CDL may put all its offices into a new Reit
Portfolio could be worth up to $3b; meanwhile, firm posts $128m profit
PROPERTY tycoon Kwek Leng Beng has indicated that he may put all his office properties into a new real estate investment trust (Reit) as early as next year. This portfolio of assets is estimated to be worth up to $3 billion.
This follows months of speculation about Mr Kwek’s plans for the considerable office assets owned by his City Developments (CDL) group, after a deal to sell a package of 11 CDL properties to Suntec Reit fell through last year.
The developer said in August that it had rejected an ‘unsolicited’ offer that valued the bundle of assets at ‘over $200 million’ more than the $788 million initially offered by Suntec Reit.
At that time, CDL also said it was looking into options for these properties that included injecting them into a new Reit or selling them at a later date.
But Mr Kwek indicated yesterday that a new office Reit, rather than a simple divestment, may be the right move for CDL, Singapore’s second-largest developer.
‘Next year we have more leases coming up for renewal, so next year will be the right time for us to think about doing a Reit,’ he told The Straits Times.
Mr Kwek added that if CDL decides to go ahead with the Reit, it is likely to inject all its office properties at the same time. ‘When we want to create a Reit, we will put everything into it, because then we have critical mass.
‘It will be worth at least more than $1 billion and who knows, we may also add the offices owned by our private companies.’
CDL has more than two million sq ft of office space in Singapore - most within the Central Business District - including Republic Plaza, which alone makes up 750,000 sq ft.
ST understands that CDL’s entire office portfolio, which is now enjoying occupancy rates of 92 per cent, could be worth up to $3 billion.
Mr Kwek also said that while the Reit would initially comprise ‘all Singapore assets’, it may ‘acquire more offices in the region and elsewhere’ in time to come.
Separately, CDL yesterday said its third-quarter net profit more than tripled to $128.3 million from $36.4 million a year ago. This was on the back of higher home sales - including St Regis Residences, for which CDL is booking profits for the first time - and the divestment of four hotels to CDL’s newly-launched hotel Reit earlier this year.
The profit surge came despite revenue rising just 13.8 per cent to $665.2 million.
For the first nine months, CDL sold 835 homes for $2 billion, compared with 2,100 units for $1.6 billion for the whole of last year.
Earnings per share jumped to 14.1 cents for the quarter from 4.1 cents a year ago. Net asset value per share inched up to $5.15 as at Sept 30, from $5.12 as at Dec 31.
CDL is proposing a special interim cash dividend of 7.5 cents per share, to be paid out on Dec 27. It will also pay 1.97 cents per preference share on Jan 3 next year.
CDL has at least one more residential launch planned for the year, a freehold 33-storey condominium next to Grand Copthorne Waterfront Hotel.
The 175-unit Tribeca, renamed from The Pharos, is expected to be soft-launched this weekend at about $1,400 per sq ft (psf).
Also in the pipeline is No 1 Shenton Way, which will be launched either later this year or early next year. The 341-unit project is expected to be priced at between $1,400 psf and $1,600 psf.
CDL shares closed unchanged at $11.60 yesterday.
Source : Straits Times - 15 Nov 2006
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