MP Sin Boon Ann has assured some Tampines residents, who were unhappy that HDB rental flats will be built right in front of their block, that the quality of their estate will not be hurt nor the peace be disturbed.

The MP for Tampines GRC will work with the HDB and residents to debunk the perception that rental flats are old, dirty and bad for image of the estate.

A block of rental flats will soon be built in front of Blk 885, Tampines St 83.

Bernard Fernando, a resident living in one of the units in that block, met HDB officials and MP Sin recently to express his unhappiness over the development.

“They shouldn’t build a towering block of 14 stories right beside our 12-storey block. It doesn’t really make sense. It will cut off the light and cut off the ventilation. If there is a need to build, we don’t object to it, but build a lower block,” said Mr Fernando.

Other residents are equally upset. “Most of the rental flats, normally, problem families will stay (there). Once got problem, anything will happen,” said a resident.

“You will lose everything. You block the air, the wind and everything,” said another.

Mr Sin said it is important to have the rental flats near amenities, and that the government has the final say over where the rental flats are sited. He said efforts will be taken to make things smooth for residents.

He said: “We’ll be working very closely with the contractors, HDB and town councils. We’ll be forming a committee, which also will comprise residents, to (find ways to) mitigate the effects of the noise pollution (during the construction of the flats).

“The new flats will be of the new-generation type, which will blend very nicely within the community itself, such that I don’t think one can visibly pick out these flats as rental flats.”

Some residents are concerned that the value of their homes will go down once the rental flats are up. However, property agents said this is highly unlikely.

Eugene Lim, associate director of ERA Asia Pacific, said: “For example, in Bukit Merah, you see resale flats that are next to rental flats still fetching very high resale prices.”

Some observers said public housing may be one issue debated at the next General Election.

Source: Channel News Asia, 10 Feb 2010

Revaluation losses, writedowns push company into red

CAPITALAND unit Australand yesterday reported a net loss of A$298.2 million (S$368.1 million) for 2009 as it was hit by revaluation losses on its investment properties as well as writedowns of development and joint venture assets.

In 2008, the Australian developer’s net profit – net earnings attributable to stapled-security holders – slid 85 per cent to A$40.2 million.

Australand achieved a net operating profit after tax of A$120.2 million in 2009, but sank into the red after revaluation losses of A$249.4 million and writedowns of A$148.4 million. The company also saw non-recurring finance costs of A$20.7 million.

Looking ahead, Australand said that operating profit in 2010 will be similar to that achieved in 2009. It added that investment property earnings are expected to grow steadily, mainly from embedded rental growth.

Australand also said that market evidence indicates that investment property valuations are either at or near trough levels in the cycle.

‘Property valuations now appear to be stabilising with revaluation losses of A$14 million in the second half across the A$2 billion portfolio,’ said Australand managing director Bob Johnston.

‘Despite the large statutory loss for the full year, the majority of which was recorded in the first half, the operating profit demonstrates the resilience of the group’s high quality investment portfolio.’

In 2009, Australand’s earnings before interest and taxes (Ebit) from its investment properties grew to A$154 million from A$136 million in 2008. However, Ebit from the residential segment fell sharply to A$68 million from A$117 million.

‘Margins for the residential division remained under pressure during the year as the division continued to trade through impaired and non-core inventory,’ Mr Johnston said.

Looking ahead, the company unveiled a host of new strategies for growth – including a fresh target to get 60-70 per cent of group Ebit from recurrent earnings. It also intends to improve the development divisions’ return on average capital employed to at least 12 per cent over the next three years and recycle underperforming capital in the development divisions to drive earnings growth.

Finally, the company’s gearing will be maintained within a target range of 25-35 per cent, Australand said. The company’s gearing fell to 25 per cent at end-2009, from 36 per cent at the end of 2008.

‘With a strengthened balance sheet, the group is well-positioned to take advantage of the improving economic conditions in the commercial, industrial and residential markets,’ Mr Johnston said.

The company is paying a full year distribution of 5 Australian cents per security. Australand will continue to distribute 80-90 per cent of realised operating trust income.

The company also announced that it intends to seek approval at the annual general meeting in April to undertake a five into one consolidation of the group’s stapled securities.

Source: Business Times, 10 Feb 2010

Grangeford Apts, OUB Centre probably took revaluation hit at end-2009

OVERSEAS Union Enterprise (OUE) has warned that it expects to report a ‘material loss’ for the year ended Dec 31, 2009, as a result of a fair value writedown on an investment property of an associated company and an impairment charge on the group’s development properties, arising from a revaluation of the properties at end-2009.

‘The fair value writedown and impairment charge are non-cash items,’ OUE said in a statutory filing with Singapore Exchange.

‘Notwithstanding the above, the board wishes to inform that the group’s business and operations continue to have a positive contribution to the group,’ it added.

OUE in its statement did not identify the properties involved in the writedown and impairment charge. BT understands the development property that suffered an impairment charge was Grangeford Apartments at Leonie Hill Road while the investment property written down would probably be OUB Centre at Raffles Place.

It had slipped into the red for Q2 2009 due mainly to recognition of impairment losses for two residential development properties, The Parisian and The Grangeford. For the first nine months of last year, OUE posted a net loss of $27.4 million, against a net profit of $45.8 million for the previous corresponding period.

In October last year, the group sold the former Parisian site at Angullia Park for $283 million to China Sonangol Land.

According to some analysts, many of OUE’s other assets are also on the market – including 50 Collyer Quay, an 18-storey office development on the former Overseas Union House site; Mandarin Orchard hotel and Mandarin Gallery along Orchard Road; and Grangeford Apartments.

When contacted, OUE’s chief executive Thio Gim Hock said: ‘We are not actively looking for buyers; it’s more a case of us receiving unsolicited offers, mostly initiated by property brokers.’

‘However, if we receive offers too good to refuse for any of our assets, we’ll consider selling. We’re not sentimental about our properties,’ he added.

For 50 Collyer Quay, the group’s priority for now is to actively look for tenants. The office block is expected to receive Temporary Occupation Permit in Q4 this year, according to Mr Thio.

‘We’re in the process of signing up a few tenants,’ Mr Thio said, declining to elaborate further. BT reported in October last year that law firm Drew & Napier was in discussions to lease space at 50 Collyer Quay. It is currently at Ocean Towers.

50 Collyer Quay, which will have about 400,000 sq ft net lettable area, could be worth about $900 million, some property consultants suggest. The lease on the site has been topped up to a fresh 99-year term.

OUE is controlled by the Riady family’s Lippo group and Malaysian tycoon Ananda Krishan Tatparamandan.

On the stock market yesterday, the counter ended nine cents lower at $9.

Source: Business Times, 10 Feb 2010

SINGAPORE’S iconic Clarke Quay nightspot has been sold to real estate investment trust (Reit) CapitaMall Trust (CMT) for $268 million.

CapitaMalls Asia (CMA), owner of the riverfront food and beverage development, announced yesterday that the cash sale to CMT was in line with its strategy of recycling capital to reinvest elsewhere.

CMA chairman Liew Mun Leong said there was a need to revamp the firm’s portfolio to free up capital for new opportunities, such as Asia’s shopping mall sector, which had ‘tremendous growth potential’.

‘The sale further strengthens CMA’s investment strategy of acquiring new malls for higher returns. We continue to focus on expanding our presence in Singapore, China, Malaysia, Japan and India,’ he added.

The price agreed represents a 2.3 per cent premium over the valuation of $262 million made at the end of last year.

CMA chief executive Lim Beng Chee said Clarke Quay’s growth potential was best realised through CMT.

CMT – which is managed by external manager CapitaMall Trust Management Limited (CMTML), a wholly-owned subsidiary of CMA – said yesterday that it had the financial flexibility and capacity to fund the transaction that is targeted for completion by July.

CMTML chairman James Koh said the purchase of Clarke Quay, which sees more than a million local and overseas visitors per month, would allow CMT’s unitholders to capitalise on the growing lifestyle and entertainment demand.

‘Since the completion of its major refurbishment in late 2006, Clarke Quay has been successfully repositioned as one of the top entertainment zones in Singapore,’ he added.

The acquisition will increase CMT’s asset size to $7.6 billion, cementing its lead as Singapore’s largest Reit by asset size and market capitalisation.

CMTML chief executive Simon Ho said the opening of the integrated resorts is expected to boost tourist arrivals, and the improving economy, together with rising consumer confidence, would boost discretionary consumer spending.

‘Clarke Quay increases the number of properties we have catering for discretionary consumer spending, and enables us to ride on the long-term remaking of Singapore as Asia’s leading convention, exhibition, leisure destination and services centre,’ he added.

He noted that some current leaseholders were paying below-market rent and there was potential for rent hikes when leases are due for renewal.

CMA subsidiaries – CapitaMall Trust Management and CapitaLand Retail Management – will continue to act as Clarke Quay asset manager and property manager respectively, with Clarke Quay remaining in CapitaMalls Asia’s portfolio.

Source: Straits Times, 10 Feb 2010

I REFER to the letters by Mr Lua Eng Chuan (‘Ban PRs from reselling HDB flats at a profit’, Jan 19), Mr Wan Siew Kay (‘Citizenship caveat’, Jan 20) and Mr Robin Chua (‘Costly flats’, Jan 27).

In response to recent strong demand, the HDB has already ramped up the supply of new flats. With at least one build- to-order (BTO) launch a month, most first-time buyers can expect to select a BTO flat within two tries, and move into their new flats three years after booking.

The HDB is monitoring the demand situation closely and will increase the supply of new flats further, if necessary.

The oversubscription for BTO launches does not mean the flat supply is inadequate. In fact, many flat buyers do not select a flat when they get the chance. Last year, almost 50 per cent of first-time applicants in BTO launches did not select a flat upon invitation. So it is not true that there is inadequate supply of new flats, as suggested by Mr Chua.

We also wish to correct some misperceptions about permanent residents (PRs). PRs do not enjoy housing subsidies or HDB concessionary loans. Citizens make up 95 per cent of flat owners and 80 per cent of resale flat buyers.

Mr Wan may have confused HDB’s public rental flats with flats rented out by lessees at open market rentals. The former is meant only for needy Singaporeans who have no other housing options. PRs must rent a flat from the open market at full market rates.

Mr Lua suggested banning PRs from sub-letting or selling their flats at a profit. Like Singaporeans, PR flat owners are required to fulfil the minimum occupation period before they are allowed to sublet or sell their flats. They bear the market risks for their purchases. Nonetheless, the HDB is looking into whether our rules have inadvertently allowed flat purchases for speculative purposes.

Singaporean singles also enjoy subsidies to buy an HDB flat, albeit less than citizen households. Singles above 35 can buy a resale flat with up to $20,000 housing grant if their parents are staying with them.

Lily Chan-Wong Jee Choo (Mrs)
Deputy Director (Policy and Property)
Housing & Development Board

Source: Straits Times, 10 Feb 2010

Seller CapitaMalls Asia says right time to monetise property as it has stabilised

CAPITAMALL Trust (CMT) has agreed to buy Clarke Quay from parent company CapitaMalls Asia for $268 million in cash, the two companies said yesterday.

The purchase will increase CMT’s asset size to $7.6 billion, from $7.4 billion as at end-2009.

Both CMT and CapitaMalls Asia are units of CapitaLand, Singapore’s largest property group by market capitalisation.

CapitaMalls Asia was created after CapitaLand spun off and listed its retail arm late last year. CMT, Singapore’s largest real estate investment trust, was sponsored by CapitaLand and listed in 2002.

CapitaLand carried out several major asset enhancements of Clarke Quay between 2004 and 2006 to reposition it as a one-stop entertainment and lifestyle hub. It also refreshed Clarke Quay’s tenancy mix to ensure that it remains a vibrant lifestyle destination. Visitor traffic has doubled to nearly one million monthly today from about 500,000 visitors before the asset enhancement.

‘The acquisition of Clarke Quay complements CMT’s current portfolio of mainly suburban malls catering for necessity shopping,’ said Simon Ho, chief executive of the trust’s manager. ‘It increases the number of properties that we have catering for discretionary consumer spending and will enable us to ride on the long-term remaking of Singapore as Asia’s leading convention, exhibition, leisure destination and services centre.’

CMT’s portfolio now consists of 14 retail properties including Tampines Mall, Plaza Singapura and Raffles City Singapore.

Mr Ho added that when the repositioning of Clarke Quay was completed in December 2006, it did not yet have an established track record of operations and some leases were committed below market rent. There is therefore potential for rental upside when leases become due for renewal in the next few years, he said.

On its part, CapitaMalls Asia is monetising Clarke Quay to recycle capital for new investment opportunities.

‘This is the right time to monetise Clarke Quay as the property has stabilised,’ said Lim Beng Chee, chief executive of CapitaMalls Asia. ‘There is growth potential in Clarke Quay which is best realised through our stake in CMT going forward, after CMT has acquired the property from us.’

CapitaMalls Asia has an interest of about 29.9 per cent in CMT. It also fully owns CMT’s manager.

The price represents a 2.3 per cent premium over the valuation of $262 million as at end-2009, as well as a 5.9 per cent yield on Clarke Quay’s net property income of $15.8 million in 2009.

The transaction, which is conditional upon CMT unitholders’ approval, is expected to be completed by July 2010.

CMT said that based on its closing price of $1.73 on Feb 8, 2010, CMT’s distribution yield is 5.1 per cent and the implied property yield is 4.9 per cent. As such, the transaction is expected to be yield-accretive.

The trust added that it has sufficient financial flexibility and capacity to fund this transaction. Assuming the transaction is fully funded by debt, CMT’s gearing would be 33.1 per cent – still within its target range of 30-35 per cent.

CapitaMalls Asia lost 2 cents to close at $2.22 yesterday while CMT gained 4 cents to close at $1.77.

Source: Business Times, 10 Feb 2010

NUMBERS for the hotel industry for the year also took a plunge, with overall room revenue falling 28.3 per cent to S$1.51 billion.

This is the result of falls in two hotel indices – overall average occupancy rate and overall average room rate.

Occupancy rates stood at an average of 76 per cent, a drop of 4.6 percentage points compared with the same period a year ago.

The drop was felt sharply when it came to room rates, which fell 22.3 per cent to S$191.

Santa United International Holdings, which owns six mid-tier hotels here, said that revenue dropped 7 per cent in 2009 compared with 2008.

Similarly, Rendezvous Hotel reported a loss in revenue and occupancy due to the recession.

‘As a result, there was intense competition among hotels for the shrinking pie,’ said general manager Kellvin Ong. ‘Price comparison was also rampant, with consumers… trying to stretch their dollar.’

Competition was made even tougher with the introduction of an additional 2,740 rooms to the total hotel room inventory last year. There are 41,000 hotel rooms on the market now, and the figure will rise further this year with the integrated resorts.

When asked if there were fears of an oversupply, Singapore Tourism Board chief Aw Kah Peng said the ‘demand and supply balance has to adjust itself in lieu of the new inventory’.

‘We do expect to see some adjustments there,’ she said. ‘We believe much of it is in anticipation of future growth, because these are long-term decisions taken by hotel investors.’

Source: Straits Times, 10 Feb 2010