Archive for category: Real Estate

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Lendlease Global Commercial REIT JYEU -0.75%has acquired a 10.0% stake in Parkway Parade Partnership (PPP) with an investment of $88.9 million.

PPP Indirectly is the owner of 77.09% of the share value of Parkway Parade, an integrated retail and office property situated within Marine Parade.

The purchase price is based on PPP’s net asset values (NAV) that includes the agreed-upon market value of Parkway Parade, which is approximately $1.38 billion.

The market value agreed upon was reached on a willing-buyer and willing-seller basis, with reference on the valuations independently conducted conducted by Savills as well as Jones Lang LaSalle (JLL). It is comparable to JLL’s valuation which is the more expensive of the two on April 30.

With fees included including fees, the acquisition will cost the REIT around $90.5 million.

The acquisition is anticipated to increase LREIT’s dividend per unit (DPU) on an annual basis. If the acquisition had been finished on the 1st of July, 2021, for the FY2022 period that ended in June LREIT’s DPU would have increased to 4.89 cents in comparison to 4.85 cents. In the event that it was concluded on July 1st, 2022, LREIT’s DPU for 1HFY2023 that which ended in March would have increased to 2.47 cents which is an increase from 2.45 cents.

The REIT’s gearing at December 31, 2022 using an average basis it would be 40.4%.

The acquisition was financed with internal resources as well as credit facilities.

“Parkway Parade” is an good integration with our portfolio, as we strive to provide profitable returns for the unitholders of LREIT. The seamless connection between Marine Parade Central and the soon-to-open Marine Parade MRT station and Marine Parade Central, the integrated asset will boost LREIT’s earnings and distributions in the future,” says Kelvin Chow who is the manager’s CEO.

The REIT claims that an asset improvement initiative (AEI) is being scheduled in the vicinity of Parkway Parade to coincide with the construction on the construction of a new MRT station. When it is completed the mall will be able to include a link with the brand new MRT station through the basement. It will be home to new Food and Beverage (F&B) tenants in the wake of the AEI.

Units of LREIT were with a flat 67 cents closing June 5.

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It’s been nine months ago that Ashish Manchharam, founder and CEO of 8M Real Estate (8M) has stepped into the shophouse market in conservation through his initial purchase of of five shophouses located at the 112-116 Amoy Street. The purchase price was $50 million. the shophouses located in the CBD in the year 2014. Based on the gross floor area (GFA) that was 27,500 square feet across five shophouses, the $50 million price of the purchase equates to $1,818 per square foot.

These five shophouses located at Amoy Street are valued at more than $110 million, or $4,000 per square foot. “When we first began acquiring shophouses in 2014 there was no properties were valued at more than the value of $100 million” claims Manchharam. “Today we’re probably in possession of just a few properties over the $100 million mark.”

The shophouses along Amoy Street, owned by 8M and 8M, have a leasehold tenure with 99-year leases beginning in 1990. The leasehold prices for the freehold and leasehold shophouses located in Chinatown, the CBD along with Chinatown in the prime Districts 1, 2 and 3 have gone up even more.

On November 20, 2022 a storehouse located at 95 Amoy Street changed hands for $18.688 million, or $6,028 per square foot in accordance with an GFA of 3,100 square feet, as well as a 999-year leasehold site of 1,856 square feet. Then, five months later in the beginning of April, a caveat was negotiated to purchase the exact same building at $21.8 million, or $7,032 per square foot. It was purchased by NC Properties, an entity associated with Hong Hong Kong’s New Century Group. NC Properties is said to also own other conservation shophouses situated in Telok Ayer and Circular Road too.

“The deal of Amoy Street has set a new benchmark for the cost of leasehold and freehold shophouses within Districts 1 and 2. CBD and Chinatown district in Districts 1, 2 and 3” declares Richard Tan, senior group district director at PropNex Shophouse Elites and a specialist in the conservation of shophouses.

8M has been a major beneficiary of the rising the cost of shophouses in conservation. In 2017 the real estate firm’s portfolio comprised of nine shophouse investments and a the total of thirty shop lot was valued at $400 million. Six years later 8M has built up 30 shophouse investments spread across 72 shop lots as well as the entire portfolio worth approximately $1.4 billion in the present.

‘Long-term investor’
“We believe in being an long-term investment,” says Manchharam. “8M is an unlisted property firm that aims to own properties for a long period of time.” It is funded entirely by its own funds and backed by his own institutional investors and from outside the country. “We have not had to conduct any fundraising outside of the company,” he adds. “Unlike the case with a property fund, we’re not required to sell at a specific time, in the event that we consider an property that is not core for our investment portfolio.”

Many had anticipated a surge of foreign buyers into the conservation shophouse market particularly in light of the property cooling measures that went to effect on the 27th of April. Based on property agents there is a lot of the desire to purchase conservation shops with a wide range of foreign buyers who hail from China, Hong Kong, Taiwan, India and Indonesia.

Local investors are active, according to PropNex’s Tan. “Prices are higher than they were in the past. Local buyers cannot be able to accept these costs.” The interest rates are also rising, says Tan and that means higher cost of borrowing. Today, transactions are controlled through “all-cash customers or people who use only a small amount of leverage”.

One of the buyers one of these buyers is 8M that bought the four-storey conservation shophouse on 28 Stanley Street for $29 million in April, in a deal that was facilitated by JLL. The property is located on an undeveloped freehold site with a total area of 1,729 square feet with a total floor space of 6,485 square feet and was purchased without vacant possession. The property’s value is $4,472 per square foot.

“It’s not inexpensive,” says Manchharam, “but considering what prices are currently the price was a good value.” Manchharam is buying the shop with cash in an all-cash transaction. “No need to purchase an empty building without income or earning and also paying high interest costs. We are hoping that interest rates decrease, so we can refinance.”

Based on current market rents and the current rental yields, they are calculated at 2% and borrowing costs are 5% according to Manchharam. This could be the reason for more cautious mood in the market and also the 47% reduction in transactions, from 52 shophouse sales from 1Q2022 to 1Q2023, according to PropNex in their 1Q2023 shophouse report, that was released the 26th of April. The value of deals in 1Q2023 was $278 million, which is an 11.7% drop from the prior quarter, and an 40.6% y-o-y drop compared to 467 million reported in the 1Q2022.

The patience to buy real estate
Despite the current market conditions, 8M has decided to stick to the long-term strategy. “You must be patient when purchasing real property,” says Manchharam, who adds that the acquisition from 28 Stanley Street was not opportunistic. He was following the shophouse located at 28 Stanley Street for five years and waited for the owner to decide whether or not to sell. It was finally put on the market in January of this year. “The owner was a private person who held the property for a long period of.”

8M plans to revamp the shophouse on 28 Stanley Street. The two floors that are on the ground are permitted for use as restaurants and comprise a floor space of around 3000 square feet. “It’s very difficult to find this type of space in the neighborhood,” says Manchharam. “We have several F&B operators who have signed up to lease these spaces.” Two floors on the upper levels are leased out for office space.

He has “some potential synergies” in Solitaire on Cecil which is a brand new freehold, 20-storey Grade-A office development located across the road across Cecil Street with strata-titled floors available for sale. The development is a renovation of the old PIL Building by TE Capital Partners and LaSalle Investment Management. In the latter part of April, the three top floors, spanning levels 17 through 20 were sold at $162.8 million, or an average of $4300 psf across the entire strata of 37,857 sq feet. The highest level (20th) was able to hit a new maximum of $4,325 psf. Savills Singapore brokered the deal.

Nearby 8M has Ten Stanley Street, which it purchased in June 2016 for $9.2 million. It’s now an office that is serviced.

An additional property that Manchharam was eyeing since “a for a long period of period of time” was the five shophouses located at the 109-117 Jalan Besar. In September, 8M scooped up the five shophouses worth $40 million, in a deal that was negotiated by Simon Monteiro, associate vice president of List Sotheby’s International Realty. The five shops are situated on a 6,584 square foot site with a lease of 999 years beginning in 1926.

The selling company is TSG Group, founded as Teo Siok Guan Pte Ltd in the year 1950. Teo Siok Guan had previously been the owner of Guan Hoe, the distributor for Suzuki motorcycles in Malaysia and Singapore during the 1960s. In the course of more than fifty years, TSG accumulated an extensive real estate portfolio. In 2017 TSG Group offered its portfolios of shophouses in Tembeling Road and Joo Chiat Place to be sold. The shophouses located in Jalan Besar were the last to be offered for auction. “But we were aware of the possibility because we’d been watching it for the past 5 years,”” manchharam says. The property never went on the market, however 8M was the first to buy it prior to it being listed for sale.

Amassing portfolios
In the latter half of 2022 8M Real Estate scooped four more shophouses located at 25, 27 29 as well as 31 Tanjong Pagar Road for 75 million. The buyers were two companies, Silkroad Property Partners and Clifton Partners, who owned two shophouses. 8M’s purchase price was $3700 to $3,800 psf, based on the GFA for all four shophouses, which had 99-year leases beginning in 1994.

“The value of 99-year leasehold shophouses within areas like the Tanjong Pagar area are now at the upper end of $3,000 to $4,000 psf” Manchharam adds. The purchase of four shophouses located at 25-31 Tanjong Pagar Road gave 8M Real Estate ownership of the entire row of shophouses that are bookended by the 15 Tanjong Pagar Road and 43 Tanjong Pagar Road.

The shophouses had been acquired located on Tanjong Pagar Road in three blocks over the course of five years. 8M made the initial bulk purchase of five adjoining shophouses on 15,17 19, 21, as well as 23 Tanjong Pagar Road for $57.4 million in March 2018. Based on a GFA of 26,500 sq feet which works out to $2,166 per sq ft.

The five shophouses located at between 15 and 23 Tanjong Pagar Road were purchased from property investor Stanley Quek as part of the portfolio comprising seven shophouses, for $81.4 million in the year 2018. Other shophouses included the 18 Gemmill Lane ($11 million) and 71 Neil Road ($13 million).

8M made a third bulk buy of 6 shophouses located at 33 35, 37, 39 43 and 41 Tanjong Pagar Road for $80 million in February of 2019 in accordance with an agreement to caveat. The buyer of the shophouses was Arcc Holdings CEO Tony Chen who is a long-term buyer of conservancy shophouses. “We made a swap deal which involved buying 33-43 Tanjong Pagar Road from him and then we traded to him the 70 Neil Road, next to the property that he owns,” Manchharam explains.

The four remaining shophouses located in central part of row, at 25-31 Tanjong Pagar Road purchased late in the year, the whole row is now an GFA of 80,000 square feet and 50,500 sq ft is office space and 30,000 sq feet of retail space. The estimated value of the property is $350 million, which is “by the far our biggest asset at the moment” Manchharam believes. Manchharam.

The portfolio comprised five 999-year leasehold shops at Boat Quay and Circular Road for $45.5 million, or $3150 per square foot with the GFA of 14,445 sq feet. The shophouses are comprised of a land area of 6,002 square feet spread across the the 61 Boat Quay, 77 Boat Quay 17, Circular Road, 45 and Circular Road.

The only commercial building that was included in the portfolio was a five-storey freehold property located at 23 New Bridge Road, which is situated next to four 99-year leasehold shophouses in conservation at 27 29, 31, as well as 33 New Bridge Road. The purchase price of 8M for the properties located on New Bridge Road was $37 million.

Repositioning assets, selling non-core assets, and selling
However, 8M has sold three of the shophouses that comprise the portfolio. The first was the 61 Boat Quay for $11.2 million in June 2021. It was then 17 Circular Road for $10.7 million in October 2021. Then there was the 77 Boat Quay for $16.188 million during the 1Q2022 period. The three shophouses are individual parts and, as such “non-core assets” Manchharam says.

8M has retained the adjoining units located at 45 and 46 Circular Road, as well as the corner block that runs from 27-33 New Bridge Road. The section of shops along New Bridge Road will likely be worth more than 100 million dollars.

A rear extension has been added to four shophouses located at 27-33 New Bridge Road as part of their transformation into an elegant boutique hotel with 48 rooms. The design was created by the renowned architectural firm Woha the hotel will feature an outdoor pool on the roof as well as a lush garden on the third level, as well as two eateries on the first level. Manchharam keeps the property hidden for now and is planning to unveil the building later in the year. “It could be considered one of the most iconic structures, similar to that of the Eu Yan Sang Building on South Bridge Road,” Manchharam says. Manchharam.

8M bought 8M purchased the Eu Yan Sang Building across four shophouses that are conservation in the areas of 265 2, 267, 269 as well as 271 South Bridge Road in December of 2019. It was the seller, Eu Realty, who sold the property under a lease of 199 years which is despite the fact that the property has a lease of 999 years.

After the renovation of the property and co-working space, The Great Room has leased the Eu Yan Sang Building for 10 years. The co-working space was officially opened in April and has 22,000 square feet spread across four floors. In the words of Manchharam, 8M signed a 10-year contract in conjunction with The Great Room.

Apart from the hotel with 48 rooms that is planned located at New Bridge Road, 8M also has three other hospitality-related properties: Ann Siang House located on Ann Siang Hill, Kesa House located on Keong Saik Road as well as Wanderlust located on Dickson Road in Little India. The world’s largest serviced apartment provider Oakwood Worldwide has managed these properties as part of The Unlimited Collection since the beginning of 2019.

On July 20, 2022 CapitaLand Investment acquired Oakwood from Mapletree Investments for an undisclosed amount. This acquisition Oakwood will bring the management of 8M’s Unlimited Collection into CapitaLand’s lodging business division, Ascott.

8M also has shophouses on Hongkong Street and Gemmill Lane, owned through Cove as co-living apartments. 8M also has 70 to 72 Boat Quay, three adjoining three-storey buildings that it bought for $23 million in May 2017. The shophouses are built on an area of 8,600 square feet in the top floors. They were recently let to a hostel operator according to Manchharam.

The co-living, hospitality, and serviced apartments sector contribute to only 20% of 8M’s total revenue according to Manchharam. Around 40% of the revenue is derived from office space, and an additional 40% comes from retail and F&B% of it comes from retail, and F&B. “Our portfolio is primarily retail and office space,” he adds.

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In the past one month Colliers completed three capital market deals that took place in Seoul, South Korea, that totaled 780 million dollars ($1.05 billion). These deals are the sole major transactions to have occurred within South Korea’s capital. South Korean capital in that month according to the real estate services company says in a press release on May 22.

The transactions involve selling Munjeong Plaza, a mixed-use office and retail complex within the Gangnam Business District, to local developer Dong Hoon for US$219 million. Also, the transfer of the office construction Donghwa Building to Korean conglomerate JB Financial Group for US$202 million. The third deal was the sale of Namsan Green Building, with the office tower being sold to a global investment company KKR in an agreement worth $368 million.

Sungwook Cho, Colliers’ executive director of the capital market and services for investment in Korea Sungwook Cho, Colliers’ executive director for capital markets and investment services in Korea, are the beginning of a “promising change” in the country’s investing landscape. “In the current economic climate that have high interest rates and construction costs, we’ve observed the potential to overcome these issues, and offer optimism for investment opportunities in Korea,” Cho says. Colliers’ Korean capital markets team has completed more than US$1.5 billion in transactions over the past 12 months which includes three recent deals that were signed in May.

Chris Pilgrim, managing director Apac’s global capital markets division. Apac Chris Pilgrim, managing director of global capital markets, Apac Colliers Adds that the work by the group in such a demanding environment is an indication of their dedication and expertise.

In addition, Robert Wilkinson, managing director of Colliers Korea, notes that these transactions demonstrate that there are opportunities exist for those who invest across South Korea despite high interest rates. “The basic principles that underlie the Seoul market remain solid. Seoul boasts the lowest vacancy rate among any city in the world and the demand is still strong,” he observes.

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The Singapore listed property firm City Developments Ltd (CDL) announced on May 19 that it will begin construction of the Myst A new 99-year leasehold, 408-unit development located at Upper Bukit Timah Road at some point in the second half of 2023. The private condominium is only five minutes walk from the MRT station of Cashew on the Downtown Line.

However, CDL has changed the date of the preview for Newport Residences initially scheduled for the 29th of April. The freehold 246 unit Newport Residences is part of a mixed-use project which includes office space, serviced apartments as well as F&B along with retail. It’s a revamp of the previously-used Fuji Xerox Towers commercial building located on Anson Road in Tanjong Pagar in District 2 of the Core Central Region (CCR).

CDL delayed the preview after the implementation of the latest phase of property cooling measures that went in force on April 27th in 2003. Additional buyer’s stamp duty (ABSD) for foreign buyers purchasing residential property increased by 30% and increased to 60%. ABSD for Singapore citizens purchasing their second and third homes doubled from 30% to 60%. ABSD is applicable to Singapore citizens purchasing their third or second subsequent residential property has increased by 20% as well as 30% and 30%, respectively. Meanwhile, that for Singapore permanent residents (PRs) was increased by 30% as well as 35% in both cases.

“The Group will monitor the market conditions carefully and then start Newport Residences at the right moment,” says CDL.

“Minimal impact” on mid-tier and mass segments
In the near future, CDL expects the latest property cooling measures to affect projects that have a greater percentage of foreign demand, which is typically luxurious or high-end properties located in prime districts or CCR.

The group anticipates “minimal effect” on the mid- and mass-tier segments, where the majority of buyers are PRs and locals such as the launch of the EL Development’s Blossoms by The Park at one-north and 75% of the 275 units sold on the day of the launch on April 29, at the average price of $2,423 per square foot. The opening of 816 units at the freehold The Continuum by Hoi Hup and Sunway Property the following weekend saw the sale of 211 units (26%) at an average of $2,730 per square foot. The 732-unit The Reserve Residences at Jalan Anak Bukit, which is an alliance between Far East Organization and Sino Group The Reserve Residences will be launched on the 27th of May.

The analyst of RHB, Vijay Natarajan, In his report, he notes on May 19, that effect from the measures to cool the residential inventory of CDL “is manageable” because the company has sold the equivalent of 88% of its new inventory in Singapore in April.

Natarajan believes that the company could be able to recognize around $5 billion in residential sales that have not been billed in the coming three years. CDL owns four different projects totalling around 1500 unit ($2 billion gross value of development) in the pipeline for launch. He claims that the majority of% of the un-sold units are in the mid-tier or mass-market segment, which is not affected by the most recent cooling measures targeted primarily at investors and foreigners.

“While we anticipate a slight decrease in prices for new launches post-measures margins are likely to be significantly reduced and will remain within an eight to 20% interval,” says Natarajan in his research.

The company has residential developments across Australia as well. At the time of 1Q2023, construction of 198 units at The Marker in West Melbourne is complete. So far, it’s 92% sold. The 60-unit apartment development, Fitzroy Fitzroy, in Melbourne is currently 40% pre-sold in advance of the completion date of 1Q2024. In Brisbane it’s 215 unit Brickworks Park is 49% pre-sold. Its 97 unit Treetops at Kenmore, a JV development located in Brisbane is also presold at 49% pre-sold.

Commercial portfolio – strong occupancy
CDL announced it’s office inventory has an occupancy commitment that was 94.3% as at 1Q2023 which was higher than the island-wide percentage which was 88.8%. Republic Plaza, the flagship office of the group’s Grade A building located in the heart of downtown, is 93.2% occupied, with positive rental reversions to 8.9% in 1Q2023. The other office assets of CDL, City House and King’s Centre King’s Centre, have committed occupancies that are 96.7% and 100% respectively.

The portfolio of retail properties owned by the group has an occupancy committed that was 97.6%, higher than the overall rate which was 92.4%. The City Square Mall’s occupancy rate was 95% in the 1Q2023, whereas Palais Renaissance, Waterfront Plaza and The Venue Shoppes are 100% lease-up. Reversions in rental at City Square Mall and Palais Renaissance increased 7.9% and 7.5% in 1Q2023, respectively.

The increase in shopper traffic and returning of tourists are aiding the revival of the retail industry. But, retailers are beware of the risks of inflation in the form of utility bills and rising rates of interest, CDL comments.

Acquisitions from overseas
The group completed its acquisition in March. company has completed its purchase of St. Katharine Docks, an iconic 23-acre freehold marina estate located in Central London, for PS395 million (about $636 million) or PS751 per square foot ($1,209 per square foot) in the current Net Lettable Area. The estate covers more than 500 000 sq feet in Grade A offices space, F&B retail, residential and F&B located across four major buildings, as well as additional spaces and a marina that has the capacity to accommodate up to 185 vessels. The office portion currently has a high occupation rate of around 90% with a broad tenant base that spans industries like shipping, consulting education, co-working spaces and more.

The purchase of St. Katharine Docks adds to the portfolio of top commercial assets in the UK and will increase the value of the entire portfolio to PS1 billion. In addition to enhancing the group’s regular earnings stream, it is a complement to its strategy for managing funds by allowing the company to transfer their UK assets into platforms that are listed or not at the right time as per CDL.

The company is owned by its hotel subsidiary wholly owned by the group Millennium & Copthorne Hotels (M&C) and through a 50:50 joint partnership with its NewZ-listed affiliate M&C Hotels New Zealand, decided to acquire the hotel with 416 rooms Sofitel Brisbane Central hotel for A$177.7 million (about $159.2 million) which is equivalent to the equivalent of A$427,000 ($383,000) for each key, in March. When the deal is completed, acquisition in the 2H2023, CDL will benefit from this five-star hotel, which has the largest conference facilities located in the middle of Brisbane CBD, the group’s third hotel in Australia.

Acquisitions like St. Katharine Docks and Sofitel Brisbane increase CDL’s fund assets under management by 4 billion dollars, according to RHB’s Natarajan. CDL has set its sights on $5 billion at the end of 2023. “The fund management’s growth in business is one of the most important strategies to boost its low fundamental ROE (return on equity),” he comments.

PRS, PBSA portfolio boost
The month of April saw CDL bought two properties in the Osaka private rented segment (PRS) at Y=31.5 billion ($314.1 million). With the acquisition of 201 units, they increase an overall number of PRS units in Japan to 714. Average occupancy in it’s Japanese assets is higher than 95%. CDL says that a strong demand from both corporate and residential customers will fuel leasing growth in the first half of 2023, as the border restrictions are eased and foreigners come back.

According to CDL the company’s UK PRS portfolio continues to be “a class of assets that is counter-cyclical” after the pandemic. The leasing process is in progress in The Junction, the Group’s PRS development in Leeds that has achieved practical completion for three from five blocks (307 out of 665 units).

In the UK the company offers a specially-built students’ accommodation (PBSA) portfolio that includes 2,400 beds spread across five cities. It has an occupancy rate of 99% for the academic year 2022/23. Due to the high need and post-pandemic improvement CDL anticipates “significant rent growth” for the coming academic year.

Hotel portfolio RevPAR rebounds
CDL’s hotels recorded worldwide revenue per available room (RevPAR) an increase to 65.4% to $13.2 for 1Q2023, an increase of $79.3 on a yearly basis, driven by the robust recovery in Asia as well as Australasia.

In the 1Q2023, Singapore hotels recorded an 88.9% y-o-y increase in RevPAR which is mainly due to the higher rooms rates on average. As travel restrictions gradually eased for the rest Asia Singapore hotels saw 150.2% y-o-y RevPAR growth driven by the impressive performances of Taipei in China and Beijing.

The company opened its 294 room M Social Suzhou hotel in April, the debut M Social property in China. M Social Suzhou is located in China. M Social Suzhou is within Hong Leong City Center, the group’s integrated development adjacent to Jinji Lake in Suzhou Industrial Park.

According to CDL Hotels in Australasia had a significant increase in RevPAR in the range of 126.8% to $112.5 in 1Q2023 due in part to increased occupancy and rooms rates.

In Europe CDL’s hotels posted an 40.9% increase in RevPAR in the 1Q2023 quarter to $138.9. London hotels had an average room price that was $248.7, 22.3% higher than in the same period last year. This resulted in an 39.7% growth in RevPAR.

The US hotels registered an 38.4% y-o-y increase in RevPAR in 1Q2023, fueled mostly by New York hotels. The higher average rate for rooms and a continued effort to manage costs allowed hotels in the New York hotels to achieve an operating profit that was lower than the Q1 2022.

Ratio of net gearing at 55% and cash reserves of $1.9 billion
The company’s net gearing ratio was at 55% at the end of March 2023, after the purchase from St. Katharine Docks. The interest coverage of 3.1 times, and reserves for cash at $1.9 billion. CDL keeps its “liquid position” consisting of cash and non-renewal bank facilities of $3.6 billion. According to the company its debt expiry report, the group “remains sound”.

“The recently announced property cooling measures that were announced in April serve as a continual reminder to the Group that it shouldn’t be relying too heavily on a particular region or asset class,” states CDL. “The diversification of the portfolio geographically across all its business segments helps it remain stable while also embracing expansion.”