Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Sources pointed out by Bloomberg stated that Hongkong Land is aiming to unload MCL Land at a costs to its book worth of $1.1 billion. While this is lower than Hongkong Land’s net investment for Singapore project properties of US$ 1.362 billion ($ 1.83 billion) showed as of end-June, it presents around 8% of the team’s overall funding recycling target of US$ 10 billion and about 14% of its US$ 6 billion capital reusing target for innovation real estates, according to JP Morgan.
In any case, the study house accentuate that selling MCL Land above account price may be “a little bit difficult”, granted existing market conditions and that it “would most likely not be surprised if the firm winds up dealing with MCL Land at a little below book worth” to match its capital recycling targets. Alternatively, the group may take its moment selling its development property projects and diminishing its land bank.
Last week, Bloomberg reported that Asian real estate group Hongkong Land Holdings is considering offering its 100%- managed Singapore real property development subsidiary, MCL Land. The step, if correct, would certainly be in line with the former’s plan to discontinue investing in development properties, says JP Morgan in an equity study information.
An upcoming venture, expected to be launched next year, is a new 500-unit nonpublic residential project at Clementi Avenue 1. MCL Land and joint venture companion CSC Land Team defeated five more to win the spot with a bid of $633.45 million ($ 1,250 psf per story ratio) last November.
In November, MCL Land launched the 552-unit Nava Grove in Pine Grove, District 21. A mutual property with Sinarmas Land, the 99-year leasehold condominium attained 65% sales on launch weekend at an average price of $2,448 psf.
JP Morgan has actually preserved its “neutral” score on Hongkong Land, with a target price of US$ 4.10. “We believe HKL’s existing values are fair, and hence we keep Neutral, yet we might convert much more beneficial if Hongkong Land shows its capability to implement value-accretive agreements.”
In October, Hongkong Land disclosed in a vital evaluation that the group may no longer pay attention to investing in the build-to-sell segment across Asia. Instead, the team is assumed to begin reusing capital from the segment right into new integrated commercial property opportunities as it completes all existing projects.
