Frasers Property (formerly: Frasers Cpt (FCL))

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FCL's Central Park - the student accommodation portion of the development has been thrown into questionable light - possible abused of NRAS - National Rental Affordability Scheme. Alamak, I really don't know what to make up of the following mess...

ALP housing scheme abused
RICK WALLACE THE AUSTRALIAN MARCH 11, 2014 12:00AM

Central Park developmentThe Central Park development on Abercrombie Street, close to the Sydney CBD, which is subsidised by the NRAS. Picture: James Croucher Source: News Corp Australia < PrevNext >
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NEW evidence of the hijacking of Labor’s flagship social housing scheme has emerged, with the companies behind a major Sydney development tapping $80 million in taxpayer subsidies to help build units for wealthy foreign students rather than the low-income Australian households the program was designed to help.

Earlier this month, The Australian revealed that universities had won thousands of grants under the National Rental Affordability Scheme and were filling hundreds of these government-sponsored units with fee-paying international students. The revelations have prompted one of the architects of the scheme — National Shelter executive officer Adrian Pisarski — to call for changes to ensure it delivered truly affordable housing to those in need.

“As one of the people who thought up NRAS in the first place, the original intention was not (for it) to be used for international students. The intention was to house low- to middle-income Australians,” he said.

“To the extent to which it’s happening, it needs to be monitored and the intention of the scheme allowing that needs to be reviewed or at least given serious consideration. It should not be what the NRAS becomes.”

He said there was evidence some international students faced difficulty in the private housing market and some student housing for them could be part of the mix, but the overall goal was to address the dearth of options for those on low wages.

The $4.5 billion NRAS was launched by the then prime minister Kevin Rudd in 2007 as part of his public campaign to tackle homelessness and the “BBQ stopper” issue of rising housing costs for struggling Australians. It was designed to provide subsidies to developers of housing that would be rented to “low- and middle-income households at a rate that is at least 20 per cent below the market value rent”.

A promotional brochure issued by developers Frasers Property Australia and Sekisui House Australia, and seen by The Australian, tells would-be investors in the Central Park development in central Sydney the project is “NRAS-advantaged” and that foreign students pay higher fees than locals, with their total expenditure topping $55,000 a year.

“This provides some guidance as to the calibre of tenant typical of off-campus student accommodation facility such as Abercrombie Street,” the document says.

The giant project, just west of Sydney’s Central railway station, is only two blocks from the electoral office of Deputy Opposition Leader Tanya Plibersek, who as housing minister in the Rudd government was the architect of the NRAS. Ms Plibersek referred inquiries about the NRAS and the Central Park development to Labor housing spokeswoman Jan McLucas.

Frasers Australia chief executive Guy Pahor yesterday defended the project saying it would be open to local students, and increasing the pool of affordable housing within Sydney’s education precinct would free up housing for students and local workers alike.

Outside of Queensland, there is no regulation stating that NRAS tenants have to be Australian citizens and both the universities’ developments and the Central Park project meet the guidelines of the scheme.

The brochure issued to potential investors in the $2 billion project makes it clear that international students would be the major tenant group for the 823-bed facility.

The 34-page document, issued in October 2012, contains the phrase “international student” or “international students” almost 50 times and describes the main student building, on Abercrombie Street, as an “NRAS-advantaged” project.

It talks about how international student numbers at the nearby University of Sydney and the University of Technology, Sydney, and two other tertiary institutions are forecast to grow by 400 per year. In the local area, “85-95 per cent of privately owned student accommodation is occupied by international students”, the document says.

Mr Pahor said although a “significant proportion of the dwellings would be taken up by foreign students”, Australian students would benefit too.

He said it would increase the “pool of affordable accommodation in (the) conventional rental market for both students and local workers”.

“In this application of the NRAS scheme, the pool of inner-city affordable housing stock will grow markedly with benefits extending to the community at large,” he said.

But one critic of the project, a construction industry source, said he was uncomfortable that it did not meet the original intent of the policy.

“In general, I am not adverse to government incentives being used to encourage developers to provide a certain type of product that the market needs; however, NRAS in this case provides very little benefit to its target market and is predominantly benefiting the developer — at a cost to the taxpayer,” he told The Australian.

Estimates contained in the brochure for Central Park state a studio apartment in the Abercrombie Street building would rent for $450 a week at market prices. The scheme stipulates that landlords or developers must offer the unit at 80 per cent of market value, which brings this down to $360 a week.

In exchange, investors get an incentive or tax offset from the government totalling $10,000 per year, or $191 per week guaranteed for 10 years. This takes the total return to $551 a week for investors, according to the prospectus.

Forecasts for the project, which was being offered to institutional investors but is proceeding for now under the auspices of the developers, predict it will return $18.5m in net income in 2015 increasing to $22m in 2019 as NRAS incentives increase in line with the inflation of prices of rental prices.

The investors will receive more than $85m in taxpayer subsidies over the 10-year lifespan of the project in return for offering a 20 per cent rent discount to tenants.

The NRAS scheme has seen more than 20,000 units constructed but has been beset with issues of complexity, bureaucracy and poorly drafted legislation, according to critics. Expectations are that it will not be continued by the current government beyond the 50,000 planned units.

A spokeswoman for the Department of Social Services said that for the majority of allocations of NRAS incentives to universities, the department specifies that local students and those coming from elsewhere in Australia must be given preference.

“While an approved participant may have ‘reserved’ NRAS incentives, they must: comply with all the conditions of an allocation; deliver dwellings within the agreed time frame; and rent the properties to eligible tenants at least 20 per cent below market rent before an incentive is paid,” she said.

Australian Council of Social Services chief executive Cassandra Goldie defended the scheme as a groundbreaking attempt to bring private capital to social housing.

She said the Central Park development was the kind of development you would expect under the scheme and it would absorb rental demand in the area through the construction of desperately needed new housing stock. “This is a scheme that needs to be seen in the broader context of what it does do in the rental market more broadly,” he said.

To be eligible for NRAS as a tenant you must have earned less than $45,956 in the 12 months before you take up residency, and to remain eligible you must earn less than $57,445 in subsequent years. But parents’ income is not factored in, making it easy for many students to qualify.
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Crackdown on abused National Rental Affordability Scheme
PATRICIA KARVELAS AND RICK WALLACE THE AUSTRALIAN MARCH 12, 2014 12:00AM

SOCIAL Services Minister Kevin Andrews has flagged a major shake-up of the National Rental Affordability Scheme in the wake of revelations the program has been manipulated to build student housing that is being let to wealthy foreign students.

Mr Andrews has moved to close the loophole that has seen international students become key beneficiaries of the flagship $4.5 billion Rudd-era social housing scheme, which had been aimed at providing affordable housing for low-income Australians.

Responding to revelations in The Australian that the scheme had been exploited by universities and developers to secure lucrative subsidies for student housing, Mr Andrews said he was planning new restrictions.

The changes are likely to involve placing extra conditions on recipients of subsidies under the program, which pays the owners of units $10,350 a year if they agree to charge rent at 20 per cent below market rates.

“(The) NRAS was rushed in design and implementation under Labor and includes numerous design flaws, ambiguous legal requirements and red tape,” Mr Andrews told The Australian. “I have asked my department to implement more stringent processes to test compliance under the scheme and stamp out the possibility of non-compliance.

“The legislation designed by the previous Labor government does not exclude international students from occupying NRAS dwellings. Within the framework of the legislation, my department has sought to better target the scheme where possible by imposing conditions on offers such as those in relation to tenancy preferences.”

The Australian can reveal that the Department of Social Services has launched an internal audit of the payments and compliance under the scheme, which has delivered more than 20,000 of a target of 50,000 units but has been criticised for its complexity and vulnerability to manipulation. The government’s figures reveal that two in five places under the NRAS have gone to students, in many cases from overseas.

The Australian revealed yesterday two developers behind an 823-bed NRAS development in Sydney had tapped more than $80 million in subsidies to construct a building to be filled largely by international students. That followed revelations that universities had snapped up thousands of NRAS incentives to build large blocks of studio accommodation that is often taken up by fee-paying international students, who are the lifeblood of many universities’ finances. Figures compiled by The Australian reveal there are more than 1000 foreign students in NRAS properties.

The NRAS has also led to the growth of an industry of firms operating through internet sites that solicit interest from investors in NRAS-funded units, promoting more than $100,000 in cash and tax breaks over 10 years.

Former housing minister Tanya Plibersek, who oversaw the NRAS implementation from 2008, yesterday defended the scheme as “very well designed”, saying she had been advised the government could not restrict eligibility to Australians.

Ms Plibersek, whose Sydney electoral office is just two blocks from the giant “NRAS-advantaged” Central Park project being marketed for international students, claimed “there would be very few international students” as tenants under the scheme.

“I investigated whether we should have exclusions for particular groups like that and the problem with the administrative complexity and possible breach of laws where you are discriminating against people based on whether they are Australian citizens or permanent residents or whatever,” she said. “(That) made it a path that my department recommended against.”

However, another of the architects of the scheme yesterday backed restricting eligibility to Australian residents to meet the original purpose of providing housing to low-income workers.

Carol Croche, executive director of the Community Housing Federation of Australia, said although NRAS was a great scheme, it was rolled out at high speed amid the global financial crisis and some finetuning was needed.

“The main target of the problem has been key workers or those who are getting killed in the private market by having to pay more than 50 per cent of their income in rent,” she said.

“There’s room here to make modifications and changes and, look, some of those areas are problematic. I don’t want to see this program scrapped because of things that can be addressed by (changes to) administration.”

Ms Croche said the community sector had recommended scaling the incentives to encourage development of larger units or houses. At the moment, the incentive is the same regardless of the number of rooms, which tends to favour student accommodation rather than homes for impoverished working families.

Ms Croche, who was part of the reference group that helped devise the scheme, said the community housing sector had discussed the idea of limiting the percentage of student accommodation built under the scheme. Asked about the widespread allocation of NRAS units to international students, she said she supported some tightening of restrictions.

“If we are talking about permanent residents, I think there is some value in looking at it. These are the kind of changes that are worth investigating,” she said.

Her comments echo those of National Shelter executive officer Adrian Pisarski, who also backed changes to limit uptake by foreign students and meet the goals of the original scheme.

Although 4000 student accommodation units have been built under NRAS, Ms Croche said 50 per cent of the incentives under the scheme had gone to community housing providers.

The private housing construction sector echoed the community sector’s comments calling for Mr Andrews to amend the scheme but not to scrap it altogether.

“What the recent criticisms of the program highlights is the need for the federal government to refine NRAS — but to scrap NRAS altogether would be throwing the baby out with the bathwater,” said Nick Proud, executive director of the Residential Development Council.

“The property industry has long advocated for a review of the program to improve the outcomes and ensure it remains focused on delivering affordable housing for those that need it most.”

Additional reporting: Paige Taylor
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Market wasn't negative to this news, so should be discounted by now.
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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One step closer to the final listing...

(vested)

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RECEIPT OF ELIGIBILITY-TO-LIST FOR PROPOSED REIT LISTING

The Company wishes to announce that the SGX-ST has today issued its eligibility-to-list letter (“ETL Letter”) for a proposed initial public offering and listing on the SGX-ST (the “Offering”) of a stapled trust comprising a hospitality REIT which will hold a portfolio of hotels and serviced residences and a business trust which will be dormant initially. The Company wishes to reiterate that no decision has been made as to whether the transaction will take place and there is currently no certainty that the Company will proceed with the Offering. The receipt of the ETL Letter is only one of the requirements which have been met to enable the Company to proceed with the Offering when it considers it appropriate to do so.

Ref: http://infopub.sgx.com/FileOpen/FCL-Tham...eID=288146
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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The drama series unfold according to script...

Akan datang... injection of Changi City Point and surprise interim dividends to be proposed in late April / early May?

Vested
GG

(12-03-2014, 09:00 PM)CityFarmer Wrote: One step closer to the final listing...

(vested)

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RECEIPT OF ELIGIBILITY-TO-LIST FOR PROPOSED REIT LISTING

The Company wishes to announce that the SGX-ST has today issued its eligibility-to-list letter (“ETL Letter”) for a proposed initial public offering and listing on the SGX-ST (the “Offering”) of a stapled trust comprising a hospitality REIT which will hold a portfolio of hotels and serviced residences and a business trust which will be dormant initially. The Company wishes to reiterate that no decision has been made as to whether the transaction will take place and there is currently no certainty that the Company will proceed with the Offering. The receipt of the ETL Letter is only one of the requirements which have been met to enable the Company to proceed with the Offering when it considers it appropriate to do so.

Ref: http://infopub.sgx.com/FileOpen/FCL-Tham...eID=288146
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Commercial investors can benefit from Yishun buzz

Published on Mar 15, 2014


By Cheryl Ong

FAR-FLUNG Yishun is headed for some downtown-style buzz with the completion of two mixed developments, along with more homes and amenities.

The mature town's mushrooming population also means commercial investors can expect good returns from a large catchment of residents living in the area, experts said.

Plans to reinvigorate the town include both amenities and leisure areas.

The Urban Redevelopment Authority's (URA) Draft Masterplan 2013 flagged the Government's intention to increase the number of green spaces in Yishun.

Amenities, such as a new hospital next to Khoo Teck Puat Hospital and a community club, are also slated for the area.

Under the Housing Board's Remaking Our Heartland initiative, the Government rolled out a plum mixed-use site at Yishun Central1 in September last year.

The 41,085 sq m site, next to Frasers Centrepoint's Northpoint mall, drew a stunning bid of $1.43 billion, or $1,077 per sq ft (psf) per plot ratio (ppr), from Frasers Centrepoint.

The site will feature a new integrated development with an air-conditioned bus interchange, residences, commercial retail spaces and a community club.

Ms Alice Tan, research head of property consultancy Knight Frank, said: "The next phase of development and improvements in Yishun will continue to enhance the quality of the living environment, with the introduction of a mixture of private and public retail (options) and other recreational amenities."

As with the rest of Singapore, executive condominiums have been a hit in Yishun. At One Canberra, a total of 665 units were sold at an average price of $716 psf in 2012.

And at the 406-unit The Canopy, homes were sold for an average of $650 psf when the project was first launched in 2011.

More homes are expected to be added to Yishun when the URA rolls out two more sites under its Government Land Sales programme for the first half of the year.

The two sites, at Yishun Street 51, can yield a total of 1,010 units.

Just this week, a 99-year residential site in Yishun drew a top bid of $278.8 million from EL Development, trumping the record of $406 psf ppr for a residential plot in the area.

Launch prices of a 600- to 660-unit development to be built there are expected to fall between $1,050 psf and $1,250 psf, Ms Tan estimated.

She added that retail businesses will be supported by a steady demand from the growing community in Yishun.

Commercial investors flocked to Yishun when developer CEL Developments launched its Junction Nine project in October last year.

More than 85 per cent of its 146 retail units were snapped up at an average of $3,600 psf on the first day of sale.

Ms Tan noted that shops in the Yishun planning area were 99 per cent occupied in the three months to Dec 31.

"Investment in commercial properties, particularly the retail segment, in this northern suburban area could bring steady returns in the medium term."

ocheryl@sph.com.sg
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I have posted the following thread on F&N but felt that it is relevant to FCL due to the potential missing episode that could arise from a share swap to streamline holdings of F&N and FCL between TCC and ThaiBev.

Thank you Cityfarmer and Tolietsiao for the headsup in the reminder for the streamlining of F&N and FCL stakes between TCC and Thai Bev.

Using latest closing prices, ex capital reduction of $0.42, F&N @ $3.00 and FCL @ 1.57, Thai Bev can swap for about 50% of TCC's F&N stake leaving TCC with the balance 50% that can be placed out over time, if it so wish to. In return, TCC will assume full control of 87.93% of FCL with a moratorium that bars it from placement till after 10 Jul 14.

The upcoming swap could well explain the firmness in Thai Bev share price as F&N will become its subsidiary (don't know the actual financial impact).


GG
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Seems that pre-marketing for Frasers Hospitality Trusts has began... where on earth is celebrating 16th birthday significant?

Marking Sweet 16 with 92

http://infopub.sgx.com/FileOpen/Frasers_...eID=288920
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(31-03-2014, 08:10 AM)greengiraffe Wrote: Seems that pre-marketing for Frasers Hospitality Trusts has began... where on earth is celebrating 16th birthday significant?

Marking Sweet 16 with 92

http://infopub.sgx.com/FileOpen/Frasers_...eID=288920

Running out of idea to find an occasion? Ha ha...Big Grin

I do agree it seems a pre-marketing events, more should follow, till the IPO, IMO.

(vested)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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Recap:

http://infopub.sgx.com/Apps?A=COW_CorpAn...7700387B4B

6 Feb 14 - "Thai tycoon Charoens FCL eyes $473 mln hospitality REIT in Q2 sources".

http://infopub.sgx.com/FileOpen/FCL-Tham...eID=286023

12 Mar 14 - RECEIPT OF ELIGIBILITY-TO-LIST FOR PROPOSED REIT LISTING

http://infopub.sgx.com/FileOpen/Frasers_...eID=288920

31 Mar 14 - Marking Sweet 16 with 92

Facts: PBIT for Hospitality S$69.7m or 12% of total group PBIT for year ending 30 Sept 2013.

With financial engineering for the floating of REIT and with the potential participation of TCC Group, it appears that another platform for value creation will soon be established.

Vested
GG
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