Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Recently, Bloomberg disclosed that Asian real estate group Hongkong Land Holdings is taking into consideration marketing its 100%- acquired Singapore property development subsidiary, MCL Land. The action, if real, would certainly remain in line with the previous’s plan to stop acquiring development properties, claims JP Morgan in an equity research study information.
In October, Hongkong Land disclosed in a strategic review that the group will most likely no longer concentrate on purchasing the build-to-sell segment throughout Asia. Rather, the team is assumed to begin recycling capital from the segment into new integrated retail property options as it finalizes all existing projects.
JP Morgan has kept its “neutral” score on Hongkong Land, with a target cost of US$ 4.10. “We think HKL’s existing evaluations are decent, and therefore we remain Neutral, however we can convert much more beneficial if Hongkong Land demonstrates its capacity to carry out value-accretive agreements.”
An upcoming venture, anticipated to be opened next year, is a brand-new 500-unit exclusive residence project at Clementi Avenue 1. MCL Land and joint venture partner CSC Land Group defeated five more to win the spot with a quote of $633.45 million ($ 1,250 psf per plot ratio) last November.
Resources mentioned by Bloomberg said that Hongkong Land is aiming to unload MCL Land at a fee to its account worth of $1.1 billion. Although this is lower than Hongkong Land’s net investment for Singapore project properties of US$ 1.362 billion ($ 1.83 billion) reported since end-June, it represents approximately 8% of the group’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 any case, the study house accentuate that selling MCL Land above account price could be “a bit demanding”, granted present market issues and that it “would not be shocked if the firm winds up disposing of MCL Land at slightly listed below book value” to match its capital recycling targets. Alternatively, the group might get its time offering its development property projects and depleting its land bank.
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 condo achieved 65% sales on launch weekend at an average price of $2,448 psf.
