Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Sources pointed out by Bloomberg said that Hongkong Land is wanting to divest MCL Land at a premium to its book value of $1.1 billion. Whilst this is lower than Hongkong Land’s net investment for Singapore development real properties of US$ 1.362 billion ($ 1.83 billion) reported since end-June, it stands for approximately 8% of the team’s total capital recycling target of US$ 10 billion and about 14% of its US$ 6 billion capital reusing target for development properties, according to JP Morgan.
In November, MCL Land kicked off the 552-unit Nava Grove in Pine Grove, District 21. A conjoint project with Sinarmas Land, the 99-year leasehold condominium attained 65% sales on launch weekend at an average price of $2,448 psf.
JP Morgan has actually maintained its “neutral” rating on Hongkong Land, with a target rate of US$ 4.10. “We assume HKL’s current valuations are fair, and therefore we keep Neutral, but we can transform more favorable if Hongkong Land indicates its capacity to execute value-accretive deals.”
An upcoming venture, anticipated to be opened next year, is a new 500-unit nonpublic residence development at Clementi Avenue 1. MCL Land and joint project partner CSC Land Group defeated five others to win the location with a bid of $633.45 million ($ 1,250 psf per story ratio) last November.
In any case, the research study house accentuate that selling MCL Land over account worth could be “a bit challenging”, granted existing market issues and that it “would not be shocked if the business ends up dealing with MCL Land at somewhat below book value” to match its capital recycling targets. Alternatively, the group may get its moment selling its development real estate projects and depleting its land bank.
In October, Hongkong Land disclosed in a calculated review that the group may no longer focus on purchasing the build-to-sell segment across Asia. Instead, the group is anticipated to begin reusing capital from the segment right into new combined commercial property opportunities as it finishes all continuing projects.
Recently, Bloomberg disclosed that Asian real estate group Hongkong Land Holdings is taking into consideration selling its 100%- managed Singapore real property development subsidiary, MCL Land. The step, if real, would certainly remain in line with the previous’s plan to discontinue investing in development properties, says JP Morgan in an equity research report.
