Metro Holdings

(25-11-2014, 09:40 PM)pianist Wrote: i bet they mostly likely able to renew the lease.
property lease be it residential or commercial are short term in nature
there are many more residential property even nearer the end of their lease...does it mean the people will get chased out?

Anyway, its a bit premature to talk about the lease now right?
Here are the 5 properties and when their leases run out.

EC Mall, Beijing 50 year term from 2001 (2051)
Metro City, Shanghai 36 year term from 1993 (2029)
Metro Tower, Shanghai 50 year term from 1993 (2043)
GIE Tower, Guangzhou 50 year term from 1994 (2044)
Frontier Koishikawa Building, Tokyo Freehold

Earliest is 2029, 15 yrs away.
Kinda early to be speculating about whether leases will be renewed. China in 15 yrs will be a very different animal.
Obviously management feels confident enough to do a major refurbishing works for their properties currently, taking a short term hit in earnings and rentals to maximise longer term returns.

divesting tesco lifespace..peanut gain though

The Divestment of the Six BVI Holding Companies by Diamond Wind and
Choice Bright is expected to result in a divestment gain on disposal of
associated companies to be included with the Metro Group’s share of
associated companies results estimated at about S$ 13.0 million (net of
charges, other adjustments and tax) which will be recognized on completion of the SPA.

(18-12-2014, 10:58 PM)pianist Wrote: divesting tesco lifespace..peanut gain though

The Divestment of the Six BVI Holding Companies by Diamond Wind and
Choice Bright is expected to result in a divestment gain on disposal of
associated companies to be included with the Metro Group’s share of
associated companies results estimated at about S$ 13.0 million (net of
charges, other adjustments and tax) which will be recognized on completion of the SPA.

S$13million net gain = 1.57 cents per share
not too bad considering:
1) Many of the malls are actually still loss making
2) Metro bought into the 1st of the 6 malls (Qinhuangdao) only in Jan 2010, and the most recent one (Shenyang) only opened in Aug 2013.
So the investments have only been between 1-5 years old before divesting at a profit.

<vested>

Strong recent run up in price, but with no apparent news

(26-11-2014, 12:21 AM)GFG Wrote:

(25-11-2014, 09:40 PM)pianist Wrote: i bet they mostly likely able to renew the lease.
property lease be it residential or commercial are short term in nature
there are many more residential property even nearer the end of their lease...does it mean the people will get chased out?

Anyway, its a bit premature to talk about the lease now right?
Here are the 5 properties and when their leases run out.

EC Mall, Beijing 50 year term from 2001 (2051)
Metro City, Shanghai 36 year term from 1993 (2029)
Metro Tower, Shanghai 50 year term from 1993 (2043)
GIE Tower, Guangzhou 50 year term from 1994 (2044)
Frontier Koishikawa Building, Tokyo Freehold

Earliest is 2029, 15 yrs away.
Kinda early to be speculating about whether leases will be renewed. China in 15 yrs will be a very different animal.
Obviously management feels confident enough to do a major refurbishing works for their properties currently, taking a short term hit in earnings and rentals to maximise longer term returns.

I noticed that Metro’s 60% interests in Shanghai Metro City and Shanghai Metro Tower are held through “joint controlled entities”.

I have seen JV with term of 20 years only (shorter than the land tenure of the properties owned) and was not renewable - with foreign interests in the JV revert to the Chinese partner at expiry.

Hence, the terms or contractual agreements of the JV are also critical

Not sure on the disclosure standards/requirements on these JV interests.

(01-02-2015, 01:40 PM)Boon Wrote:

(26-11-2014, 12:21 AM)GFG Wrote:

(25-11-2014, 09:40 PM)pianist Wrote: i bet they mostly likely able to renew the lease.
property lease be it residential or commercial are short term in nature
there are many more residential property even nearer the end of their lease...does it mean the people will get chased out?

Anyway, its a bit premature to talk about the lease now right?
Here are the 5 properties and when their leases run out.

EC Mall, Beijing 50 year term from 2001 (2051)
Metro City, Shanghai 36 year term from 1993 (2029)
Metro Tower, Shanghai 50 year term from 1993 (2043)
GIE Tower, Guangzhou 50 year term from 1994 (2044)
Frontier Koishikawa Building, Tokyo Freehold

Earliest is 2029, 15 yrs away.
Kinda early to be speculating about whether leases will be renewed. China in 15 yrs will be a very different animal.
Obviously management feels confident enough to do a major refurbishing works for their properties currently, taking a short term hit in earnings and rentals to maximise longer term returns.

I noticed that Metro’s 60% interests in Shanghai Metro City and Shanghai Metro Tower are held through “joint controlled entities”.

I have seen JV with term of 20 years only (shorter than the land tenure of the properties owned) and was not renewable - with foreign interests in the JV revert to the Chinese partner at expiry.

Hence, the terms or contractual agreements of the JV are also critical

Not sure on the disclosure standards/requirements on these JV interests.

If you are the Chinese JV partner , will you extend the lease agreement or take 100% ownership after the expiry of lease ?

(01-02-2015, 01:57 PM)cfa Wrote:

(01-02-2015, 01:40 PM)Boon Wrote:

(26-11-2014, 12:21 AM)GFG Wrote:

(25-11-2014, 09:40 PM)pianist Wrote: i bet they mostly likely able to renew the lease.
property lease be it residential or commercial are short term in nature
there are many more residential property even nearer the end of their lease...does it mean the people will get chased out?

Anyway, its a bit premature to talk about the lease now right?
Here are the 5 properties and when their leases run out.

EC Mall, Beijing 50 year term from 2001 (2051)
Metro City, Shanghai 36 year term from 1993 (2029)
Metro Tower, Shanghai 50 year term from 1993 (2043)
GIE Tower, Guangzhou 50 year term from 1994 (2044)
Frontier Koishikawa Building, Tokyo Freehold

Earliest is 2029, 15 yrs away.
Kinda early to be speculating about whether leases will be renewed. China in 15 yrs will be a very different animal.
Obviously management feels confident enough to do a major refurbishing works for their properties currently, taking a short term hit in earnings and rentals to maximise longer term returns.

I noticed that Metro’s 60% interests in Shanghai Metro City and Shanghai Metro Tower are held through “joint controlled entities”.

I have seen JV with term of 20 years only (shorter than the land tenure of the properties owned) and was not renewable - with foreign interests in the JV revert to the Chinese partner at expiry.

Hence, the terms or contractual agreements of the JV are also critical

Not sure on the disclosure standards/requirements on these JV interests.

If you are the Chinese JV partner , will you extend the lease agreement or take 100% ownership after the expiry of lease ?

The terms of each JV are different - here is another case between LKN and its JV partners on the Shanghai Equitorial hotel

2.1 Joint venture in relation to SIEH
LKNII and SIVCC (the "JV Parties") had entered into an agreement dated 29 October 1986 (the "Hotel JV Agreement") to jointly invest in, construct and manage the hotel known as "Equatorial Hotel Shanghai" (the "Hotel") in Shanghai, The People’s Republic of China ("PRC"). Pursuant to the Hotel JV Agreement, the JV Parties had established SIEH as a joint venture company to undertake the construction and operation of the Hotel. Each of the JV Parties holds a 50% equity interest in SIEH. Under the Hotel JV Agreement, the duration of SIEH was originally stipulated to be 20 years, but it had been extended by the JV Parties until 20 November 2013. The Hotel JV Agreement provides that upon the expiry of the duration of SIEH, SIEH shall be liquidated in accordance with PRC laws and the Hotel JV Agreement (unless the duration of SIEH is extended by the JV Parties).

http://www.finanznachrichten.de/pdf/2012...73E4.1.pdf

METRO Holdings on Thursday reported a 82.7 per cent drop in net profit to S$7.6 million for its fourth quarter ended March 31, 2015, down from S$43.8 million a year ago.

This was despite the property development and investment group's revenue growing 19.2 per cent to S$41.7 million. Revenue rose due to higher turnover from the retail division as the new store at Metro Centrepoint started operations in Q3 FY2015.

But earnings fell because of the retail division's higher operational and overhead costs, mostly from the new Metro Centrepoint store.

There was also a write-down of the costs of plant and equipment of Metro Centrepoint of about S$8.8 million, it said.

For the full year, the company's earnings rose 33.7 per cent to S$142.9 million, on a 4.78 per cent increase in revenue to S$145.8 million.

This is due to higher turnover driven by the retail division's new Metro Centrepoint store, the strengthening of the renminbi against the Singapore dollar, and higher rental income from certain malls in its property division.

The board has recommended dividend of 6 Singapore cents, comprising an ordinary final dividend of 2 cents and a special dividend of 4 cents, unchanged from a year ago.

Wondering why nobody brought this up thus far. It's very significant IMO, as it shows Metro's continued ability to recycle assets:

Announcement on 14 August 2013:
"The Board of Directors of Metro Holdings Limited ("Metro" or the "Company") wishes to announce that Nordevo Investments Limited (“Nordevo”), a 50% held jointly controlled entity of Crown Investments Ltd, a wholly-owned subsidiary of Metro China Holdings Pte Ltd, has entered into a Share Purchase Agreement and Deed of Novation (together, the “SPA”) to increase its 63.3% equity interest in China East Investment Ltd (“CEI”) to 100% (the “Investment”). CEI’s wholly-owned subsidiary, ECM Property Holding (Tianjin) Co Ltd, owns EC Mall at Zhongguancun, Haidian District, Beijing, PRC. Metro China Holdings Pte Ltd is a wholly-owned subsidiary of the Company."

"The SPA provides for Nordevo to acquire 36.7% of the issued shares of CEI at approximately US$7.7 million, and to acquire the related shareholders loans of approximately US$36.3 million. The total consideration is US$44 million (approximately S$55.8 million)."

Essentially, 36.7% of EC Mall is bought for US 44million, which means EC mall is valued at approximately 120million USD

Now, in FY15Q4 (March 2015):
"Metro Holdings Limited (“Metro” or the “Company”) wishes to announce
that Nordevo Investments Ltd (“Nordevo”), its indirect 50% held jointly
controlled entity, has entered into a Sale and Purchase Agreement
(“SPA”) to sell its 100% interest in the issued capital of China East
Investment Ltd (“CEI”) (the “Divestment”) to an independent and unrelated
party. CEI’s wholly owned subsidiary, ECM Property Holdings (Tianjin) Co
Ltd (“EPHC”), owns the retail mall property, EC Mall, in Beijing, PRC.
Nordevo is a 50% jointly controlled entity of Crown Investments Ltd
(“Crown”). Crown is a wholly-owned subsidiary of Metro China Holdings
Pte Ltd, who in turn is a wholly-owned subsidiary of the Company."

"The SPA provides for the sale of all of the issued share capital of
HK$5,000 of CEI for approximately US$179.5 million and payment for the
novation of the shareholders loan of approximately US$123.2 million. The
consideration is based on the value of EC Mall of RMB2.5 billion."

Sold stake in EC mall in <2years, at a total value of 302.7million USD

So Metro increased stake in EC Mall in FY14Q2 for USD $22mil, then shortly after, booked a negative goodwill gain in FY14Q3 of $19.1mil because "Information regarding the fair values of certain assets relating to the acquisition for the purpose of calculating the negative goodwill only became available in late January 2014"

Now we all know this "information" is related to this sale, allowing a quick gain.

On top of this, in this latest financial results release:
"Further to the announcement dated 24 March 2015 on the divestment of the Group’s effective
interest of 50% in the joint ventures owning EC Mall, Beijing, PRC, beneficial completion of the
sale and purchase took place on 1 April 2015. A divestment gain on disposal, estimated at about
$36.8 million (net of charges and tax but including translation and other reserves) will be
recognised in 1QFY2016."

EC Mall has turned out to be very profitable indeed for Metro Holdings

http://infopub.sgx.com/FileOpen/MHLFUNDI...eID=356102

Metro getting into a NF led investment fund - with a ah long mandate...

Long absence - ie the ah long mkt may be back again in China. 1st sponsor has seen their high interest financing book growing rapidly...