YTL to streamline REITs here, S’pore

YTL Corp Bhd (4677) plans to streamline RM8 billion worth of hotels and retail malls it controls in Asia-Pacific into two specialised real estate investment trusts (REITs) in Singapore and Malaysia.

Starhill REIT, listed on Bursa Malaysia, will ultimately own only the hotels under the YTL group, while the Singapore-listed Starhill Global REIT will focus on retail malls when the revamp is completed in six months.

The move makes it easier for analysts to rate the stocks and investors will be clearer about the property trusts’ intention when they expand globally.

YTL Corp managing director Tan Sri Francis Yeoh made it clear during a media briefing in Kuala Lumpur yesterday that the two REITs are set to grow internationally with an Asia-centric strategy. Among others, Starhill REIT may buy more brands in the hotel and hospitality sector.

“This is the time to buy more brands because the world has not fully recovered yet. There are still low hanging fruits to be plucked,” Yeoh said.
As part of the revamp, Starhill REIT will sell the two shopping malls in its portfolio – Starhill Gallery and Lot 10, both located in downtown Kuala Lumpur – to Starhill Global REIT for RM1.03 billion.

This will leave it with JW Marriot Hotel Kuala Lumpur and part of The Residences at The Ritz-Carlton serviced apartments, also in Kuala Lumpur, worth a combined RM400 million.

Subsequently, Starhill REIT will use the proceeds from selling the malls to buy other Malaysian hotels under the YTL group, which will boost the asset size to RM1.6 billion. It can also take on more debt for this since its current debt-to-assets ratio is only 13 per cent.

These assets are the remaining 54 apartments in The Residences, luxury hotel The Ritz-Carlton Kuala Lumpur, Pangkor Laut Resort in Perak, Tanjung Jara Resort in Terengganu, Cameron Highlands Resort, The Majestic Malacca, and the three Vistana Hotels in Kuala Lumpur, Penang and Kuantan.

Potential assets to be sold into Starhill REIT in future include The Chedi Phuket, SPA Village Resort Tembok Bali and the Muse Hotel in Saint Tropez, France, which is under construction.

Yeoh pledged that the dividend yield of Starhill REIT will stay at least 7 per cent after the group’s asset restructuring. There is also a plan for the REIT to pay out dividends every quarter as part of a bigger plan that allows YTL Corp to get steadier returns from its subsidiaries.

YTL currently owns 65.2 per cent of the REIT in Malaysia and 28.9 per cent of the one in Singapore. Starhill Global REIT’s assets include retail malls in Singapore’s famous Orchard Road and Tokyo’s Roppongi area, and it is set to buy another mall in Perth, Australia, to bring the portfolio to S$2.5 billion (RM6 billion).

Australia: Flying dollar to help repel foreign raids

GOLD Coast developers just cannot win a trick as foreign investors continue to beat them to the punch on big-ticket properties.

But it could all come to an end thanks to a resurgent Australian dollar.

Despite the currency putting the brakes on big deals, most market players agree that the latest offshore spending spree has been a confidence boost for the city’s flagging property market.

“It’s some relief to the local development industry (that) new money is finally starting to filter into Australia,” said DTZ’s Gold Coast managing director Cameron Wilson.

His comments come on the heels of The Gold Coast Bulletin revealing last week that an Indian property giant had snared the Sheraton Mirage for less than $60 million.

The deal is $40 million less than the price expected by receivers to the ageing hotel property more than a year ago, and $20 million less than the price Casuarina Beach developer Don O’Rorke was willing to pay in January.

Mr O’Rorke is one of several Coast property players who have missed out on bargain deals this year.

His problem is understood to have been a lack of enthusiasm by financiers amid tightened credit conditions.

For others, like cashed-up developer Sunland Group, it has been due to zealous buying from foreign investors.

Sunland was second in line to pick up the Pacific Beach site, which was part of the failed City Pacific empire.

An undisclosed Chinese buyer has signed an $80 million contract for the Surfers Paradise site, around twice the price offered by Sunland to City Pacific’s receivers.

The Coast is now awash with foreign money, mainly from Korea, China and now India, all vying for a limited piece of the Coast pie.

CB Richard Ellis’s Mark Witheriff, who negotiated the Sheraton and Pacific Beach sales, was confident the wave would continue despite the strong dollar.

“There is no question there’s more money coming this way from offshore,” he said.

While Colliers International’s Gold Coast boss Stewart Gilchrist said the rising dollar had caused a cooling of interest from Hong Kong and Singapore, he was confident domestic institutions could take up the slack.

Listed property groups and fund managers have raise about $16 billion in capital in the past year, and Mr Gilchrist said some of this would make its way to the Coast.

“We’re seeing value on the Coast and more so than in the capital cities,” he said.

DTZ’s Mr Wilson said the Sheraton Mirage sale last week to New Delhi-based Pearls Group was a classic example of receivers deciding it was time to shift bad debt from bank balance sheets.

“They’ve realised the market has found its natural level, that there are only so many buyers for these assets and they’re accepting the only real offers on the table,” he said.

Singapore Highlights Land Sales Program

MND announces Government Land Sales Programme for private residential, commercial & hotel developments for first half of 2010.

Government Land Sales Programme for Private Residential, Commercial and Hotel Developments for First Half of 2010

The Ministry of National Development (MND) today announced:

* The Government Land Sales (GLS) Programme for private residential, commercial and hotel developments for the first half of 2010 (1H2010); and

* The supply of commercial space by Government agencies outside the GLS Programme in the first half of 2010.

Increase in Supply of Private Housing in First Half 2010 to Meet Demand

In view of the strong demand for private housing and improved conditions in the property market, Minister for National Development had announced on 14 September 2009 that the Government would reinstate the Confirmed List and replenish the supply of Reserve List sites in the GLS Programme for 1H2010 to ensure that there is adequate supply of private housing to meet demand.

In line with the earlier announcement, MND will place 8 residential sites, including 2 Executive Condominium (EC) sites, on the Confirmed List of the 1H2010 GLS Programme. The 8 Confirmed List sites comprise 4 new sites and 4 sites carried over from the 2H2009 GLS Programme. These sites can potentially yield about 2,925 residential units, close to the highest potential supply of about 3,000 units from the GLS Confirmed List1 since the Reserve List/Confirmed List system started in 2H2001.

In addition, the Reserve List in 1H2010 will have 16 residential sites including 3 EC sites, and 2 mixed use sites where private residential units can potentially be built2. Of the 18 sites, 6 are new sites and 12 sites will be carried over from the 2H2009 GLS Programme (see details on the status of the sites in the 2H2009 GLS Programme in Appendix 1). In total, these 18 sites can yield about 7,625 private residential units.

The 1H2010 GLS Programme will therefore have a total of 24 residential sites and 2 mixed use sites where private housing can be built. Of the 26 sites, 10 are new sites and 16 sites will be carried over from the 2H2009 Programme. Overall, the 26 sites in 1H2010 (i.e. from both the Confirmed and Reserve Lists) can generate 10,550 private residential units, which is the highest from any half yearly GLS Programme since the Reserve List system started in 2H2001. The details of all the private residential sites in the Confirmed and Reserve Lists of the 1H2010 GLS Programme are given in Appendix 2.

All the 26 sites in the 1H2010 GLS Programme, including the 5 EC sites, are located in the Outside Central Region (OCR) or in locations in the Rest of Central Region (RCR) where more affordable private housing are expected to be built. They will therefore provide additional supply of more affordable private housing.

Hotel and Commercial Sites in the First Half 2010 GLS Programme

MND will add 2 new hotel sites, one at Robinson Road and the other at Robertson Quay, to the Reserve List of the 1H2010 GLS Programme. This will provide more variety of sites for hotel development to suit the accommodation needs of business travellers and visitors. The hotel site at Robinson Road, which comprises an existing conserved building that can be restored into a unique boutique hotel development, will widen the hotel options available in the Central Business District. The release of the hotel site at Robertson Quay, on the other hand, will help to build up the existing hotel cluster along Singapore River.

All remaining hotel, commercial, commercial & residential and white sites in the Reserve List of the 2H2009 GLS Programme will be carried over to the Reserve List of the 1H2010 GLS Programme.

Summary of the First Half 2010 GLS Programme

The 1H2010 GLS Programme will therefore comprise 8 Confirmed List sites and 34 Reserve List sites. The 42 sites will consist of 24 residential sites, 5 commercial sites, 1 commercial and residential site, 2 white sites and 10 hotel sites. These sites can potentially yield 10,550 private residential units, 417,740 sqm Gross Floor Area (GFA) of commercial space and 4,515 hotel rooms (see details in Appendix 2).

Other Government Supply to be Made Available in First Half of 2010

Apart from the GLS Programme, the Government also makes available other supply of land and properties through its various agencies. MND works closely with other agencies to coordinate this supply of space with the supply from the GLS Programme.

The planned supply from the various Government agencies in the first half of 2010 can yield a total of about 43,000 sqm GFA of commercial space. These projects are to meet strategic economic or development objectives. The planned commercial space supply from these projects includes:

* Commercial space at one-north (about 11,400 sqm GFA).

* Leasing of vacant state properties for commercial uses (12,300 sqm GFA).

* Localised retail facilities at Sentosa and community centres.

This announcement of the planned supply to be made available by the Government outside of the GLS Programme is to provide a complete picture of the overall Government supply of space for 1H2010.

Supply in the Pipeline Expected to be Completed in Next Few Years

Apart from the potential supply from the GLS Programme and other Government sources in the first half of 2010, there is additional supply from projects in the pipeline which have been initiated earlier, both from the Government and private land sources. In order to give a more complete picture of the supply situation in the next few years, URA has included in this section information on the various types of space from all sources of supply.

For the private housing sector, as at 3rd quarter 2009, there were about 59,700 private residential units in the pipeline, comprising supply from projects that were already under construction and those that had been granted planning approval but were not under construction yet. Of these, a total of about 32,200 new private residential units are expected to be completed between 4th quarter 2009 and 2012. Of the 59,700 units, about 22,200 units will be in Core Central Region, 17,300 units in Rest of Central Region and 20,200 units in Outside Central Region. However, the supply of 2,010 units from the GLS sites which were sold and triggered for sale in 2009 has not been included as submission for planning approval has not been made yet.

In addition, of the 59,700 private residential units in the pipeline about 34,120 units were still unsold. These comprised 2,960 units that had been launched for sale by developers and 10,453 units which had the pre-requisite conditions for sale and could be launched for sale immediately. The remaining 20,707 units with planning approvals did not have the pre-requisite conditions for sale3.

For the office sector, as at third quarter 2009, there is a total supply of about 1.09 million sqm GFA of office space from various Government and private land sources in the pipeline. Of these, about 933,000 sqm GFA of office space is expected to be completed between fourth quarter 2009 and 2012.

For the shop and hotel sectors, as at third quarter 2009, there is a total supply of about 524,000 sqm GFA of shop space and 15,494 hotel rooms in the pipeline, most of which are expected to be completed between fourth quarter 2009 and 2012.

A summary of the estimated pipeline supply of private residential units, office space, shop space and hotel rooms as at third quarter 2009 can be found in Appendix 3. The estimated pipeline supply is based on expected project completion dates provided to URA by developers on a quarterly basis. These completion dates will be updated when URA releases the fourth quarter Real Estate Statistics in end-January 2010.

Topics: 2010, commercial real estate, Economy, Governance, hotel development, Land Sales Program, MND, private residential, real estate, Singapore

Ogilvy Centre to be hotel site

AN 82-year-old colonial office building next to the famous Lau Pa Sat hawker centre has been earmarked as a hotel site and will be sold next year.

The curved four-storey Ogilvy Centre at the junction of Robinson Road and Boon Tat Street has been added to the Urban Redevelopment Authority’s (URA) list of government land sites for sale.

The building was given conservation status in 2000 so the developer who buys the site must retain its facade and part of the interior. It neo-classical style, with large decorative ionic columns and recessed balconies with cast-iron balustrades, was the design of F.G. Lundon of Swan and Maclaren, the oldest architectural firm in Singapore.

As a hotel, it will be able to host 70 guest rooms, said the URA on Friday.

Property consultants said the hotel could prove to be popular among business travellers, like the luxury 17-room Klapsons The Boutique Hotel that opened along Hoe Chiang Road this year.

Source: The Straits Times 6 Nov 2009

Trusts cut $4.5bn in value from for-sale list

THE total value of properties on the market in Australia has fallen by $4.5 billion in recent months, as the pressure came off listed property trusts in the wake of their rash of capital raisings.

In a research note this week, JPMorgan said the largest portfolio to be pulled from the market was Investa’s $1.2bn of office buildings, due to the upcoming initial public offering.

GE Real Estate had withdrawn assets totalling $800 million from sale, it said.

However, $10.8bn of Australian assets are still for sale.

Writing in its October 2009 Direct Property Overview, the JPMorgan property research team said that after a review, it had reduced its list of assets for sale from $15.3bn in September to $10.8bn.

The team, headed by Rob Stanton, wrote that many vendors had recapitalised and had withdrawn their properties, believing that property values would improve.

Mr Stanton told The Australian the withdrawals showed there was less stress among the vendors, particularly listed trusts.

But on JPMorgan’s “for sale” list is the $1bn retail and office portfolio owned by Brookfield Multiplex, followed by Aurora Place, owned by Colonial First State, for $650m.

Also on the list of available assets are Robina Holdings $500m residential, mixed used and commercial land, holdings on the Gold Coast; the Grand Hotel portfolio, owned by the Singapore-based Tuan Sing Holdings; and the $400m Brisbane Square office complex, owned by superannuation fund Westscheme.

The report said that asset sales slowed momentarily in September with only $44m of transactions compared to $1.1bn in both July and August. During October, 15 transactions totalling $1.24bn — of more than $20m each — took place.

The report said that listed property trusts accounted for the major deals, including GPT’s sale of the Four Points Sheraton Hotel in Sydney and five assets from the ING Industrial Fund.

It noted that about $230m worth of deals were approaching completion. These included a 50 per cent stake in 800 Collins Street in Melbourne’s Docklands for $87.5m and the Sheraton Mirage for $70m.

JPMorgan said a noteworthy addition to its list in October was the sale and leaseback of Energy Australia headquarters at George Street, Sydney for about $100m.

Source: The Australian 5 Nov 2009

New boutique hotel in Singapore

A NEW 65-room boutique hotel has sprung up on East Coast Road in hopes of catching the economic recovery and tourism upturn when the two integrated resorts open next year.

Le Peranakan Hotel held its soft opening on Wednesday morning offering promotional rates of $80 to $100 a night till the end of the year. The published regular rates are from $160 to $250.

Packer lifts casino stake as Asian interest rises

JAMES Packer’s move to increase his holding in casino group Crown has coincided with surging market interest in Asian gaming assets that could hasten privatisation plans.

Mr Packer on Friday paid $203 million for 22.5 million shares in Crown, taking his shareholding in the company he also chairs to just over 40 per cent, prompting speculation that he is preparing to make a full takeover offer. Analysts said yesterday that Friday’s stronger than expected performance of Steve Wynn’s Macau casino listing on the Hong Kong stock exchange augured well for the valuation of Mr Packer’s Macau casino assets.

The news prompted further gains in the price of the US-listed Melco Crown Entertainment Ltd, valuing Crown’s stake in its Macau casino operations at almost $1.2 billion.

Shares in Melco Crown Entertainment have now recovered from a low of $US2.27 in February this year, closing higher at $US7.18 in trading on Friday.

Melco Crown shares gained 7.8 per cent last week, as the market watched the initial public offering of Steve Wynn’s aggressively priced Wynn Macau at 34 times this year’s forecast earnings, raising $US1.63bn ($1.8bn) for the Las Vegas casino veteran.

The 7 per cent gain in the Wynn Macau price on Friday to $HK10.78 a share, or about 37 times forecast earnings, defied predictions that the float of 25 per cent of Wynn’s Macau operations was overpriced and would be a market flop.

Analysts say the sale of Mr Packer’s 33.5 per cent stake in the Macau casino joint venture between Crown and Lawrence Ho’s Melco could help to fund a privatisation of Crown by Packer’s private interests.

At the $9 per share he paid for Crown stock on Friday, a full takeover bid for the remaining shares in the company would cost Mr Packer $4.1bn.

But others say that with signs that the Macau casino market is at last turning around, Mr Packer would be better to hold his stake in the venture to cash in on the improved market outlook.

The prospect of further competition for the Asian gambling dollar from the opening of two new upmarket casino and hotel projects in Singapore next year would also be a factor in any assessment by Crown of the length of its holding in the Macau venture.

Crown has reduced its stake in the Macau venture from an initial 50 per cent before its US listing in December 2006, to 38 per cent earlier this year and now to 33.5 per cent.

After a hard year, there has been a turnaround in the atmosphere in the Macau casino business as a result of the improved economic outlook and a reported easing of visa restrictions by the Chinese government on visits by mainland citizens to Macau. Wynn’s market share in Macau has been challenged by the opening of the $3bn City of Dreams casino project on Macau’s Cotai Strip, the flagship of the Packer-Ho joint venture.

“Wynn has done a lot better than we expected,” said Alex Wong from Ample Finance Group in Hong Kong on Friday.

Australian Shareholders Association representative John Curry said investors would quiz Mr Packer on his intentions for Crown at the company’s AGM in Melbourne on October 28.

Source: The Australian – 12 Oct 2009