Great jobs GLC,
invest billion $ in China to see property and SSE crashing in the
last few day!! What a good timing and golden age of
investment!
http://www.businesstimes.com.sg/sub/storyprintfriendly/0,4582,368688-1264017540,00.html?
Business Times - 19 Jan 2010
CapitaLand's giant US$2.2b step in China
Its acquisition of HK-listed outfit's property business will double
its China portfolio
By UMA SHANKARI
(SINGAPORE) CapitaLand has agreed to buy the entire property
business of Hong Kong-listed Orient Overseas (International) Ltd
for US$2.2 billion, it said yesterday.
CapitaLand chief executive
Liew Mun Leong said that this could very well be the largest real
estate transaction in Singapore's
history.
Under the deal, CapitaLand
will acquire a real estate business with a portfolio of seven sites
located in Shanghai, Kunshan and Tianjin.
The sites, which comprise a mix of residential and serviced
residences sites as well as plots with integrated development
potential, are in various stages of planning and development.
CapitaLand, which is South-east Asia's largest developer, will pay
for the purchase from its existing cash, a significant portion of
which arose when it spun off and listed its retail arm CapitaMalls
Asia last year. CapitaLand raised net proceeds of S$2.7 billion
from the public offer.
The transaction price takes into account the portfolio value of the
seven sites of about US$2 billion as well as the cash within the
business of around US$262 million.
CapitaLand won the right to buy the property after a closed tender
by Orient Overseas (International) Ltd, which is divesting its
property interests to focus on its core shipping business.
CapitaLand was invited to bid for the assets in November 2009 and
submitted the bid on Jan 8.
The company said it did not know how many bidders there were, or if
its bid was the highest. But Hong Kong media reports said there
were about about five bidders.
'This proposed acquisition is timely and an excellent strategic fit
for CapitaLand,' said CapitaLand chairman Richard Hu in a
statement. 'It also fits into our stated goal of growing our asset
size in China from the present 28 per cent of total assets to 45
per cent over the next five years as we remain very confident of
the long term future of the country.'
The acquisition will double CapitaLand's China property portfolio
from 1.4 million square metres to 2.8 million sq m and increase the
asset size in the country to around 36 per cent of the group's
total assets. The deal is expected to be completed by the end of
the first quarter of 2010.
Added Mr Liew: 'The major assets are in the city centre where there
is currently very limited supply of such land in the market. Most
of the sites have planning and land use approval while some sites
have construction permits in place. This is a large development
advantage in China and should command a price premium.'
Analysts said that the news appears to be positive for the property
group, although they pointed out that shareholders who were hoping
for a bumper payout might be disappointed.
Following the IPO of CapitaMalls Asia last year, CapitaLand said
that part of the proceeds will be paid out as a special dividend to
the group's shareholders - but only after the business plans and
capital requirements of the group's other business units had been
taken into consideration.
'We did say that the special dividend will be subject to investment
decisions,' said chief financial officer Olivier Lim
yesterday.
'The acquisition is positive for CapitaLand,' said UOB Kay Hian
analyst Vikrant Pandey. 'They (shareholders) may not get as large a
special dividend but the re-investment will get them decent returns
over a longer term.'
The purchase should contribute to CapitaLand's earnings for its
2010 financial year, Mr Pandey said. This is because a serviced
residence/hotel project on one of the sites is already
operational.
In a note to clients, CIMB-GK Research said that news of the
acquisition reflects CapitaLand's pro-active stance in redeploying
its capital into net asset value productive assets. 'This aspect of
CapitaLand's strategy was lacking in 2009,' said the report.
Assuming the acquisition was completed on Sept 30, 2009, the pro
forma net debt-to-equity ratio would be 0.3 times and the pro forma
cash balance would be $5.5 billion, CapitaLand said.
CapitaLand's shares, which were suspended from trading yesterday,
will resume trading today. The stock closed 2 cents up at $4.28
last Friday.