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Hospitality arm of F&N aims to add 5,000 serviced units over next two years

FRASERS Hospitality, undaunted by the uncertain global economic outlook, is pursuing an aggressive expansion strategy in China, India, Vietnam and other markets.

The hospitality arm of Singapore-listed conglomerate Fraser & Neave is a ‘contrarian’ that aims to add about 5,000 serviced apartments over the next two years, despite fears of a global economic slowdown, said its chief executive Choe Peng Sum.

He sees ‘a lot of pent-up demand’ in cities such as Singapore, London and Sydney - where its residences have enjoyed occupancy rates of more than 90 per cent.

It is also the ‘right time now to get into China’ while growth opportunities are still bright in Vietnam and India, Mr Choe told a media conference yesterday to mark Frasers’ 10th anniversary, as well as to share its expansion plans.

In Singapore, where Frasers already operates two high-end serviced residences, it is planning a third property, but details will be released later, he said.

He added that Frasers has seen a robust 26 per cent rise in average room rates to about $400 per night for certain units in Singapore.

Farther afield, Frasers is also planning to plant its brand in places such as Edinburgh, Bahrain and Perth.

Noting that ‘growth in Asia and Europe (for extended-stay accommodation) is just starting to take off’, Mr Choe said Frasers expects to expand its portfolio to 8,478 units by 2010.

It will focus on China, India and Vietnam, which have strong long-term growth momentum.

Frasers is targeting new property launches in cities where demand for serviced apartments has been driven up by expatriates working for multinational companies that set up shop in these countries.

In China, where Frasers already has 12 properties in key cities such as Beijing and Shanghai under its brand, the company is looking to grow in other cities such as Chengdu, Nanjing and Tianjin.

As for Vietnam, while skyrocketing inflation poses challenges for the hospitality industry, land prices are now becoming ‘more reasonable’ as land owners are more realistic in pricing. This offers opportunities for Frasers to expand there, Mr Choe added.

India is another key growth market for Frasers, which has seven properties scheduled to be launched there over the next three years.

Frasers is also in talks to set up private equity funds to invest in China, India and South-east Asia.

Mr Choe added that plans to inject some of Frasers’ properties into a real estate investment trust are still in the pipeline, but it depends on the ‘right timing’.

GROWING THE BUSINESS

Frasers Hospitality chief executive Choe Peng Sum says the company expects to expand its portfolio to 8,478 units by 2010. Besides China, India and Vietnam, it is also planning to plant its brand in places such as Edinburgh, Bahrain and Perth.

REIT PLANS

Mr Choe says plans to inject some of Frasers’ properties into a real estate investment trust are still in the pipeline, but it depends on the ‘right timing’.
 
Source : Straits Times - 4 Jul 2008

But operating profit rises 35%; revenue jumps 69% to $365.6m

MAPLETREE Investments posted a 3 per cent dip in net earnings for the year ended March 31, 2008 to $1.04 billion because of lower net revaluation gain and higher net finance cost.

Operating profit, however, rose 35 per cent to $146.9 million on the back of first full-year contributions from VivoCity and St James Power Station (SJPS) and maiden contribution from The Beacon, a residential project at Cantonment Road.

The fully owned subsidiary of Temasek Holdings also achieved much higher occupancy and rental rates from all its investment properties across the board.

Revenue jumped 69 per cent to $365.6 million with VivoCity and SJPS contributing a total $99.5 million and The Beacon contributing $47.5 million.

The Temasek unit booked a net revaluation gain of $879 million (after deferred tax provision) for the latest financial year, lower than the $971.2 million in the preceding year.

Mapletree chairman Edmund Cheng said the group is exploring several mixed-use commercial projects in Vietnam (in Ho Chi Minh City, Hanoi and the provinces abutting them). ‘In line with our business model, we will seed these projects with our own balance sheet, and will consider the possibility of starting a Vietnam-focused fund once we have achieved a significant asset size,’ he said in his message in Mapletree’s latest annual report.

Elsewhere in the report, the group revealed it is ‘in the advanced stage of evaluating several projects comprising a wide spectrum of property types, from office, retail, residential, to industrial and service residential properties, with a view to seed a new Vietnam fund with these assets over the next few months’.

When asked, Mapletree’s spokeswoman said the Vietnam fund will be started within the next 12 months but this will depend on market conditions in Vietnam. The fund size will be at least US$500 million.

Mapletree’s real estate assets, both owned and managed, stood at $8.9 billion as at March 31, 2008, up 59 per cent from $5.6 billion a year earlier. Of these, its third-party assets under management (AUM) amounted to $3.1 billion, an increase of 94 per cent, while the group’s owned assets grew nearly 45 per cent from $4 billion to $5.7 billion.

Fee income, excluding fee income from associates, grew 40 per cent last year. The group’s AUM and fee income will be boosted significantly in the current financial year from the Mapletree India-China Fund launched in April this year and a new Mapletree-Arcapita Bank fund formed to hold the $1.7 billion portfolio of properties acquired from JTC Corp.

In an interview with BT in April this year, Mapletree CEO Hiew Yoon Khong projected the group’s total assets could hit $15 billion to $20 billion in a year.

The India-China fund has secured a US$600 million commitment at the initial closing and is currently marketing its second closing with a target to secure a total commitment of US$1.5 billion.

In Singapore, the group is developing Mapletree Business City, an office and business park with 1.7 million sq ft of total net lettable area and slated for completion in second-half 2010.

It is also developing a 19-storey Grade A office building at Anson Road called Mapletree Anson, which is expected to be ready in mid-2009. These two assets could be potentially sold at some point to the proposed Mapletree Commercial Trust.

This trust was to have been listed here earlier this year holding about $3 billion of the group’s assets in the HarbourFront and Alexandra Precincts with VivoCity as the anchor asset. However, the launch has been deferred due to unfavourable stock market conditions.

Source : Business Times - 03 Jul 2008

KepLand’s projects across the region will yield 54,500 housing units

TOWNSHIP developments in the region can offer large business potential. Tapping into this is Keppel Land, which currently has about 1,300 hectares of such projects across China, Vietnam, Indonesia and Malaysia. These developments are slated to yield 54,500 residential units on completion, and have been launched or planned for launch.

Phase one of a 34-hectare township development in Shenyang, China could be next in line for release in 2009.

According to Keppel Land International’s executive director and chief executive officer Ang Wee Gee, the property developer continues to actively pursue deals in Shenyang. ‘We might be able to announce some interesting deals in the near future,’ he said.

Mr Ang observed that residential prices in Shenyang have increased by an average of 10 to 15 per cent per annum over the last several years and the trend is likely to continue. This is a healthy growth rate because it is driven less by speculation, and more by demand for homes for occupation, he pointed out.

What of the outlook for property developments in Vietnam? Some analysts have been bearish over falling sale prices and expect developers to delay launches. Keppel Land currently has 431 hectares of township developments which have been launched or planned for launch in Vietnam.

Mr Ang said Keppel Land’s deals are ‘above water’ - it acquired seven sites in Vietnam last year on projections of lower selling prices before the property market peaked. ‘If these projects are presented to us today, we will still proceed to acquire them,’ he said.

Mr Ang also said that Keppel Land’s property launches in Vietnam will proceed according to plan.

He believes fundamentals remain strong in growing economies such as Vietnam and China, and factors such as rapid economic growth and urbanisation will continue to boost demand for housing.

There may be short-term market fluctuations but ‘we want to build our presence and that entails a longer term strategy,’ said Mr Ang.

Keppel Land shares closed at $4.96 yesterday, down 7 cents or 1.4 per cent.

Source : Business Times - 01 Jul 2008

THAKRAL Land is selling the remaining 17 apartments it owns at The Sovereign, a freehold condo in Meyer Road that it developed more than a decade ago.

Based on asking prices of $1,300-1,500 psf for lower-floor units and $1,800-2,500 psf for upper floor units, the total price works out to between $75 million and $99 million

Thakral is open to selling the units individually or to a single party. Market watchers reckon a bulk buyer who takes the whole 17 apartments would get some discount.

All the units are leased or about to be leased. Based on current monthly rents of $3.20 to $4.50 psf, the net yield works out to around 2.5 per cent, says Jones Lang LaSalle’s Singapore and South-east Asia managing director Chris Fossick, whose firm is sole marketing agent for the 17 apartments, each of which has four bedrooms.

A party that buys all 17 units may also hold the key to a potential collective sale of the condo, which has a total of 87 units. The 17 units that Thakral is offering represent 19 per cent of share value and about 26 per cent of the total sq ft area.

There is redevelopment potential as the site’s current Masterplan plot ratio - ratio of maximum potential gross floor area to land area - is 2.8, which is higher than the 1.8 plot ratio tapped by the existing property.

The unutilised plot ratio may be tapped by building an additional block or tearing down the existing project and redeveloping the 143,918 sq ft site into a brand new condo.

The 30-storey Sovereign, at 99 Meyer Road, received its Temporary Occupation Permit in 1993.

It is next to a 115,300 sq ft plot of land at 97 Meyer Road sold by Della Suantio Lee last year to Hong Leong Group for around $200 million. The price worked out to around $760 psf of potential gross floor area, including development charges (DC), according to an earlier report.

Dr Lee is the wife of Lee Foundation chairman Lee Seng Gee.

Source : Business Times - 28 Jun 2008

Acquisition enables creation of pure-play Malaysian retail Reit by year end

CAPITALAND has acquired its third Malaysian retail asset, buying nearly 62 per cent of the total retail area of Sungei Wang Plaza, located in the Kuala Lumpur city centre, for RM595 million (S$250 million).

The acquisition from a private entity called Sungei Wang Plaza Sdn Bhd includes the car parks and was done through an asset securitisation structure, which would see Sungei Wang held by a special purpose vehicle called Vast Winners, according to a CapitaLand statement yesterday.

Property consultants said that the deal was a positive sign for the local market, and while they expected CapitaLand to add value to Sungei Wang Plaza, the company was also gaining from a solid cash-flow acquisition.

‘They’re buying into a good stream of cash flow,’ Zerin Properties chief executive Previndran Singhe told BT, adding that there is still upside in the complex, particularly with CapitaLand’s expertise in mall management.

In the media statement, CapitaLand Retail chief executive Pua Seck Guan said much the same, noting that through CapitaLand’s proactive management and by leveraging on its retail real estate management expertise, ‘there are tenancy remixing opportunities to create significant value at Sungei Wang’.

CapitaLand had already acquired Gurney Plaza in Penang and Mines Shopping Fair in Selangor. With the Sungei Wang Plaza acquisition, it has now accumulated assets totalling about RM2 billion. This puts it on track to establish a proposed pure play Malaysian retail Reit by year end, Mr Pua said.

Of the three, Sungei Wang Plaza, which roughly translates to river of money, is the cream of the crop. Located in the city’s Golden Triangle at the Bukit Bintang shopping district, its annual visitors surpass 24 million, while its occupancy is close to 100 per cent. It is also easily accessible as it is located next to a monorail station, and according to some, enjoys one of the highest rentals on a per square foot basis in the city.

Despite the emergence of newer, flashier malls, the long-established plaza continues to attract locals and tourists who like its eclectic mix of shops.

In Malaysia, CapitaLand has a listed commercial Reit - QuillCapita - via a joint venture with local partner Quill Group. However, that Reit is more of a pure-play commercial Reit because it prefers not to take on retail malls which require shopping centre management skills.

On the asset securitisation structure, CapitaLand said that Vast Winners has issued three tranches of senior medium-term notes - Classes A, B, and C - as well as a tranche of subordinated Class D medium- term notes.

Its wholly owned subsidiary Gain 888 Investments has fully subscribed for the Class D notes in the principal amount of RM338 million, while the senior medium-term notes were fully taken up by a Malaysian financial institution, which has asked not to be identified.

Source : Business Times - 26 Jun 2008