(15-03-2012, 04:03 PM)camelking Wrote: [ -> ]Just one question. LKT revalued JP periodically. Now, why is there such a difference then?
I guess the difference lies with the overall conservative thinking of the LKT's BOD and auditors, and the actual and evolving property investment market pumped up by aggressive players like CapitaLand trying hard to grow and create future value for their portfolio including new development projects at locations they consider strategic.
LKT's JP is an old but very high-quality asset and its value is backed by solid and still growing rental earnings. In a property investment market still going up and supported by a growing economy and population and improving transport infrastructure, and fanned by historical low interest rates, it is entirely possible JP when sold would be at a good premium over its BV or more conservative valuation.
(16-03-2012, 10:54 PM)dydx Wrote: [ -> ]I am so pleased to note that in share price LKT has actually out-performed STI by some 3 times in the last approx. 9 years.....
http://finance.yahoo.com/q/bc?s=L25.SI&t...l&c=%5Esti
Let's see what will happen if and when LKT and Guthrie GTS together sell JP.
Wonder who has the money to buy ? More than 1.5B ?
(15-03-2012, 12:22 PM)dydx Wrote: [ -> ]I just chanced upon the old presentation slides CapitaMalls Asia / CapitaLand Group used when they successfully tendered for the Jurong Gateway site located in Jurong East - which is being transfomed into the largest Regional Centre at the much publicised Jurong Lake District - for a huge $969m, equivalent to $1,012 psfppr (per square foot per plot ratio).....
http://info.sgx.com/webcoranncatth.nsf/V...1007B875E/$file/Slides_JurongGateway_final2250hrs_20110601.pdf?openelement
In p8 of the slides giving some Development Details of the mixed shopping mall/office project, CapitaMalls Asia / CapitaLand Group have projected a Total Development Cost of approx. $1.5b and a Capital Value for the shopping mall portion - which will have a GFA (gross floor area) of 575,000 sq ft - at approx. $2,800 –3,000 psfNLA (per square foot net lettable area).
If we just use the above Capital Value assumption and, to be conservative, adopt the lower point (i.e. $2,800 psfNLA) of the range and take a further 15% discount - i.e. $2,800 x 0.85 = $2,380 psfNLA - and apply it to the entire JP's approx. 750,000 NLA.....
http://www.jurongpoint.com.sg/fact-sheet
we can derive a fairly good estimate of JP's CMV at $1,785m.
Based on the above estimate, LKT's 50% share in the entire JP is potentially worth and could be sold for $892.5m - i.e. approx. $158.5m, or 21.6%, above its latest (as at 31Dec11) BV of 733.945m. Based on the above and LKT's latest (as at 31Dec11) 505.443m outstanding issued shares, the potential extra gain over its latest valuation, if and when the entire JP is sold, could add another up to approx. $0.313 to EPS and NAV/share.
This piece of news report is interesting and relevant to all those who are holding shares in LKT and Guthrie GTS.....
http://www.channelnewsasia.com/stories/s...52/1/.html
Sengkang Mall Ltd (which includes Frasers Centrepoint / F&N Group as a shareholder), the owner of Compass Point Shopping Centre in Sengkang town, has put the mall (which reportedly has 269,546 sq ft of NLA) for sale via public tender through CBRE (as the appointed Sale Manager), who is pitching the property at a potential price in excess of $645.0m, which translates to approx. $2,393 psf on the existing NLA and a net yield of about 4.5% based on the estimated net operating income of almost $29.0m.
As a direct comparison, LKT's 50% share of JP (which has approx. 750,000 sq ft of NLA) is now bringing in a total rental & related income of approx. $59.64m a year (derived by annualising the latest Q4-FY11's total rental & related income of $14.909m), and is being carried in LKT's latest (as at 31Dec11) B/S at a BV of $733.945m - translating to only $1,957 psf. If we use CBRE's $2,393 psf for Compass Point Shopping Centre as a basis, the derived CMV of the entire JP would be approx. $1,795m - or approx. $897.5m for LKT's 50% share. I think we should also bear in mind that JP is a bigger and more strategically located mall, with a much larger and likely also high-quality recurrent rental income stream.
Hi, dydx
From the rental yield point of view, Compass point yields 4.5%; and if we apply the same yield, we arrive at $1,325m for JP ($59.64m / 0.045). Will an investor be willing to accept lower yield paying @1,795m for JP? Or did I understand the numbers for JP incorrectly?
$59.64m is only for LKT I think.
LKT + Guthrie or the entire JP rental income is $120million.
so taking 4.5% yield, 120m/0.045 = $2.6billion.
Valuation psf = (Gross monthly rental - expenses/etc) x 12 / Net annual yield
59.64 mil is LKT's share of JP gross income (and assuming this is 100% due to JP not incl from other LKT assets)
4.5% is net annual yield of Compass Point
Hence to get a proper valuation estimate using the net yield (or cap rate) approach, what is missing is the expenses/etc part due to JP which is not available from the LKT financial statement, or at least I don't know how to read it from there.
Using the 2400 psf NLA comparative approach is closer. CMT values Tampines Mall and J8 (malls next to mrt and bus interchange just like JP and CP) at around 2400 psf NLA too.
(22-03-2012, 01:54 PM)egghead Wrote: [ -> ]Hi, dydx
From the rental yield point of view, Compass point yields 4.5%; and if we apply the same yield, we arrive at $1,325m for JP ($59.64m / 0.045). Will an investor be willing to accept lower yield paying @1,795m for JP? Or did I understand the numbers for JP incorrectly?
yeokiwi is right - the entire JP now fetches a total rental & related income running at approx. $120.0m a year. This is some 413% (or 4.13x) of that being generated by Compass Point Shopping Centre at approx. $29.0m a year, even though JP's total NLA of 750,000 sq ft is only 278% (or 2.78x) that of Compass Point Shopping Centre's 269,546 sq ft . So it is very clear that JP is a superior mall as being bigger it is able to generate more rental & related income and, more importantly, also a higher average rental rate.
From
http://www.channelnewsasia.com/stories/s...52/1/.html :
Compass Point
estimated
net operating income
29 million
current
gross rent about $11.71 per square foot per month
about 269,546 square feet over five storeys
hence current
gross rental income/yr = 11.71 x 12 x 269,546 =
37.9 million
From
http://info.sgx.com/webcoranncatth.nsf/V...100250AC6/$file/FY2011Results.pdf?openelement :
Jurong Point
Revenue: rental & related income 4Q11 $14.909 million
Annualised = approx 60 million
x 2 for whole property =
120 million
Think this is
gross rental income/yr.