DUBAI’S Union Properties is willing to sell any of its projects if it receives a fair price, its chairman told UAE newspapers yesterday.

The third-largest developer in the Gulf Arab emirate has been hit by the global downturn, which has sent prices in Dubai’s once-booming property sector tumbling some 50 per cent from their peaks in 2008.

The developer has received offers for its Ritz Carlton hotel in Dubai which the debt-laden firm is hoping to sell for about 1.5 billion dirhams (S$570.8 million).

‘The company’s complete projects have achieved their investment targets, and it’s not strange that we offer them to investors for sale, particularly as we have giant projects under way,’ Khalid bin Kalban told the Arabic daily al-Bayan.

‘Buyers are mainly investment companies and individuals who are looking to buy complete and rented properties with an income of 7-8 per cent,’ he added.

In a separate interview with the UAE Arabic daily al-Ittihad, Mr Kalban said the funds raised from asset sales will be used to repay financial commitments and finance ongoing property projects.

The firm posted a third consecutive quarterly loss on provisions for contracting and property revaluation.

It has 6.5 billion dirhams of outstanding debt, of which 2.8 billion had been rescheduled for payment to 2011 from 2009, with the remainder maturing in the long term.

Source: Business Times, 20 Mar 2010

THE Commissioner of Charities has questioned City Harvest Church (CHC) about its $310 million stake in Suntec Singapore.

The 33,000-strong megachurch announced two weeks ago that it had become a co-owner of the downtown commercial property, which houses a convention and exhibition centre.

The complex’s full name is Suntec Singapore International Convention and Exhibition Centre.

The money spent includes renovation and rental costs, the church said. CHC has not created a separate business entity for the purchase of the property.

But in the wake of the announcement, questions surfaced among the public about whether religious organisations – which are registered as charities – should be allowed to go into business using what are essentially donor funds.

Some asked if the income collected by CHC through rentals at Suntec would be taxed.

Questions were also raised about whether the church’s plans to use two floors in Suntec for worship services would amount to a change of use of commercial properties.

When The Straits Times posed these questions to the Commissioner of Charities, he said he was not in a position to comment at the moment as his office is ’seeking clarifications from CHC on this business venture’.

However, a letter jointly issued by the Ministry of Community Development, Youth and Sports, the Urban Redevelopment Authority (URA) and the Inland Revenue Authority of Singapore provided some answers.

The letter was a response to Straits Times reader Lester Lam, who wrote to the Forum page and questioned the relevance of giving religious organisations tax-exempt status when several such groups own commercial properties and collect rental income.

The government bodies responded that incomes earned by charities are tax-exempt because their main purpose is to provide public benefits through their activities.

They acknowledged that some charities have chosen to engage in business activities to generate additional income, but said such business activities ‘must be done in the best interest of the charity and not subject the charity’s assets and resources to unacceptable risk’.

Charities contacted said that the decision on what is an ‘acceptable risk’ is left to their boards. They said investment decisions are made internally, and that they are reflected in their accounts, which are subject to audit.

The joint letter went on to say that any business carried out by a charity under a separate legal entity is subject to the normal corporate income tax.

It added that the ‘exclusive use of commercial developments for religious purposes would constitute a material change of use of such developments into places of worship’.

Doing so requires a proposal to be submitted to the URA. URA said no such proposal has been received from CHC.

The church, which had said earlier that it would use two floors in Suntec to house a 12,000-seat auditorium for worship services, could not be reached for comment last night.

During the March 6 service, senior pastor Kong Hee said that the auditorium would be used exclusively for its services, except under certain circumstances.

He said then that it would move out about five times a year to allow for international conferences or events to be held there.

The church has spent the past five years looking for a suitable plot of land, said Dr Kong, who founded it in 1989 as a small Bible study group of 20.

The Suntec purchase came after it looked at tens of other properties, including the Lion City Hotel in Tanjong Katong and Iluma in Bras Basah Road, but rejected them as they were considered unsuitable due to their small size or likely traffic congestion.

Source: Straits Times, 20 Mar 2010

Real estate firms looking to build in the City again as prime office rents start to climb

LAND Securities Group plc, the UK’s largest real estate investment trust, is seeking a joint-venture partner to help it restart development of the City of London skyscraper known as the Walkie-Talkie.

Land Securities, based in the UK capital, has appointed property broker BH2 to find a co-developer for the 155-meter tower, spokesman Donal McCabe said in an interview yesterday. The project at 20 Fenchurch Street in London’s main financial district was shelved in 2008.

Real estate companies in the UK want to build in the City again after competition for a dwindling number of prime offices starts pushing up rents. Most development plans were put on hold in the recession. Some developers will prefer to seek equity partners if they are building towers without tenants.

‘We have begun testing the market for potential partners,’ said Mr McCabe. ‘We have always maintained that we would investigate the possibility of taking on partners as a way of mitigating the risk associated with such a large development.’

Land Securities asked contractors last month to provide estimates for building the Walkie-Talkie, named because of its resemblance to a two-way radio. At the time, the company said the ‘options are open’ on whether it needs to secure a tenant before starting the project.

Rents for the most expensive offices in the City of London climbed in the fourth quarter of 2009 for the first time in three years.

Prices may advance 19 per cent this year as companies try to lease more space in a recovering economy, according to Knight Frank LLP. Tenants signed leases for 204,000 square meters of space in the quarter, which was double the amount of a year earlier.

Tony Gibbon, one of BH2’s founding partners, declined to comment on the project.

Source: Business Times, 20 Mar 2010

Cache Logistics Trust prospectus says 474.2m units will be offered at 84-88 cents each

CACHE Logistics Trust has lodged its listing prospectus with the Monetary Authority of Singapore, revealing that the new Reit hopes to raise about $400 million through its IPO.

According to the prospectus, Cache is offering 474.2 million units at 84 to 88 cents each.

A distribution yield in the range of 8.82-9.08 per cent has been forecast for 2011, depending on the issue price.

Cache is managed by ARA-CWT Trust Management (ACT) which is 60 per cent owned by ARA Asset Management Ltd and 40 per cent by CWT Ltd.

Daniel Cerf, formerly deputy chief executive of K-Reit Asia Management is ACT’s CEO. Mr Cerf, a licensed architect in the US, was previously general manager of special duties at Keppel Land.

Lim How Teck, who recently resigned as non-executive independent director of AIMS AMP Capital Industrial Reit Management, is ACT’s chairman and non-executive director.

Cache is a Singapore-based Reit and will principally invest in logistics properties in the Asia-Pacific as well as real estate-related assets.

Its initial portfolio of properties consists of six logistics warehouse properties in Singapore with an aggregate gross floor area (GFA) of 3.86 million square feet and a value of about $730 million.

The properties are CWT Commodity Hub, CWT Cold Hub, Schenker Megahub, C&P Changi Districentre, Hi-Speed Logistics Centre and C&P Changi Districentre. The properties are part of a sale and leaseback agreement entered by Cache with CWT and C&P Holdings respectively.

According to the prospectus, the initial portfolio is 94.1 per cent occupied by and contracted to 262 end-users comprising domestic and international companies.

The largest end-user accounts for 16.1 per cent of the total GFA of the initial portfolio. The top five end-users together account for 56.5 per cent of the occupied GFA.

CWT and C&P Holdings are the master lessees for these properties. Of the occupied GFA, 79.1 per cent is occupied by direct counterparties of the master lessees being third-party logistics service providers and third-party end-users.

The remaining 20.9 per cent of the occupied GFA is contracted from the master lessees by CWT related entities, which has in turn been fully contracted for use by third-party end-users.

C&P Holdings is a significant shareholder of CWT with a stake of 35.9 per cent.

The master lease agreements provide for lease durations ranging from five to 10 years and a weighted average lease expiry of 6.4 years, with locked-in annual rental escalations and a triple net lease structure for the first five years of the initial contracted lease term.

CWT and C&P has granted right of first refusal to Cache, providing the Reit with access to future acquisition opportunities. As at Dec 31, 2009, there are 11 properties totalling 2.3 million sq ft of GFA currently owned by CWT in Singapore, China and Vietnam and two income-producing properties totalling over 723,651 sq ft of GFA currently owned by C&P in Singapore of which Cache has first right of refusal.

Source: Business Times, 20 Mar 2010