MapletreeLog in 27.8b yen property deal
March 23rd, 2007
Mapletree Logistics Trust yesterday said it is acquiring the beneficiary interest of five logistic properties in Japan for 27.8 billion yen (S$358.2 million).
Based on the letter of undertaking, the Reit will buy the beneficiary interest from a special-purpose company, which is managed by Itochu Corporation, and the transaction has been structured as an outright sale of beneficiary rights with assignment of existing tenancies.
Four of them - Atsugi Centre, Ayase Centre, Funabashi Centre and Zama Centre - are located in the Greater Tokyo area, while the Kyoto Centre is in the Kyoto (Kansai) area. The deal will be accretive to MapletreeLog’s distribution per unit and its pro forma effect for the year ended Dec 31, 2006 would be an additional 0.56 Singapore cents per unit.
Said Chua Tiow Chye, CEO of Mapletree Logistics Trust Management: ‘This portfolio of assets is accompanied by long-lease tenures which vary from seven to 18 years from tenants with very good credit standing, bolstering our core base of leases which yield stable and recurrent rental income.’
Also, he said the new facilities complement the Reit’s shorter-term leases from higher-growth markets such as China, Malaysia and Hong Kong. ‘The addition of these longer-term leases will lengthen the average lease tenure and the unexpired lease term of underlying land of MapletreeLog’s portfolio,’ Mr Chua added.
Besides providing geographical diversification, MapletreeLog said the acquired portfolio also comes with strong tenant base, including top Japanese third-party logistics (3PL) service providers and major supermarket suppliers.
The deal is MapletreeLog’s single-largest transaction to date, and is the trust’s second with Itochu. The trust had bought Gyoda Distribution Centre - its first property in Japan - from Itochu last month.
MapletreeLog expects the latest acquisition to be completed in the middle of this year, adding that it will be wholly funded by debt due to the lower cost of borrowing in yen.
Also, the trust will benefit ‘by structuring the acquisition in such a way that the properties’ net income inflows in yen will be exchanged for Singapore dollars through a currency swap. Based on prevailing forward contract rates, the average annual pick-up is estimated to be one to 2 per cent’, it said in a statement.
MapletreeLog is upbeat on prospects in Japan, pointing to its 2.2 per cent economic growth last year and citing forecast from the Economist Intelligence Unit that it may grow another 2 per cent this year and 2.1 per cent in 2008.
‘The improving economic conditions in Japan and the consequent increase in business activities have boosted demand for new logistics facilities,’ it said in a statement.
Another factor is the growing trend among companies to outsource their logistics operations to 3PL operators, as this allows them to streamline their balance sheets and focus their resources on core operations.
Citing Colliers International, MapletreeLog says demand for quality logistics space in Japan is picking up, driven by corporate capital investment.
‘There is a shortage of bigger, modern and efficient distribution centres located in key areas. Currently, modern distribution facilities that measure more than 3,000 square metres in floor area represent less than half of the total national stock in Japan,’ it added.
Source: The Business Times, 23 March 2007
Saturday, March 24, 2007
Sing Holdings inks deal to buy Hillcourt Apartments for $361m
Sing Holdings inks deal to buy Hillcourt Apartments for $361m
March 23rd, 2007
Sing Holdings has signed a conditional agreement to buy the freehold Hillcourt Apartments on Cairnhill Road for $361 million or about $1,542 per square foot (psf) of potential gross floor area (GFA).
The price is about 75 per cent higher than the $880 psf per plot ratio (ppr) that SC Global paid in H1 2006 for Hilltops Apartments at Cairnhill Circle and 16 adjoining terrace houses, reflecting the surge in prime land values in Singapore over the past year.
The unit land price for Hillcourt Apartments also beats the $1,107 psf ppr that CapitaLand paid for the next-door Silver Tower in September last year. Both the Silver Tower and Hillcourt en bloc sales were handled by Savills Singapore.
Sing Holdings will not have to pay a development charge (DC) for the Hillcourt site up to the existing development’s GFA of 234,095 square feet, which works out to 3.0778 times the land area of 76,059 sq ft. However, if Sing Holdings decides to tap an additional 10 per cent GFA allowed for balcony space, it will have to pay a DC.
Nonetheless, this will lower Sing Holdings’ unit land price to $1,444 psf ppr, according to Sing Holdings managing director Lee Sze Hao.
Mr Lee also said the group will once again team up with US-based fund Forum for its acquisition of Hillcourt Apartments, although the respective stakes of the two parties have yet to be finalised.
The companies worked together for the earlier purchase of Finland Gardens in the East Coast and Bellerive at Keng Chin Road.
Sing Holdings’ break even cost for a new condo project on the Hillcourt site could be about $2,000 psf, factoring in rising construction costs, BT understands.
Mr Lee said the company is looking to develop a new 20-storey condo with about 180 units ranging from 1,500 to 1,800 sq ft. The project could be launched around the final quarter of next year.
The tender for Hillcourt Apartments closed on Wednesday, attracting several bids, Savills said yesterday. The highest was from Sing Holdings.
Owners of Hillcourt’s existing 100 apartments and two penthouses will receive $3.46 million per apartment and $7.26 million per penthouse.
These sums are about 60 per cent higher than if the units had been sold individually.
Sing Holdings said in its release to the Singapore Exchange that its purchase of Hillcourt Apartments is subject to a permissible GFA of 234,095 sq ft, and approval from the Strata Titles Board.
Source: The Business Times, 23 March 2007
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March 23rd, 2007
Sing Holdings has signed a conditional agreement to buy the freehold Hillcourt Apartments on Cairnhill Road for $361 million or about $1,542 per square foot (psf) of potential gross floor area (GFA).
The price is about 75 per cent higher than the $880 psf per plot ratio (ppr) that SC Global paid in H1 2006 for Hilltops Apartments at Cairnhill Circle and 16 adjoining terrace houses, reflecting the surge in prime land values in Singapore over the past year.
The unit land price for Hillcourt Apartments also beats the $1,107 psf ppr that CapitaLand paid for the next-door Silver Tower in September last year. Both the Silver Tower and Hillcourt en bloc sales were handled by Savills Singapore.
Sing Holdings will not have to pay a development charge (DC) for the Hillcourt site up to the existing development’s GFA of 234,095 square feet, which works out to 3.0778 times the land area of 76,059 sq ft. However, if Sing Holdings decides to tap an additional 10 per cent GFA allowed for balcony space, it will have to pay a DC.
Nonetheless, this will lower Sing Holdings’ unit land price to $1,444 psf ppr, according to Sing Holdings managing director Lee Sze Hao.
Mr Lee also said the group will once again team up with US-based fund Forum for its acquisition of Hillcourt Apartments, although the respective stakes of the two parties have yet to be finalised.
The companies worked together for the earlier purchase of Finland Gardens in the East Coast and Bellerive at Keng Chin Road.
Sing Holdings’ break even cost for a new condo project on the Hillcourt site could be about $2,000 psf, factoring in rising construction costs, BT understands.
Mr Lee said the company is looking to develop a new 20-storey condo with about 180 units ranging from 1,500 to 1,800 sq ft. The project could be launched around the final quarter of next year.
The tender for Hillcourt Apartments closed on Wednesday, attracting several bids, Savills said yesterday. The highest was from Sing Holdings.
Owners of Hillcourt’s existing 100 apartments and two penthouses will receive $3.46 million per apartment and $7.26 million per penthouse.
These sums are about 60 per cent higher than if the units had been sold individually.
Sing Holdings said in its release to the Singapore Exchange that its purchase of Hillcourt Apartments is subject to a permissible GFA of 234,095 sq ft, and approval from the Strata Titles Board.
Source: The Business Times, 23 March 2007
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Friday, March 23, 2007
Developers should reveal more price data
Developers should reveal more price data
March 23rd, 2007
The record home prices achieved this week by luxury condominium Orchard Residences have become the talk of the town.
Everyone is abuzz at the dazzling $4,000 per sq ft (psf) that buyers forked out for ’several units’ in the condo - a figure proudly announced by joint developers CapitaLand and Sun Hung Kai Properties on Wednesday.
But does this undoubtedly remarkable price give an accurate picture of the overall pricing achieved at the condo, being built above Orchard MRT Station?
The answer is: We don’t know.
The only other clue we have is CapitaLand’s statement that ‘units above the 30th floor have also attained prices of over $3,200 psf’. This throws up more questions than it answers.
For one, just how many units were sold at $4,000 psf? What price did the units below the 30th floor manage to fetch? What was the lowest price achieved?
And - most importantly - what was the psf price of a typical unit?
When asked for these details, CapitaLand simply clammed up.
It declined to say how many units were sold at record $4,000 psf prices, which floors they were on, and what proportion of their buyers were foreigners.
A similar scenario unfolded last year at the much-hyped Marina Bay Residences. Despite throngs of buyers on the first day of sales, its developers - Keppel Land, Cheung Kong Holdings and Hong Kong Land - refused to give sales figures or prices.
The next day, they offered some information: They had sold ‘more than 90 per cent of typical units…with prices in excess of $2,700 psf’. It took another day for them to finally disclose the average prices, which turned out to be ‘in the region of $1,850 psf’.
Should this lack of clarity be allowed to continue?
The danger in withholding information about average prices and sales figures is that it makes it impossible for the average person to judge the true value of, and demand for, any given development.
Offering only the highest prices further skews the market’s perception of what similar projects are worth. Those who suffer most from this obfuscation are home buyers. In the first place, they are handicapped in their access to such industry information.
Actual sales data, with prices and unit details, is available only through caveats, which are lodged when a sale takes place. But these are not mandatory and can take up to a few months to lodge.
By then, the average buyer may already have made a decision based on incomplete information.
Developers should also disclose why certain units fetch exceptionally high prices, and if these were bought by foreigners.
Often, these apartments are on higher floors, come in bigger sizes, or are equipped with special features. A typical unit, therefore, could be worth much less than the record-busting figures fetched by more unique apartments.
Apart from giving a better picture of individual condos, detailed sales data can also improve the workings of the broader property market.
Condos such as Orchard Residences and Marina Bay Residences, while out of the reach of the average buyer, belong to the category of closely-watched projects.
Rival developers and property analysts study their prices and use them as guidelines for future price points. If the prices of these projects are to act as benchmark prices for others, their actual levels should be made clearer.
A final point has to be made about investors who put money into property stocks such as CapitaLand and City Developments. Investors watch how these developers price their projects, because sales feed directly into their profits.
The issue of how project pricing can affect the developer’s share price was brought up last month. The question then was whether it was right for developers to announce target prices before their actual launches.
But the same principle applies even after the units have been transacted. If there is only partial disclosure of prices in a certain project, investors have no idea whether these prices are truly reflective until weeks later.
Still, there may be good reasons developers are reluctant to release too much price information.
They may have competitive or strategic interests, or may simply want to wait until all the options have been exercised. But in a fast-rising market, where benchmark prices for private homes are scaling dizzying heights, selective disclosure is especially worrying.
Home buyers tend to remember only the trumpeted highest prices in a project, even if average prices are much lower.
Take SC Global’s Boulevard Residence, which made headlines last month when one unit went for a ‘benchmark’ $3,205 psf. But the average price of the six units sold there in the last year was only $2,200 psf.
CapitaLand’s Rivergate is remembered for a ‘benchmark price’ of $1,700 psf last August, even though most units were averaging $1,250 psf. Similarly, City Developments’ St Regis Residences is known for being the first to cross the $3,000 psf mark, although its average price now, from caveats, is about $2,500 psf.
Not all developers are equal; some are more forthcoming with sales data than others.
But surely it is in the interests of all developers to ensure that the market is acting on as much information as it can get.
The alternative is a speculative bubble due to the exuberance of poorly-informed buyers - and that is in the interests of no one.
Source: The Straits Times, 23 March 2007
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March 23rd, 2007
The record home prices achieved this week by luxury condominium Orchard Residences have become the talk of the town.
Everyone is abuzz at the dazzling $4,000 per sq ft (psf) that buyers forked out for ’several units’ in the condo - a figure proudly announced by joint developers CapitaLand and Sun Hung Kai Properties on Wednesday.
But does this undoubtedly remarkable price give an accurate picture of the overall pricing achieved at the condo, being built above Orchard MRT Station?
The answer is: We don’t know.
The only other clue we have is CapitaLand’s statement that ‘units above the 30th floor have also attained prices of over $3,200 psf’. This throws up more questions than it answers.
For one, just how many units were sold at $4,000 psf? What price did the units below the 30th floor manage to fetch? What was the lowest price achieved?
And - most importantly - what was the psf price of a typical unit?
When asked for these details, CapitaLand simply clammed up.
It declined to say how many units were sold at record $4,000 psf prices, which floors they were on, and what proportion of their buyers were foreigners.
A similar scenario unfolded last year at the much-hyped Marina Bay Residences. Despite throngs of buyers on the first day of sales, its developers - Keppel Land, Cheung Kong Holdings and Hong Kong Land - refused to give sales figures or prices.
The next day, they offered some information: They had sold ‘more than 90 per cent of typical units…with prices in excess of $2,700 psf’. It took another day for them to finally disclose the average prices, which turned out to be ‘in the region of $1,850 psf’.
Should this lack of clarity be allowed to continue?
The danger in withholding information about average prices and sales figures is that it makes it impossible for the average person to judge the true value of, and demand for, any given development.
Offering only the highest prices further skews the market’s perception of what similar projects are worth. Those who suffer most from this obfuscation are home buyers. In the first place, they are handicapped in their access to such industry information.
Actual sales data, with prices and unit details, is available only through caveats, which are lodged when a sale takes place. But these are not mandatory and can take up to a few months to lodge.
By then, the average buyer may already have made a decision based on incomplete information.
Developers should also disclose why certain units fetch exceptionally high prices, and if these were bought by foreigners.
Often, these apartments are on higher floors, come in bigger sizes, or are equipped with special features. A typical unit, therefore, could be worth much less than the record-busting figures fetched by more unique apartments.
Apart from giving a better picture of individual condos, detailed sales data can also improve the workings of the broader property market.
Condos such as Orchard Residences and Marina Bay Residences, while out of the reach of the average buyer, belong to the category of closely-watched projects.
Rival developers and property analysts study their prices and use them as guidelines for future price points. If the prices of these projects are to act as benchmark prices for others, their actual levels should be made clearer.
A final point has to be made about investors who put money into property stocks such as CapitaLand and City Developments. Investors watch how these developers price their projects, because sales feed directly into their profits.
The issue of how project pricing can affect the developer’s share price was brought up last month. The question then was whether it was right for developers to announce target prices before their actual launches.
But the same principle applies even after the units have been transacted. If there is only partial disclosure of prices in a certain project, investors have no idea whether these prices are truly reflective until weeks later.
Still, there may be good reasons developers are reluctant to release too much price information.
They may have competitive or strategic interests, or may simply want to wait until all the options have been exercised. But in a fast-rising market, where benchmark prices for private homes are scaling dizzying heights, selective disclosure is especially worrying.
Home buyers tend to remember only the trumpeted highest prices in a project, even if average prices are much lower.
Take SC Global’s Boulevard Residence, which made headlines last month when one unit went for a ‘benchmark’ $3,205 psf. But the average price of the six units sold there in the last year was only $2,200 psf.
CapitaLand’s Rivergate is remembered for a ‘benchmark price’ of $1,700 psf last August, even though most units were averaging $1,250 psf. Similarly, City Developments’ St Regis Residences is known for being the first to cross the $3,000 psf mark, although its average price now, from caveats, is about $2,500 psf.
Not all developers are equal; some are more forthcoming with sales data than others.
But surely it is in the interests of all developers to ensure that the market is acting on as much information as it can get.
The alternative is a speculative bubble due to the exuberance of poorly-informed buyers - and that is in the interests of no one.
Source: The Straits Times, 23 March 2007
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