Capitaland and Ascott
CapitaLand (CAPL) acquires US$835m (S$1.14b) US multi-family portfolio of 3,787 multifamily apartments (average price: US$220,000/unit) across suburban communities in Seattle, Portland, Greater Los Angeles and Denver.
The acquisition is in-line with CAPL’s strategy to diversify outside Singapore and China to developed markets and to grow new businesses. CAPL also anticipates value enhancement to the properties.
The consideration would be funded by CAPL’s internal resources. Pro-forma impact to EPS and NAV/sh is not expected to be material.
Potential upside from the portfolio growth include the option to spin off the assets into investments vehicles and partnerships, and also to build the business into other markets such as China.
Separately, CAPL had also announced that its wholly-owned serviced residence SBU, The Ascott Limited, had invested US$26m (S$35.7m) for a 70% stake in TAUZIA Hotel Management, which marks Ascott’s first major move into the lodging segment beyond its core serviced apartment business and existing business in apartments for corporate lease.
TAUZIA is one of Indonesia’s top five hotel operators with close to 20,000 units across 122 hotels in Indonesia, Malaysia and Vietnam, half of which are under development.
The acquisition will put Ascott’s portfolio to over 94,000 units, surpassing its 2020 target of 80,000 units, and is a step closer to Ascott’s target of 160,000 units by 2023, which would incorporate an extension of its mandate to the business hotel space.
Ascott Residence Trust (ART) may be considering sale of Ascott Raffles Place after an expression of interest (EOI) closed recently for the 146-unit 999-year leasehold serviced apartment property at Raffles Place.
According to the Business Times, the EOI, which was launched after several unsolicited bids, may have drawn offers which crossed S$350m (63% above the latest valuation of S$215m).
Potential upside for the buyer could be realized via the subdivision of the larger sized (48-148 sqm) apartments or via conversion of the conserved property into office or co-working space, while ART could redeploy the capital to acquire the 299-unit Citadines serviced residence component of CapitaSpring. (Source: The Business Times)
Aug-18 monthly sales update
Sales moderate post measures. August-18 home sales fell 64% to 616 units with transactions moderating post the 6-July cooling measures and the onset of the Hungry Ghost Month.
New launches, such as The Tre Ver and 8 Saint Thomas, still saw modest demand despite the overhang from the measures, while we anticipate that lower launch prices could see a revival of buyer interest for new launches in September.
Developers are up 0.8% since the measures were announced, outperforming the FSSTI (-1.6%).
We think valuations for Developers remain undemanding, trading at 1SD below mean, with renewed buying interest for new launches a potential share price catalyst.
Our top pick remains UOL with its lower-priced mid-end landbank. Link. (Source: URA, J.P. Morgan estimates)
Three en-bloc collective sales launched
Laguna Park, the 669,484 sqf 99-yr leasehold (59-yrs remaining) East Coast development, is launching its collective sale at a reserve price of S$1.48b or S$1,253 psf (inclusive S$870m development charge and lease top-up on GFA of 1.87m), which implies average selling price of S$1,960-2,050 psf to achieve PBT margins of 5-10% on breakeven of S$1,860 psf.
Two other prime freehold sites in District 9 were also relaunched, namely Grange Heights in St Thomas Walk (S$820m or S$$2,143 psf, which is 3% lower than previous tender price of S$845m), and Cairnhill Astoria in Cairnhill Rise for S$196m, although psf pricing has risen 8.2% to S$2,126 psf vs. initial S$1,964 psf due to a doubling of the estimated development charge to S$34m from S$16m. (Source: The Business Times)