Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
An upcoming plan, expected to be launched next year, is a brand-new 500-unit exclusive non commercial project at Clementi Avenue 1. MCL Land and joint project companion CSC Land Team beat 5 more to win the site with a quote of $633.45 million ($ 1,250 psf per story ratio) last November.
Recently, Bloomberg reported that Asian real estate group Hongkong Land Holdings is thinking about marketing its 100%- owned Singapore real property development subsidiary, MCL Land. The move, if true, would certainly remain in line with the former’s method to cease acquiring development properties, states JP Morgan in an equity study information.
In any case, the study house feature that selling MCL Land above account price could be “a little bit complicated”, provided present market problems and that it “would most likely not be stunned if the company ends up disposing of MCL Land at a little listed below account value” to suit its capital recycling targets. Alternatively, the group may get its period marketing its development real estate ventures and diminishing its land bank.
In October, Hongkong Land publicized in a vital assessment that the group will no longer focus on purchasing the build-to-sell segment throughout Asia. Instead, the team is anticipated to begin recycling funds from the segment into new integrated business estate options as it finishes all continuing projects.
JP Morgan has actually preserved its “neutral” ranking on Hongkong Land, with a target cost of US$ 4.10. “We assume HKL’s current values are decent, and thus we stay Neutral, yet we can turn much more favorable if Hongkong Land indicates its ability to implement value-accretive deals.”
In November, MCL Land launched the 552-unit Nava Grove in Pine Grove, District 21. A mutual development with Sinarmas Land, the 99-year leasehold condominium achieved 65% sales on launch weekend at an average price of $2,448 psf.
Resources pointed out by Bloomberg claimed that Hongkong Land is aiming to divest MCL Land at a premium to its book worth of $1.1 billion. While this is lower than Hongkong Land’s net financial investment for Singapore growth real properties of US$ 1.362 billion ($ 1.83 billion) documented since end-June, it stands for about 8% of the group’s overall capital recycling target of US$ 10 billion and around 14% of its US$ 6 billion capital recycling target for innovation real properties, according to JP Morgan.
