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Daily Archives: 11 Mar 2010

S-Reits outperform peers for total returns in 2009

Posted on 11 Mar 2010 | Comments Off

They posted returns of 85.6%; Asian Reits performed well as a region: study

REAL estate investment trusts (Reits) in Singapore have outperformed their counterparts in other major markets in terms of total returns in 2009, according to a report released yesterday.

Ernst & Young’s study showed that Reits Singapore and Hong Kong posted returns of 85.6 per cent and 64.5 per cent respectively in 2009.

Malaysia (38.6 per cent) and South Korea (28.4 per cent) also put up strong showings.

By contrast, total returns in the more mature Reit markets were much lower. Returns for Australian Reits were 10.4 per cent in 2009, while Japan’s Reits came in at 6.7 per cent. The largest single Reit market in the world, the United States, witnessed returns of 27.9 per cent.

‘Asian Reits performed well as a region because the Asian economies have generally been more resilient to the financial crisis, underpinned to some extent by China’s economic performance and favourable long-term growth outlook,’ said Liew Choon Wai, assurance partner and head of Singapore real estate for Ernst & Young.

The performance of each country’s Reit market appears to reflect the broader economic sentiment, he added: ‘For Singapore, the economy was seen as particularly vulnerable during the financial melt-down, and it was not surprising that we saw a plunge in Reit returns in 2008 to early 2009, which has subsequently rebounded strongly since March as financial markets stabilise.’

But only Singapore recorded a negative three-year rate of return – of minus 4.15 per cent – of the Asian countries outside of Japan. Rates of return for South Korea, Malaysia and Hong Kong are all in positive territory over the last three years. Japan, a mature economy, had a three-year rate of return of minus 19 per cent.

Ernst & Young also noted that since March 2009, many Reit markets around the world have seen significant increases in share prices and Reits have raised billions of dollars by going back to the stock market for secondary (or follow-on) equity offerings to reduce debt, recapitalise their balance sheets and prepare their businesses for the next wave of growth.

Source : Business Times – 11 Mar 2010

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Sun Plaza goes on the market for over $300m

Posted on 11 Mar 2010 | Comments Off

Investment buzz in shopping centre scene; Alpha takes stake in Katong Mall

THE shopping centre investment scene seems to be abuzz. At least one property is being put on the market officially.

Sun Plaza, located between Sembawang MRT station and bus interchange, will be marketed through an expression of interest exercise.

The asking price for the 11-year-old mall, owned by Heeton Holdings and Koh Brothers, is understood to be in excess of $300 million or $2,000 per square foot (psf) of net lettable area.

The mall has seven levels, two of which are basement floors, and offers scope for asset enhancement work and repositioning to boost yields.

Meanwhile, over in the Katong area, a fund managed by Alpha Investment Partners is said to have taken a majority stake, believed to be around 70 per cent, in the consortium that bought Katong Mall late last year for $247.6 million.

The consortium, originated by former CapitaMalls Trust chief executive Pua Seck Guan, also includes China-based retailer Beijing Hualian Group and BreadTalk Group.

Katong Mall, located at the corner of East Coast and Joo Chiat roads, will be revamped and its net lettable area boosted by about 20 per cent.

Alpha, Keppel Land’s fund management unit, has also been active in other segments of the property market. Another of its funds controls 90 per cent of a company that owns the newly spruced-up office block at Cecil Street known as The Spazio (formerly Dapenso Building).

In Shanghai, Alpha is expected to bag an upscale service apartment block from Morgan Stanley Real Estate in a transaction estimated at about 900 million yuan (S$184 million).

Over in Singapore’s Sembawang area, CB Richard Ellis is handling the expression of interest exercise for Sun Plaza.

The property has been built to its maximum plot ratio; hence, it is being pitched for its asset enhancement potential.

For instance, a community library on the third level could be moved to a higher level with the library space decanted to create higher-value retail / restaurant space, for example, in basement 1.

As well, a cineplex on the fourth and fifth levels that was formerly operated by Eng Wah has been left vacant, presenting an opportunity for a new investor to reconfigure the space into smaller lots for lease to higher-paying tenants.

Sun Plaza’s retail area is spread across six levels, including basement 1. Basement 2 is occupied by 260 carpark lots.

Currently, the average gross monthly rental for the mall is said to be about $8 per square foot but market watchers reckon that through asset enhancement works and improving tenant mix, it might be possible to raise this figure to $12-14 psf.

Sun Plaza is on a site with a remaining lease term of about 85 years. Tenants include NTUC FairPrice, Yamaha Music School, Taka Jewellery and Kopitiam.

Above Sun Plaza are 76 apartments which were sold by the developers years ago.

Source : Business Times – 11 Mar 2010