average of about S$13 – 16 per square foot. Because this is still a new market place, it certainly has more upturn, upside in the next two to three years especially when most of the residential and hotel components are fully in place.”

OUE acquired DBS Building in 2010 for about S$871 million. The podium level will be converted to a shopping mall, but it appears that the developer is keeping the two office towers and it is currently looking for tenants.

Existing anchor tenant DBS Bank is expected to move out of both office towers by year-end.

And it is likely that OUE could see some rental upside when it leases the office space to new tenants.

Apart from the developments along Shenton Way, Channel NewsAsia understands that OUE will also refurbish the shopping mall at One Raffles Place.

Renovation work could start at the end of the year and it is expected to cost over S$40 million.

Source : Channel NewsAsia – 30 Jul 2012

S’pore developers plan more suburban offices

Developers here are building more office space in the city’s suburbs as companies including Credit Suisse and Deutsche Bank shift some operations away from downtown to cut costs, according to Cushman and Wakefield.

The city’s supply of suburban office space is expected to rise to 920,000 sq ft in 2014, five times the 190,000 sq ft that is expected to be completed this year, the world’s largest privately held property services company said.

About 44 per cent of office space will be in the suburbs by 2014, up from 6 per cent now, said Cushman and Wakefield’s Singapore-based vice-chairman Donald Han.

CapitaLand, Singapore’s largest listed property developer, said its largest investment commitment this year is a S$1.5 billion office and retail building in the western part of the country.

Rents in the central business district are 2.3 times those in the outskirts, according to Government data. Leasing costs are rising, making Singapore the third most expensive in the Asia-Pacific region in the second quarter, Colliers International said.

“There are a lot of these companies that are now bracing themselves for higher costs, pending a rise in rentals over the next few years,” said Mr Han. “They have to find cheaper options to average down their costs.”

Source : Today – 6 Aug 2011