Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Last week, Bloomberg announced that Asian real estate group Hongkong Land Holdings is taking into consideration offering its 100%- acquired Singapore real estate development subsidiary, MCL Land. The step, if true, would be in line with the previous’s plan to discontinue acquiring development properties, says JP Morgan in an equity study report.
In November, MCL Land launched the 552-unit Nava Grove in Pine Grove, District 21. A conjoint property with Sinarmas Land, the 99-year leasehold condo achieved 65% sales on launch weekend at an average price of $2,448 psf.
JP Morgan has kept its “neutral” score on Hongkong Land, with a target cost of US$ 4.10. “We believe HKL’s present values are decent, and therefore we keep Neutral, yet we might turn more beneficial if Hongkong Land shows its ability to carry out value-accretive deals.”
An upcoming venture, anticipated to be launched next year, is a brand-new 500-unit nonpublic residence project at Clementi Avenue 1. MCL Land and joint project companion CSC Land Group beat 5 more to win the location with a bid of $633.45 million ($ 1,250 psf per plot ratio) last November.
Resources mentioned by Bloomberg said that Hongkong Land is seeking to divest MCL Land at a premium to its account worth of $1.1 billion. Although this is lower than Hongkong Land’s net investment for Singapore growth real properties of US$ 1.362 billion ($ 1.83 billion) reported as of end-June, it stands for around 8% of the team’s total funding recycling target of US$ 10 billion and about 14% of its US$ 6 billion capital recycling target for property development real properties, according to JP Morgan.
Regardless, the research house feature that selling MCL Land over book worth might be “a little bit complicated”, provided present market problems and that it “would not be stunned if the business winds up dealing with MCL Land at slightly listed below account value” to meet its capital recycling targets. Alternatively, the group might get its moment reselling its development real estate projects and diminishing its land bank.
In October, Hongkong Land publicized in a calculated evaluation that the group will most likely no longer pay attention to purchasing the build-to-sell sector throughout Asia. Instead, the team is anticipated to start reusing capital from the segment right into brand-new incorporated retail estate opportunities as it finishes all existing projects.
