IGB REIT IPO set to be 4th largest this year

The Gardens Mall is one of the properties of IGB REIT.

KUALA LUMPUR: IGB Real Estate Investment Trust (REIT) has priced its initial public offering (IPO) to institutional investors at the top of an indicative range in a deal that will raise about US$260mil in the buoyant Malaysian market, according to sources.

The IPO was priced at RM1.25 per share, said sources with direct knowledge of the deal who were not authorised to speak publicly on the matter. The REIT had been offered to large investors such as pension and mutual funds at a RM1.15-to-RM1.25 range.

The deal is set to be the fourth largest IPO this year in Malaysia, and follows high-profile share sales by planter Felda Global Ventures Holdings Bhd (FGVH) in June and IHH Healthcare Bhd in July.

The institutional tranche of the offer was about 30 times oversubscribed, one of the sources said, underscoring the growing interest in Malaysian deals and the emergence of South-East Asian capital markets.

Equity issuance in Malaysia year-to-date stands at about US$7.9bil, compared with US$3.9bil last year, and Malaysian IPOs have gained 17% year-to-date on average, according to Thomson Reuters publication IFR.

The IGB REIT was likely to yield 5.1% to 5.2% a year, IFR reported, making it appealing to investors looking to bolster returns amid volatile stock markets and with global interest rates near record lows.

Demand was also buoyed by the relatively small size of the deal, compared with FGVH's US$3.1bil IPO and US$2.1bil IHH dual-listing.

The property trust owns two Kuala Lumpur shopping malls the Mid Valley Megamall and the Gardens Mall.

Meanwhile, MIDF Research has placed a fair valuation of RM1.43 per share based on the resilient earnings of Malaysian REITs. The research house said there had been strong interest in IGB REIT with the retail and institution portions of the offer for sale oversubscribed.

“Hence we believe our estimated fair value (capital gain potential of 14%) is not overly optimistic,” it said.

By Reuters

Analysts see high demand for Battersea project apartments

PETALING JAYA: The market is cautious about the RM40bil Battersea Power Station project in London but it expects strong take-up rate for the apartments to be launched under phase one.

SP Setia Bhd and Sime Darby Bhd have a 40% stake each in the project while the Employees Provident Fund (EPF) has the remaining stake.

The first phase will consist of 800 apartments above a commercial podium with an estimated gross development value (GDV) of £1bil (RM5bil).

The units are from 500 sq ft to 1,400 sq ft and priced from 900 pounds to £1,300 per sq ft.

HLIB Research analysts said the pricing of the apartments was in line with other projects in the vicinity, which could fetch up to £1,500 per sq ft.

“We expect a strong take-up rate given SP Setia's pool of Malaysian and international buyers,” they pointed out.

The launch of the first phase of the Battersea Power Station project has been set for early April. The soft launch is expected to be in January while construction should start in April.

The first phase would also include the refurbishment of the power station.

Analysts said SP Setia did not specify the amount that will be contributed for the refurbishment.

A senior analyst from a local bank-backed research house said it was more likely that construction for the first phase would start in the third quarter of next year.

“There are still approvals that have yet to be given,” he said.

The approvals for the building plan are expected to be obtained by year-end.

The first phase will take up only 25% of the total 3,266 residential units allowed on the 39.1 acre site. However, it will only account for 12.5% of the overall GDV of £8bil (RM39.8bil).

SP Setia's portion for Battersea's site would amount to about RM800mil. The acquisition will be financed by a 60:40 debt-to-equity ratio. Chief executive officer Tan Sri Liew Kee Sin had said the consortium had acquired a £300mil bridging loan from CIMB Bank.

The remaining £100mil were settled according to the equity stake of SP Setia, Sime Darby, and EPF.

SP Setia has decided to pursue equity funding with a proposed placement of new shares of up to 15% of its share capital to institutional investors, which will be identified via a book-building exercise.

Based on an assumed placement price of RM3.19, the company would be able to raise about RM957.4mil.

The senior analyst said most of the funds would go to the Battersea project. The remaining funds would be utilised for SP Setia's other projects such as the 1National Institute of Health, Complex Setia Alam, the redevelopment of Bangsar land, as well as ongoing and future projects.

RHB Research analyst Loong Kok Wen said in a report: “We have estimated a funding commitment of RM600mil solely for the Battersea project for the first two years.”

Loong did not discount the possibility of more fund raising activities given the size of the Battersea project, its working capital requirement, future projects and landbanking exercises.

The placement exercise would still require the approval of Bursa Malaysia, as well as the company's shareholders.

By The Star

M'sian consortium's London Battersea Power Station job to be done in 10 years instead of 15

LONDON: The Malaysian consortium comprising SP Setia Bhd, Sime Darby Bhd and the Employees Provident Fund brushed aside scepticism and negativity by outlining an anticipated time line for the Battersea Power Station project and even shortening the 15-year duration of the project to 10 years.

Battersea Power Station Development Company (BPSDC) chief executive office Robert Tincknell said “this time, it is going to happen” at a cocktail party with guests-of- honour London mayor Boris Johnson and Minister in the Prime Minister's Department Datuk Seri Idris Jala.

Earlier, Tincknell, who introduced himself and the BPSDC to a group of international analysts and fund managers, said the first phase would be crucial, as it would set the tone for the rest of theproject.

“It will be a symbol of industrial Britain once again producing power,” he said in reference to the power station which ceased operations in 1983, adding that it would be a strictly United Kingdom show, with financial backing from the consortium partners.

Tincknell: ‘We will have enough critical mass with the Northern Line.’

Depending on the demand for space, the team will work towards shortening the 15-year project to 10 years.

The strategy, he said, would be to focus on Phase 1 and possibly doing a few phases simultaneously, depending on demand.

“Fifteen years will be very conservative,” he said, adding that the weak global situation, in a twist of irony, will not be a deterrent.

“London is a global market,” he said.

The first phase of the project is expected to begin later this year with ground breaking in the second half of next year.

“We expect to begin preparatory work later this year and to break ground in the second half of next year and the completion of Phase one in 2016,” he said, adding that there was no intention to bring in new development partners.

“If someone can make the scheme even better, that can be considered,” he said.

On the issue of profitability, Ticknell said Phase one was designed to create enough equity to move the project forward.

“When this phase is completed, we will recoup the equity injected today,” he said.

On the ambitious development of 1.7 million sq ft of office space over the 39 acre site, he said the extension of the Northern Line would help provide traffic and interest to the commercial segment. “We will have enough critical mass with the Northern Line,” he said.

Tincknell said there would be 800 apartment units above a commercial podium, which will include retail, restaurants, gymnasium, pool, spa, theatre, and office studios. The units will be sold at a market value at between £900 and £950 per sq foot.

Other work under Phase one includes a new six-acre public park at the front entrance of the power station and it will front the Thames. This park will be linked to the 200-acre Battersea Park located across Queenstown Road.

Phase one will also involve the refurbishment of the power station. The four chimneys will be demolished and replicated one at a time as set out by the local council at a cost of £11bil. The rest of the refurbishment of the power station will be a further investment of £50mil.

By The Star

Caely secures RM47.9m infra, housing project

KUALA LUMPUR: Caely Holdings Bhd has secured a RM47.93mil contract from Koperasi Peserta Peserta Felcra Malaysia Bhd as a turnkey contractor for a project in Perak.

It said on Friday the contract was to build the infrastructure and 300 houses at Changkat Lada.

"The contract period will be for two years. The value of the contract is for a total contract sum of RM47.93mil," it said.

By The Star

Hong Kong to restrict foreign homebuyers from 2013

Hong Kong on Thursday announced the first step in a policy aimed to restrict foreigners from buying property, in a move seen to be targeting mainland buyers who have been blamed for pushing up property prices.

Chief executive Leung Chun-ying said only Hong Kong permanent residents will be able to buy flats to be built on two sites that will provide around 1,100 homes next year under a so-called "Hong Kong land for Hong Kong people" policy.

Resale of the residential units will be restricted to locals for 30 years and incorporated companies will also not be allowed to purchase them.

The policy was part of Leung's election promises to tackle the housing woes in the city of seven million before he was elected into office in March.

"Hong Kong's land for property is rare and precious resource, when using this land, we must make it a priority to fulfil the housing needs of the Hong Kong permanent residents," Leung told reporters.

"This plan is the first of its kind because we have never had a policy like this in the past," Leung said while standing in the construction site where the residential buildings will be built.

The units will be built on two sites of the combined size of 1.6 hectares (3.95 acres) in an area that used to be the site of Hong Kong's former Kai Tak airport.

The announcement came after Leung unveiled a series of measures last week to cool the red-hot property market, including to provide around 65,000 new units on the market in the next three to four years.

Other measures include boosting land supply by converting 36 sites meant for government and public use to residential property to provide space for nearly 12,000 units.

Property prices in the southern Chinese city, famous for its sky-high rent, have surged over the past few years due to record low interest rates and the flood of wealthy people from mainland China snapping up homes.

By AFP