Keppel corp tie up with Vicinity, Manulife REIT DPU declines, LOGOS acquisition of an industrial building

Vicinity centres

Keppel Corporation’s (KEP) 100%-owned asset management arm, Keppel Capital Holdings (KCH), has entered into an MOU with leading Australian retail property group, Vicinity Centres (VCX), to establish a new retail-focused private fund, which intends to invest in an initial A$1b portfolio of Australian retail properties across five Australian states currently owned by VCX. KCH and VCX will manage the fund via a 50:50 JV, while each party is expected to initially hold up to a 10% equity stake in the fund, which is targeted to close by 1Q19. The fund’s investment strategy is to own, acquire and grow a diversified portfolio of Australian retail assets with stable yields and potential long-term capital growth, underpinned by high occupancy rates balanced lease expiries and diversified tenant base predominantly focused on non-discretionary spending. VCX will provide property and development services for these properties. Separately, KEP’s 100%-owned property arm, Keppel Land (KL), has acquired a residential development site in Chengdu, China from Sichuan Shengdai Food Co. for an equity value of RMB373m (S$74.6m), which is based on its market value of RMB416m. (Source: Keppel Corporation)

City Developments’ (CIT) 65% owned Millennium & Copthorne Hotels (MLC) saw 2Q18 PBT falling by 19% YoY to £39m (in constant currency terms), due to weaker hotel performance notably in London and a £3m reduction on timing of one-off gains. Group RevPAR declined 1.7%, largely due to London (-19%), Regional US (-4%) and Singapore (-2%). Newly appointed CEO Jennifer Fox is currently developing a strategic plan and has been reviewing the earnings profile/potential of MLC’s most important properties. She has reinforced the leadership team with two major appointments since arriving on 19-Jun-18, including a new Group Chief Marketing Officer and Head of Human Resources. (Source: Millennium & Copthorne Hotels)

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Chip Eng Seng Corporation (CHIP) turned in 2Q18 net profit of S$11.1m (vs. net loss of S$2.6m in 2Q17), helped by increased contributions from both its property developments and hospitality arms. After the recent property cooling measures, CHIP will cautiously replenish its landbank in Singapore. Its latest project, Park Colonial, has already achieved take-up of 52.6% since its Jul-18 launch, while Grandeur Park Residences is now 96% sold. (Source: Chip Eng Seng Corporation)

OUE Hospitality Trust (OUEHT) clarifies that the proposed infringement decision by the Competition and Consumer Commission of Singapore (CCCS) concerns OUE Airport Hotel (OUEAH), a subsidiary of OUE Limited, and Inter-Continental Hotels Singapore (IHG Singapore). OUEAH is the master lessee of Crowne Plaza Changi Airport hotel, while IHG Singapore manages Crowne Plaza Changi Airport hotel. (Source: OUE Hospitality Trust)

OUE’s 2Q18 net profit falls 24.6% YoY to S$5.3m with revenues falling 19.6% to S$150.7m due to the absence of contributions from development properties. Revenues from investment properties (+4.2% to S$69.8m) and hospitality (+11.1% to S$54.0m) were higher due to contributions from Downtown Gallery and Oakwood Premier OUE Singapore, which commenced operations in May and June 2017. Contributions from equity-accounted investees also fell 51% to S$7.4m due to the termination of the JV in Gemdale Properties and Investment Corp (Gemdale), with OUE’s share of Gemdale held via a wholly-owned subsidiary currently. (Source: OUE Limited)

Hatten Land (HATT) to acquire Malaysian developer Velvet Valley at a consideration of MYR 43m (S$14.4m) at a 20% discount to the independent valuation of MYR 53.8m. Velvet Valley is currently developing the 7,936 sqm mixed development Unicity project in Seremban, Malaysia, which is expected to complete in 4Q18. Velvet Valley is privately owned by Hatten Land executive chairman and managing director Colin Tan, Hatten Land executive director and deputy managing director Edwin Tan, and an unrelated third party and the acquisition will be subject to shareholders’ approval at an EGM. (Source: The Business Times, Hatten Land)

Also read: History of Singapore’s property cooling measures since 2011

Manulife US REIT’s (MUST) 2Q18 DPU declines 17.2% YoY to 1.30 US cts due to the impact of the preferential offering and the limited 9 days contribution from the acquisition of Penn and Phipps. DPU restated for the rights and preferential offering/DPU adjusted for the enlarged unit base were -9.7%/+5.5% over the prior period. Revenues/NPI were up 63.4/59.3% to US$32.5/20.4m due to higher contributions from Plaza and Exchange in New Jersey, and the newly acquired Penn and Phipps in Washington D.C. and Atlanta. MUST’s portfolio saw positive rental reversions of 7.2% while valuations were up 1.4% since Dec-2017. MUST has declined 5.1% YTD, outperforming S-REITs (-6.2%), and is trading at FY18/19E consensus dividend yield of 6.7/7.1%. (Source: Manulife US REIT, Bloomberg)

BBR’s 2Q18 net loss widens 57% to S$3.5m (vs.2Q17 net loss of S$2.2m) with revenues declining 39.6% to S$29.6m on lower construction activities and the absence of contributions from property development as all development units have been sold. BBR has completed The Wisteria (216-unit condominium at Yishun Ave 4) and The Wisteria Mall, which is 80% occupied. BBR will focus on the mixed commercial and residential redevelopment of Goh and Goh Building at Upper Bukit Timah Road. (Source: BBR Holdings)

Sasseur REIT’s (SASSR) inaugural results exceed forecast with DPU of 1.587 Scts 4.6% above forecast for the period from 28-Mar (IPO) to 30-Jun-18. Revenues and EMA rental income (similar to NPI) were 8.8/3.0% above forecast due to higher outlet sales at all four portfolio properties. Portfolio occupancies were at 94.5% with aggregate leverage of 33.2% and all-in financing costs of 5.4%. SASSR has declined 8.8% since its IPO on 28-Mar, underperforming S-REITs (-1.9%), and is trading at FY18/19E consensus dividend yield of 8.4/9.3%. (Source: Sasseur REIT, Bloomberg)

Fragrance Group (FRAG) has incorporated City Gate Shopping Mall Management under its 50%-owned JV, Bayfront Ventures, with a paid up capital of S$2. (Source: Fragrance Group)

SingHaiyi Group (SHG) has bought back 40,000 shares for S$4,004 or at average price of S$0.099/share, which brings its cumulative shares purchased to date at 0.217m shares (0.005% of share base). (Source: SingHaiyi Group)

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A freehold good class bungalow (GCB) along Belmont Road (Holland Road/Bukit Timah Road area) has been sold to Ms. Kuok Hui Kwong (Chairman of Shangri-La Asia and daughter of Malaysian tycoon, Mr. Robert Kuok) for S$43.5m or S$1,430 psf on land area of 30,420 sqf. In Singapore, PRs can only buy a landed residential property which does not exceed 15,000 sqf in land area and not within a GCB Area, with each applicant further subject to assessment on a case-by-case basis considering his/her economic contribution. More stringent rules are required to buy a landed residential property exceeding 15,000 sqf and within a GCB area, such that their economic contribution in Singapore must be exceptional. Only five PRs were granted approval over the past six years to buy a GCB property exceeding 15,000 sqf. Ms. Kuok is a Malaysian citizen and Singaporean PR. While 7M18 GCB transaction value is only S$494m (vs. S$889m in full-year 2017), requests for viewings have picked up last week after the recent cooling measures. (Source: The Business Times)

Private logistics property specialist, LOGOS, has acquired Tien Wah Press Building, a three-storey 60-year leasehold (38 years left) industrial property along 4 Pandan Crescent (West Coast Road area). LOGOS will redevelop the property into a six-storey modern ramp-up multi-tenanted e-commerce logistics hub with NLA of 110,000 sqm. Total development cost of S$270m translates to S$208 psf on GFA of 1.3m sqf, with construction starting in 2019 and Phase 1 completion in late-2020. It is currently in discussions with several potential tenants. The acquisition is done by LOGOS Singapore Logistics Venture (S$0.8b fund), which focuses on acquisition/development of high quality modern logistics properties in Singapore and presently has fourth other properties, including two completed multi-storey logistics warehouse facilities and two development sites. (Source: LOGOS)

UOB’s CEO Mr. Wee Ee Cheong expects the recent cooling measures to result in property prices declining by 5-10% over time. (Source: The Business Times)

The property cooling measures have diverted the spotlight from the private residential market to the shophouse market, where 7M18 transaction value of S$976m is close to the S$1b in full-year 2017 while median prices have risen to S$3,555 psf (vs. S$3,301 psf previously). (Source: The Business Times)

Resorts World Sentosa (RWS) saw strong average visitation of 18,000/day for its attractions in 2Q18, while average occupancy of over 91% for its hotels outperformed the industry. (Source: Genting Singapore)

Also read: Capitaland’s sales of Twenty Anson for S$516m

Singapore’s largest IT products/services provider, Challenger Technologies, noticed a slowdown in retail sales towards the end of 2Q18 and expects the challenging operating environment to continue into 2H18. It remains cautious of the uncertain economic outlook, which may weaken local consumer sentiment. In anticipation of this, the group has made plans to unveil two new retail concepts to reach out to a more diverse group of customers, namely: (1) at JCube by Aug-18, which stocks end-of-life, demo and trade-in IT products, as well as accept pre-owned IT products from ValueClub members at a later phase. (2) Musica.Boutique at ION Orchard by Dec-18, which sells mid to high-end audio products in a lush setting. It will also open a new 5,000 sqf store at Paya Lebar Quarter in 4Q18. (Source: Challenger Technologies)

F&B firm, Galeno, which runs the 1919 Waterboat House and Rooftop Bar at Fullerton Waterboat House, is seeking a High Court order to compel its landlord, Precious Land (JV between Far East Organization and Sino Land), to extend the restaurant’s lease and bar’s license for two more years, based on option to renew clauses. Precious Land did not offer this option and was opening marketing the premises to prospective tenants, despite Galeno submitting a written request. (Source: The Straits Times)

Violet Oon is opening a fourth restaurant at Level 3 of ION Orchard in middle of Oct-18, which will serve food from colonial times. The space covers 2,700 sqf and also has a retail shop. (Source: The Straits Times)

Changi Airport’s Terminal 4 officially opened by Coordinating Minister for Infrastructure Khaw Boon Wan. With T4, Changi’s four passenger terminals can now accommodate up to 82m passengers a year. (Source: The Business Times)


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