IN THE space of a week, residents in two housing estates – dismayed to learn that new rental blocks were being built near their homes – have gone up against the Housing Board.

They have met Members of Parliament and HDB officials over the issue.

Some of the more than 20 residents who spoke to The Straits Times were concerned that the rental flats would lower the quality of the neighbourhood and the value of their homes. Others were vocal about not having been consulted.

The residents in the vicinity of Block 885 in Tampines Street 83 form one group, while those around Blocks 475 and 476 in Pasir Ris Drive 6 form the other.

The Tampines residents found out about the HDB’s plan to build a 14-storey block of rental flats last month. In Pasir Ris, a notice went up about 10 days ago in the lift lobbies of the blocks next to the earmarked plot, informing residents that work would start this month.

Pasir Ris residents said that with the rental block so near theirs, their new neighbours would be able to look into their living rooms and bedrooms.

Asked about this, the HDB replied that it would follow prevailing building guidelines on the amount of space between new and existing housing blocks.

Over in Tampines, Ms Agatha Tee, 50, said she was concerned that the new block would rob her home of a view and the breeze.

Pasir Ris residents sounded a concern over safety. Some said they feared the flats would house foreign workers or be sublet illegally.

A 50-year-old financial consultant who identified herself as Mrs Choo said: ‘Smokers and drinkers may gather at the void deck. Many families here have young children and teenagers. We don’t want them led astray.’

The HDB, responding to questions from The Straits Times, said it was building 8,000 rental flats for the poor and needy, to be spread across the island ‘to achieve a balanced social mix’.

It added that the two sites had been zoned as residential sites and ‘would not have remained as vacant land’.

It also disclosed that new rental flats are going up in Choa Chu Kang, Woodlands and Punggol, and that rental blocks in Sembawang and Yishun had blended well with existing blocks and had not ‘created disamenities’ for residents there.

The island has 42,000 rental flats.

The Tampines and Pasir Ris residents, upset at not being told earlier about the building plans, said they would have suggested alternative sites for the rental flats. Tampines residents said they would have suggested that the rental block stand eight storeys high instead of 14.

More than 70 Tampines residents met HDB representatives and their MP Sin Boon Ann last Saturday over the matter.

Mr Bernard Fernando, 61, said: ‘What we wanted was to be included in the consultation. Mr Sin should have had the decency to consult his constituents, but he conveniently bypassed us.’

Asked to comment on residents’ charge that they had not been consulted, Mr Sin replied that this was HDB’s project, some details of which were confidential. He said that consulting the residents about the rental flats would have also led to the premature release of price-sensitive information affecting people’s decision to buy or sell flats in the area.

Emotions ran no less high when Pasir Ris residents met their MP and HDB representatives last Thursday. Asked to comment on residents’ gripes, the HDB responded: ‘HDB as well as the local advisers have been in touch with the residents on their feedback and concerns.’

When contacted, National University of Singapore sociologist Paulin Straughan said: ‘This is a particularly tough issue because it has to do with housing, and we can understand that housing concerns, or anything concerning neighbourhoods, draw a lot of sentiment…most Singaporeans have put their life savings into home ownership, and they worry how their investment is affected.’

Source: Straits Times, 9 Feb 2010

A NEW real estate investment trust (Reit) is headed for a listing on the Singapore Exchange (SGX), this time investing in logistics properties.

Cache Logistics Trust (CLT) has obtained a letter of eligibility to list on the mainboard, said a statement from real estate fund management company ARA Asset Management, a major shareholder of the manager of the Reit, yesterday.

Reits earn income from the rents of properties they own, and make regular payments to unit holders.

CLT will be managed by ARA-CWT Trust Management – a joint venture

Reit management company owned 60 per cent by mainboard-listed ARA and 40 per cent by logistics company CWT.

The new Reit will start out with six logistics properties located in Singapore worth about $730 million, with a total gross floor area of 3.9 million sq ft and average lease periods of just over two years.

It will also have the right of first refusal to acquire logistics properties in the Asia-Pacific owned by CWT and its substantial shareholder C&P Holdings.

CLT aims to become the leading logistics Reit in the region by making full use of ARA’s expertise in Reit management, CWT’s logistics operational expertise, as well as both their networks and relationships in the Asia-Pacific, ARA said.

‘We are natural partners with complementary strengths,’ARA group chief executive John Lim said.

‘CLT marks ARA’s first foray into the industrial logistics sector and we will proactively look to expand our capabilities in this segment in both the public and private investment markets.’

The opportunity to boost the scale of an industrial logistics real estate fund management platform was immense, he said, adding that ARA was well-positioned to pursue growth in this area: ‘We continue to seek more strategic partners for collaborations to expand our Reit and fund management platforms into new sectors and geographies.’

CWT group CEO Loi Pok Yen also said the listing of CLT will boost his firm’s financial capacity and flexibility and enhance its ability to expand both regionally and globally: ‘We are confident that this partnership adds tremendous value to the platform and can help distinguish CLT as the leading logistics Reit in the Asia-Pacific region.’

ARA had total assets of $12.5 billion under management as of last September and is the manager of Suntec Reit and Fortune Reit, listed on the SGX.

It is also manager of Prosperity Reit, listed on the Hong Kong Stock Exchange, as well as AmFIRST Reit, listed on Bursa Malaysia, while CWT is a global provider of supply chain logistics solutions.

Source: Straits Times, 9 Feb 2010

Company cautiously optimistic about the outlook of its construction business

KSH Holdings made a net profit of $5.09 million for the three months to end-December 2009, reversing a loss of $965,000 a year earlier, as expenses fell more quickly than revenues.

For the first nine months of its current financial year, which started on April 1 last year, the construction and property group’s net profit rose 55 per cent to $15.1 million, due mainly to lower construction costs, compared to a year earlier.

KSH, which has construction businesses in Singapore and Malaysia, and property development and property management operations in China, said its operating margins improved for both the three-month and nine-month periods ended Dec 31, despite lower revenues, as construction costs fell.

The group’s finance costs also fell sharply, to $581,000 for the three months to end-December, from $3.76 million a year earlier, as all its outstanding convertible notes had been redeemed by June 2009, and no further interest had to be paid on the notes in the most recent quarter, KSH said.

Its construction business in Singapore, where it acts as contractors for both private and public sector construction projects, is the group’s main revenue contributor.

KSH said it was ‘cautiously optimistic’ about the outlook of its construction business. It had a construction order book of over $390 million in Singapore at the end of January, it said.

But it ‘remains cautious’ on the possible impact that economic conditions and uncertainty in labour and material costs may have on the group’s performance for the next 12 months, it added.

‘Barring unforeseen circumstances, the group should remain profitable for the current financial year,’ KSH said.

In 2009, the group secured $159.7 million worth of contracts from the National University of Singapore for various construction projects, including residential buildings for the school’s university town.

KSH’s share price fell 2 per cent to 25 cents yesterday, before the earnings announcement, which was made after trading ended.

For the three months to end-December, its revenue fell 4.9 per cent to $82.5 million, compared to a year earlier, due mainly to a fall in income from its construction business as four projects were completed.

The projects are a five-storey shopping complex, Tampines Central 1, two other industrial developments – Forte at New Industrial Road and Platinum 28 at Genting Lane – as well as a residential project, The Coast at Sentosa Cove.

The $44.9 million loss in revenue contribution from these projects in the third quarter of its financial year was partly offset by a $41 million increase in revenue from a new project and ongoing projects that are still under construction, KSH said.

Source: Business Times, 9 Feb 2010

THE manager of Mapletree Logistics Trust (MapletreeLog) has filed a bankruptcy petition against Mr Ang Chee Seng for defaulting on a lease agreement.

Mr Ang is the guarantor and company director of Elchemi Assets, which used to occupy the industrial property at 9 Tampines Street 92.

A MapletreeLog Management statement yesterday said that it has repossessed the property – a two-storey warehouse with an ancillary office – and is marketing it for lease.

It has a net lettable area of 11,089 sq m and accounts for only about 0.5 per cent of the total net lettable area of MapletreeLog’s portfolio as at Dec 31 last year.

The bankruptcy petition will be heard on March 4, the manager of the logistics real estate investment trust said.

Elchemi apparently started its lease in end-2008 and has not paid rent for a few months.

MapletreeLog Management said it has obtained summary judgment against the former tenant and Mr Ang, and that the matter is under appeal to be heard on Thursday.

It bought the property, which has a 30-year lease from 1993 with an option to extend, for $11 million in early 2007.

Elchemi Assets is part of the Singapore-headquartered Elchemi Group, a private global investment firm established in 2008, according to the group’s website.

The company develops high-tech value-added facilities for lease to corporate customers, said the website.

Source: Straits Times, 9 Feb 2010

TWO lawyers argue in a new article that real estate investment trusts (Reits) in Singapore could better protect creditors and unitholders if they were corporatised instead of operating as trusts.

They question the current relevance of trust structures and point to Britain and the United States, which have shaped Reits to run along company law principles.

Reits are investment instruments listed on the Singapore Exchange that allow small investors a relatively cheap way to invest in property. They typically own properties of a particular type, such as shopping malls or medical facilities, and earn income from rent. Unitholders receive regular payouts similar to dividends.

Ms Lee Suet Fern and Ms Linda Foo, writing in a special issue of the Singapore Academy of Law Journal published last week, suggest the current trust framework underpinning

Reits here may not be suitable in future. Ms Lee is senior director of Stamford Law, where Ms Foo also works.

They argue that a corporate structure would also cut the liability for unitholders in the event of insolvency, compared with the trust structure.

In Reits, corporate taxes are minimised if most taxable income is distributed to unitholders. This makes Reits a high-dividend yield play relative to other asset classes such as shares or property unit trusts, said an industry source.

As of last October, 21 property-related investment trusts with a market value of about $26 billion were listed here. In making out the case for corporatisation, the authors point to the US practice in which more than 70 per cent of Reits are constituted as state law corporations.

British policymakers also mandated the corporate form for Reits and eschewed the unit trust option entirely.

In contrast, Reits here are organised mainly as unit trusts, a form of collective investment scheme. But among other things, Reits in Singapore are administered by trustees as well as managers, with each bearing different roles and requirements.

A corporate form would remove this division of roles and the potential overlaps and conflicts from ‘multiple masters’. It would also better protect creditors in the event of an insolvency of a Reit or its trust.

The authors argue that the regulation of Reits here shares many features with that of companies. They concede there may be a serious tax disincentive in transforming Reits into companies, but point to the examples of the US, Britain and Australia where ‘the governance of Reits may be aligned with company law principles without withdrawing tax transparency’.

‘Ultimately the authorities will have to discern the appropriate balance between market development and the protection of investors and creditors,’ they wrote.

Industry sources said the article is timely as the global credit crunch last year showed up difficulties for Reits, and corporatisation held potential benefits.

Financial adviser Roy Varghese said that in a unit trust, the manager picks the securities and the trustee has specific legal duties outside of investment management.

‘Within a Reit, the lines can be blurred. The unitholder of a Reit will be better served if there is no potential conflict of interest or overlapping of functions,’ he said.

‘It also makes sense that corporatising the structure will help in injecting cash flow in the operations of the real estate fund, given that Reits are viewed as a source of passive income for unitholders.’

Source: Straits Times, 9 Feb 2010

FOLLOWING feedback from some Eunos residents about external lift shafts blocking their flats, the Housing Board (HDB) has formed a working group comprising some of them, as well as representatives from the residents’ committee, town council and the board.

Formed this year, the group was seen by some residents as a positive step forward. Others remain sceptical that the problem will be resolved.

The issue at Blocks 411, 415 and 417 at Eunos Road 5 came about in 2006, when affected residents found out that the new shafts would be sited in front of their units, which they say blocks off some light and air.

Over the years, the residents have had numerous meetings with their precinct’s Member of Parliament and the HDB.

But an HDB bid to solve the problem was dismissed last November by affected residents, who said the designs still did not address their concerns.

Affected resident Chew Keng Woh, a 64-year-old retiree in Block 415, is one of those who has volunteered to be part of the committee.

Commenting on his new role, he said: ‘If they can give us 60 per cent (of what we want), let them finish the work.’

It is understood that the feedback process is still under way.

Source, Straits Times 9 February 2010