The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 21st July 2016

Top Stories

Temasek offers S$1.68 a share to take SMRT private in S$1.2b deal
In a widely anticipated move, Temasek Holdings has proposed a S$1.2 billion buyout of SMRT Corp to steer the transport operator away from the pressures of staying listed while it faces business pains and transits a just-unveiled new rail model.  The takeover offer by Temasek’s wholly-owned Belford Investments, received by SMRT on July 16, a day after details of the new rail financing framework (NRFF) were unveiled, is pegged at S$1.68 cash per share. This values SMRT at some S$2.57 billion and is an 8.7 per cent premium over its last-traded price of S$1.545 last Friday; it is also a 10.7 per cent premium over its three-month volume-weighted average price (VWAP) prior to the last trading day. Trading in the counter resumes on Thursday.

What’s driving the privatisation?
The S$1.2 billion takeover offer for SMRT by Temasek has raised questions about the motive behind the exercise. Why does the train operator, whose stock has been a favourite among investors for its generous returns, have to be privatised?  Has it to do with increasing maintenance challenges? Or the fact that its share price has fallen so much that its controlling shareholder finds the company undervalued? Is it simply because a privatised company can be better managed than a listed entity? Is it its falling profitability?

Singapore Economy

Push for new laws to make S’pore a debt workout centre
Singapore’s insolvency laws will be strengthened with provisions similar to those under Chapter 11 bankruptcy protection laws in the US, as the government moves to position the Republic as an international centre for debt restructuring at a time when corporate defaults are high.  The Ministry of Law (MinLaw) on Wednesday said the government is looking to introduce amendments to the Companies Act by early 2017.  The development comes after MinLaw said it has “broadly accepted” the 17 recommendations of the Committee to Strengthen Singapore as an International Centre for Debt Restructuring, which was set up in May 2015.

Singapore-KL High Speed Rail: Big gains for Singapore a decade from now, say experts
The high-speed rail linking Singapore and Kuala Lumpur is expected to be a shot in the arm for the local economy when it starts running a decade from now, creating jobs and spurring growth.  But it is unlikely to have a big economic impact during construction, said experts, citing the short length of Singapore’s section of the rail.  The rail line will span 350km, but only 15km will lie in Singapore.

Singapore Real Estate

BCA opens SkyLab to lift green building technology research
A facility of the Building and Construction Authority (BCA) that advances tests and research into innovative energy-efficient building technologies was declared open on Wednesday.  The BCA SkyLab, built at a cost of S$4.5 million, features a rotatable lab that can be angled to any orientation to the sun and wind for the purpose of such studies, and has extensive instrumentation and sensor networks that are scalable when the need arises.  The S$62 million Academic Tower, on which the SkyLab sits, has, among its features, a rooftop education deck with a functional energy-efficient chiller plant.

AHTC to award contract on Town Council Accounting System ‘shortly’
The Aljunied-Hougang Town Council (AHTC) will award the contract for a new Town Council Accounting System “shortly”, it said late on Wednesday night (Jul 20).   In a media release, AHTC chairman Pritam Singh said the Workers’ Party-run town council has noted KPMG’s recommendations relating to its finance department and internal control procedures. The new Town Council Accounting System is among three priorities AHTC will undertake to improve governance and oversight.

Decision on HSR alignment, land acquisition will take years, say experts
Land cost, terrain and disruption to the local population are among the considerations for the final alignment of the Singapore-Kuala Lumpur High-Speed Rail (HSR) link, said experts, who estimate that it would take a few years to finalise plans and acquire land before the first spade hits the ground for the construction of the highly-anticipated project.  While the Government has already moved to acquire a 12ha plot of land in Jurong East — on which Jurong Country Club sits — for the terminus station, the Malaysian authorities have yet to announce the exact locations of the six transit stations and the terminus on their end.

Companies’ Brief

Ascott Reit keeps faith with London
Ascott Residence Trust said London will remain a key global city despite the Brexit vote, and that it would seek out acquisitions in developed markets.  This comes as it reported on Wednesday a 2 per cent rise in distribution per unit (DPU) for the second quarter from a year ago. DPU for the three months ended June 30 stood at 2.13 Singapore cents, up from 2.09 Singapore cents. If adjusted for an equity placement, the DPU would have risen by 3 per cent, to 2.16 Singapore cents.

EC World Reit prices IPO at 81 cents apiece
EC World Reit has priced its initial public offering (IPO) at 81 Singapore cents per unit – the higher end of its indicative range. This translates to an annualised yield of 7.1 per cent for the forecast period of six months to Dec 31 this year and 7.3 per cent for the projection year 2017.  Speaking to BT on Wednesday, EC World Reit chairman Zhang Guobiao said that the Reit listing marks the start of asset securitisation for the Shanghai-based sponsor Forchn Group, which has plans to list other Reits here in the future to hold cultural and commercial real estate assets when their yields are raised to desired levels.

Keppel unit bags S$100m contracts
Keppel Singmarine, a wholly-owned subsidiary of Keppel Offshore & Marine (Keppel O&M), has won contracts from Jan De Nul Group to build three trailing suction hopper dredgers (TSHDs) worth about S$100 million in all.  The first two dredgers are expected to be completed in the second half of 2018, while construction of the third dredger will require a notice within six months from Jan De Nul to exercise the option for the unit.

JV contributions help CCT lift DPU for second quarter
Boosted by higher contributions from joint ventures, CapitaLand Commercial Trust (CCT) reported a distribution per unit (DPU) of 2.20 Singapore cents for the second quarter of FY2016, up slightly from 2.19 cents a year ago.  Distribution to unitholders clocked S$65.09 million, or one per cent higher year-on-year, despite lower net property income. This was due to more distributions received from CCT’s 40 and 60 per cent interests in CapitaGreen and Raffles City Singapore respectively.

Two new Keppel Capital funds hope to raise US$1.5b
Keppel Corp’s newborn asset management arm Keppel Capital is not even a month old, but it’s growing fast.  The new unit has set up two closed-end private equity funds to raise a combined US$1.5 billion, mainboard-listed Keppel Corp said in a press statement on Wednesday.  The two funds, managed by Keppel Capital’s wholly-owned unit Alpha Investment Partners, have together received initial capital commitments of US$410 million, it said.

US purchases pay off for Ascott Reit
Acquisitions made in the United States over the past two years gave earnings a shot in the arm at Ascott Residence Trust (Ascott Reit) in the second quarter.  The trust posted a 9 per cent rise in distributable income to $35.0 million for the three months to June 30 while distribution per unit rose 2 per cent to 2.13 cents. Revenue rose 21 per cent to $119.4 million while revenue per available unit went up 10 per cent to $142.

What’s fuelling Bt Sembawang rally?
Of late, the stock of a 105-year-old company has been quietly rallying to a one-year high, with volume to boot. What has sparked the renewed interest in Bukit Sembawang Estates, a conservatively-run, debt-free residential property developer partly owned by OCBC’s founding Lee family?  From S$4.64 in July 11, the counter has advanced to S$5.12 by the end of trading on Wednesday – a one year-high and a rally of 10 per cent in little more than a week.  Trading volumes, too, have exploded from under 10,000 shares a day two weeks ago to a total of more than 300,000 shares done in the past three days.  It is trading above its net asset value, a rarity for developers. And it is in technically overbought territory.

Coldwell Banker adds 7 franchisees
US real estate franchisor Coldwell Banker has signed up seven more franchisees in Singapore, adding to its existing four. The 11 franchisees have 66 salespeople.  The group, said ERA Realty Network chief executive officer Jack Chua, aims to assist small-scale and growing real estate agencies to form a bigger platform, in hopes of leading to economies of scale in training and other activities.  In Singapore, Coldwell Banker is under Northstar, the same group as ERA. “Hence,” the US group said, “these franchisees will be able to tap both Coldwell Banker’s as well as ERA’s resources, technology and brand recognition to stay ahead of the competition.

Views, Reviews & Forum

Singapore: from planned chaos to a distinctive city
Singapore is a living laboratory by which its development and urban planning experience and expertise can be studied and harnessed by other cities in the urbanisation and human development journey. What was a survival imperative in the fledgling nation-state has now become an important attribute of Singapore’s story of human development and putative soft power.  Last week, Singapore played host to the annual Singapore International Water Week, World Cities Summit, and the CleanEnviro Summit. These powwows brought together government officials, city planners, scientists, academics, and activists from the world over to engage in a series of dialogues on liveability, sustainability, urban planning, and technology in built environments.

Reits’ unrealistic rent demands contributing to S’pore’s retail woes
Our local retail scene is a challenging one, never more so than now, and industry experts agree on this (“Retail woes: Don’t blame the landlords”; July 15).  It is true that retailers must examine their product offerings and mix and their distribution channels, focus on consumer spending patterns and embrace online selling. Retailers, and we as an association, are addressing this closely.  But more worryingly, structural faults are besetting the industry, even those with the best product offerings and high footfall.

Global Economy & Global Real Estate

Recent market rebound from Brexit-linked losses premature and risky: IIF

US$ hits 4-month high on rate hike expectations

Wheelock sells HK Peak mansion for HK$630m

Foreign cash reviving home building in Spain

Canadian developers start building only after getting high sales

Hedge funds turn bullish as China weathers slower growth, Brexit vote

Additional Articles of Interest – Local & Overseas Real Estate

Local & Overseas Real Estate – Full Article

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