Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Sources pointed out by Bloomberg claimed that Hongkong Land is wanting to unload MCL Land at a costs to its book value of $1.1 billion. While this is lower than Hongkong Land’s net financial investment for Singapore project real properties of US$ 1.362 billion ($ 1.83 billion) showed as of end-June, it stands for approximately 8% of the group’s overall funding reprocessing target of US$ 10 billion and about 14% of its US$ 6 billion capital recycling target for development real properties, according to JP Morgan.
Recently, Bloomberg reported that Asian real estate group Hongkong Land Holdings is thinking about offering its 100%- acquired Singapore property development subsidiary, MCL Land. The move, if real, would certainly remain in channel with the previous’s method to cease obtaining development properties, states JP Morgan in an equity study report.
In any case, the research house feature that selling MCL Land over book value could be “a little bit difficult”, granted current market conditions and that it “would definitely not be stunned if the firm winds up dealing with MCL Land at somewhat below account value” to meet its capital recycling targets. Alternatively, the group might get its time reselling its development real estate projects and depleting its land bank.
An upcoming project, anticipated to be debuted next year, is a brand-new 500-unit nonpublic residential project at Clementi Avenue 1. MCL Land and joint venture companion CSC Land Group beat 5 more to win the site with a proposal of $633.45 million ($ 1,250 psf per plot ratio) last November.
In November, MCL Land kicked off the 552-unit Nava Grove in Pine Grove, District 21. A conjoint development with Sinarmas Land, the 99-year leasehold condominium attained 65% sales on launch weekend at an average price of $2,448 psf.
JP Morgan has actually kept its “neutral” ranking on Hongkong Land, with a target rate of US$ 4.10. “We think HKL’s present values are fair, and hence we remain Neutral, yet we could convert a lot more favorable if Hongkong Land demonstrates its capability to perform value-accretive arrangements.”
In October, Hongkong Land released in a strategic review that the group will no longer concentrate on purchasing the build-to-sell section across Asia. Instead, the group is assumed to begin reclaiming capital from the segment into brand-new combined commercial estate options as it finalizes all continuing projects.
