Extra extra, "REIT" all about it!
The Straits Times
www.straitstimes.com
Published on Apr 05, 2013
CDL may form Reit with its retail assets: StanChart
By Melissa Tan
DEVELOPER City Developments (CDL) could spin off its retail properties into a listed investment trust to help it offset the tough operating climate here, say Standard Chartered analysts.
They point out that the purchase last year of the Jungceylon mall in Phuket makes the move far more viable.
CDL's retail portfolio already includes other Thai properties, the Palais Renaissance in Orchard Road and City Square Mall in Little India.
The Jungceylon mall brings its retail holdings to around 1.7 million sq ft of space in Singapore and Thailand - large enough to potentially list as a retail real estate investment trust (Reit), the StanChart analysts said.
"We found in our recent meeting with CDL management that the company was rethinking some of its strategies as the operating conditions and regulatory environment in Singapore become more challenging," they noted.
CDL did not disclose the total value of its retail properties but StanChart analyst Regina Lim told The Straits Times that it was likely to exceed $1 billion.
The total value of its investment properties was $2.9 billion as at Dec 31 last year, according to its 2012 financial statement.
CDL recently announced that it would focus more on overseas opportunities.
Chairman Kwek Leng Beng told the group's full-year results briefing in February that CDL would look for new platforms and growth opportunities that would give it a balanced and diversified portfolio both domestically and internationally.
CDL effectively owns 49 per cent of the freehold Jungceylon mall, which has a site area of 940,324 sq ft.
Tenants at the four-storey complex near Patong Beach include department store Robinson, which is separate from the Robinsons store here, and hypermarket Big C Extra.
The 16-storey Palais Renaissance, a retail and office complex in Orchard Road, has a site area of 29,159 sq ft while the 11-storey City Square mall at the junction of Serangoon and Kitchener roads occupies 160,597 sq ft.
Both buildings are freehold.
CDL also owns the 99-year leasehold Central Mall at Havelock Road, which is a cluster of conservation shophouses, and some freehold strata units in the Tanglin and Katong shopping centres.
Part of the four-storey Mille Malle shopping mall in Sukhumvit Road in Bangkok is also in its portfolio.
The option of forming a Reit is gaining traction among local firms.
Real estate group Overseas Union Enterprise (OUE) said last month that it was in preliminary discussions with banks over a Reit listing on the Singapore Exchange mainboard.
This followed a Reuters report that OUE had chosen three banks as advisers for a US$800 million (S$990 million) listing of a hospitality Reit.
Unnamed sources cited in the report said they expected the initial public offer in the second half of the year.
Media group Singapore Press Holdings had said last month that it was exploring setting up a Reit to be listed here.
StanChart said yesterday that its target price for CDL was $12.10.
CDL shares have fallen 14 per cent from $12.99 on Jan 2 and closed five cents down at $11.21 yesterday.
melissat@sph.com.sg