Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Recently, Bloomberg reported that Asian real estate group Hongkong Land Holdings is thinking about selling its 100%- managed Singapore property development subsidiary, MCL Land. The action, if true, would remain in channel with the former’s plan to cease acquiring development properties, says JP Morgan in an equity study record.
In November, MCL Land kicked off 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.
An upcoming project, expected to be launched next year, is a new 500-unit exclusive non commercial project at Clementi Avenue 1. MCL Land and joint project companion CSC Land Group defeated five more to win the location with a bid of $633.45 million ($ 1,250 psf per story ratio) last November.
Regardless, the research study house feature that selling MCL Land over book price might be “a little bit demanding”, provided present market conditions and that it “would most likely not be stunned if the firm winds up disposing of MCL Land at somewhat listed below book value” to suit its capital recycling targets. Alternatively, the group might take its time reselling its development property projects and depleting its land bank.
In October, Hongkong Land disclosed in a calculated assessment that the group will no longer pay attention to investing in the build-to-sell section across Asia. Rather, the group is assumed to begin recycling funds from the segment into new incorporated commercial property options as it finishes all occurring projects.
JP Morgan has maintained its “neutral” score on Hongkong Land, with a target price of US$ 4.10. “We assume HKL’s existing assessments are reasonable, and hence we keep Neutral, yet we can convert a lot more beneficial if Hongkong Land demonstrates its ability to execute value-accretive deals.”
Cape Royale Ho Bee Land & IOI Properties
Resources mentioned by Bloomberg claimed that Hongkong Land is aiming to divest MCL Land at a costs to its account value of $1.1 billion. Whilst this is less than Hongkong Land’s net financial investment for Singapore project real properties of US$ 1.362 billion ($ 1.83 billion) reported as of end-June, it stands for approximately 8% of the group’s overall capital recycling target of US$ 10 billion and around 14% of its US$ 6 billion capital recycling target for development properties, according to JP Morgan.
