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ASCENDAS Real Estate Investment Trust (A-Reit) yesterday said it will develop a partial build-to-suit distribution facility at Changi LogisPark (North) with Zuellig Pharma as its anchor tenant.

The proposed project is expected to cost about S$32.5 million with completion slated for early 2008.

A-Reit said in its statement yesterday that the development, to be built on a 20,137-square-metre site, will be a two-storey distribution centre-cum-office facility.

The land tenure is 60 years starting from Jan 1, 2007.

The gross floor area for the project is pegged at 30,439 sq m, with net lettable floor area estimated at 28,619 sq m.

Zuellig Pharma, a marketing and distribution company for pharmaceutical products, will commit to 80 per cent of the space for 10 years from the completion of the building, with an option to renew for another 5+5 years upon the expiry of the initial lease.

The remaining 20 per cent of the space at the proposed development will be leased to third-party users.

The transaction also includes a lease restructuring on Zuellig Pharma’s existing tenancy in its Changi Logistic Centre premises, which will be vacated when A-Reit’s project is completed.

Tan Ser Ping, chief executive officer of A-Reit manager Ascendas-MGM Funds Management, said the proposed development will strengthen A-Reit’s relationship with Zuellig Pharma, an existing tenant, and reaffirm A-Reit’s commitment in providing total business space solutions that help its tenants improve their operating efficiency.

A-Reit has appointed Ascendas Land Singapore as development manager, and Ascendas Services as its project manager to oversee and supervise the development and construction process.

Source : Business Times - 22 Nov 2006

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

CITY Developments has said next year will be a good time for it to look at an office real estate investment trust (Reit), given that office rents are escalating and that more of its office leases will be up for renewal in 2007 than in the current year.

The property giant said this last night when it announced that Q3 net profit leapt from $36.4 million to $128.3 million on strong contributions from its residential business and one-off gains from the sale of long leases on four Singapore hotels to CDL Hospitality Trusts.

CityDev is rewarding shareholders with a special interim ordinary dividend of 7.5 cents a share gross.

The sterling Q3 performance boosted net earnings for the first nine months of this year to $214.4 million - more than double the $99.7 million in the same period last year.

The group, controlled by Kwek Leng Beng and his family, also said it is ‘confident (that it will) continue to perform strongly in the next few years’, riding on the Singapore real estate market’s recovery.

Related article: Click here for CityDev’s Q306 / 9M06 financial statements

‘The group has one of the largest landbanks and is one of the biggest commercial landlords in downtown Singapore,’ CityDev said. ‘It will definitely benefit from this recovery, hence reinforcing its strategy of being the proxy to the Singapore property market.’

Besides the high-end residential sector, which has been sparkling, CityDev said the mid-tier housing market is starting to recover. ‘The group is in an advantageous position to extract maximum value from its landbank, which can be developed into mid-tier and niche projects, thereby positioning itself favourably to ride on the growth of the property market,’ it said.

CityDev sold 835 homes - mostly in high-end projects - for a total of about $2 billion in the first nine months of this year. In the whole of last year it sold 2,100 homes worth a total of $1.6 billion. Progressive recognition of earnings on units sold as its projects are developed will help underpin CityDev’s bottom line for the next few years, analysts say.

CityDev plans to launch two projects soon - the 175-unit Tribeca, a freehold waterfront condo next to Grand Copthorne Waterfront Hotel; and 341 apartments on the 1 Shenton Way site, rising 50 and 42 storeys high in a two-tower development.

Other launches in the pipeline include a 110-unit condo on the Kim Lim Mansion site at Grange Road, a 59-unit boutique development at Balmoral Park/Stevens Road and a 236-unit luxury condo on the Quayside Collection site the group bought earlier this year at Sentosa Cove.

CityDev has also been replenishing its residential landbank. It has clinched at least four sites this year - Lock Cho Apartments in the Thomson area, Lucky Tower in Grange Rd, the Quayside Collection site on Sentosa, and Futura at Leonie Hill Rd. These sites together have a land area of 917,000 sq ft and cost a total of more than over $1 billion. The group is also poised to ride the improving office market, as supply continues to tighten.

Rental rates at its flagship Republic Plaza in Raffles Place have crossed $10 per square foot per month level lately, compared with about $6.50 psf achieved a year ago.

CityDev’s revenue for Q3 ended Sept 30, 2006 increased 13.8 per cent year on year to $665.2 million, while revenue for the first nine months of the year rose 7.2 per cent to $1.8 billion. Q3 earnings per share rose from 4.1 cents to 14.1 cents.

Net asset value per share at Sept 30, 2006 was $5.15, up from $5.12 at Dec 31, 2005. In the stock market, CityDev ended unchanged at $11.60 yesterday.

Source : Business Times - 15 Nov 2006

THE real-estate arm of Indonesian conglomerate Lippo Group is raising up to $110.92 million with the listing of a property trust called First Real Estate Investment Trust (First Reit) on the main board of the Singapore Exchange, according to a preliminary prospectus filed yesterday.

PT Lippo Karawaci Tbk, the largest listed broad-based property company in Indonesia, is offering 140.40 million units at an indicative range of 68 cents to 79 cents per unit.

The initial asset portfolio of First Reit, which will be managed by Bowsprit Capital Corp, will comprise Siloam Hospitals Lippo Karawaci, Siloam Hospitals West Jakarta, Siloam Hospitals Surabaya, and Imperial Aryaduta Hotel & Country Club.

All these properties are worth up to $257 million, making First Reit the first Singapore-listed Reit to have Indonesian-based assets. Each of the property will be leased to PT Lippo Karawaci Tbk.

Lippo, which is controlled by Indonesia’s Riady family, said the trust was established with the aim of owning and investing in diversified healthcare and related assets in high-growth markets in Asia, including Indonesia, Singapore, China, Malaysia, Thailand and Hong Kong.

‘First Reit seeks to invest in health care and healthcare-related assets that are positioned to capitalise on the growing demand for healthcare services in Asia,’ the prospectus said.

In fact, the group has already started the process of identifying and evaluating assets for future acquisition by First Reit.

The Reit manager has also entered into non-binding memoranda of understanding (MOU) with three companies managed by Singapore-listed Pacific Healthcare Holdings Ltd. This is related to the proposed acquisition and leaseback of two Singapore nursing homes, as well as a Singapore hospital. It has also entered a non-binding MOU with PT Nusautama Medicalindo in connection with the proposed purchase and leaseback of an Indonesian hospital.

First Reit manager is presently negotiating the financing and the broad lease terms with regard to the potential acquisition and leaseback of these properties. The manager intends to use a combination of debt and equity to fund future acquisitions, property enhancements and capital expenditure.

The group is forecasting a distribution yield of between 9.57 and 8.24 per cent in 2007.

Merrill Lynch and Oversea-Chinese Banking Corp are joint lead managers for the listing of First Reit.

Source : Business Times - 27 Oct 2006

Placement is to fund purchase of strata offices at Suntec City

SUNTEC Real Estate Investment Trust, controlled by Hong Kong tycoon Li Ka-shing, plans to raise up to $182.4 million for expansion by selling new units in the trust to investors.

In a statement released yesterday, ARA Trust Management (Suntec), which manages the Suntec Reit, said the property trust would sell 120 million Suntec units in a private placement with an issue price of between $1.48 and $1.52 per new unit, or a 1.9 to 4.5 per cent discount to yesterday’s $1.55 closing price.

ARA Trust’s announcement came after its chief executive Yeo See Kiat confirmed earlier in the day a Reuters report on the placement.

ARA Trust said the placement is to fund the first phase of Suntec Reit’s programme to acquire office strata units in Suntec City not presently owned by it.

The deal, of which Citigroup Global Markets Singapore is the financial adviser, lead manager and underwriter, is expected to be priced by today. This probably explains Suntec’s request for a trading halt today.

Click here for Suntec Reit’s FY2006 financial statements

Suntec Reit is expanding as Singapore’s office rents recover from their lowest in a decade and are expected to surpass their 1996 peak, reaching $11 per square foot by 2008, according to UBS AG’s estimates.

Suntec, based on three commercial and office complexes in Singapore, yesterday said it would pay investors $24.8 million in distributable income for its July 1-Sept 30 fourth quarter. The trust said investors would receive 1.91 Singapore cents per unit for Q4.

‘The office market is enjoying a strong growth momentum underpinned by sustained demand amid tight supply, translating into further rental growth in the third quarter of 2006,’ the company said.

Suntec Reit said gross office revenue rose to $15.5 million, exceeding its forecast by $3.7 million. Gross retail revenue increased to $29.4 million, also surpassing forecast by $6.7 million.

Source : Business Times - 27 Oct 2006