Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Sources cited by Bloomberg stated that Hongkong Land is looking to unload MCL Land at a costs to its account value 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) documented since end-June, it represents around 8% of the team’s total funding reprocessing target of US$ 10 billion and around 14% of its US$ 6 billion capital recycling target for development properties, according to JP Morgan.
In any case, the study house accentuate that selling MCL Land over book worth might be “a little bit difficult”, provided existing market issues and that it “would definitely not be surprised if the business ends up dealing with MCL Land at somewhat listed below book worth” to suit its capital recycling targets. Alternatively, the group may get its moment reselling its development property projects and depleting its land bank.
Recently, Bloomberg announced that Asian real estate group Hongkong Land Holdings is considering selling its 100%- managed Singapore real property development subsidiary, MCL Land. The move, if true, would be in channel with the previous’s strategy to stop obtaining development properties, says JP Morgan in an equity research record.
JP Morgan has actually kept its “neutral” ranking on Hongkong Land, with a target cost of US$ 4.10. “We think HKL’s existing values are fair, and hence we stay Neutral, but we might change more positive if Hongkong Land shows its ability to perform value-accretive offers.”
In November, MCL Land released the 552-unit Nava Grove in Pine Grove, District 21. A mutual property with Sinarmas Land, the 99-year leasehold condominium achieved 65% sales on launch weekend at an average price of $2,448 psf.
Sora Condo Chip Eng Seng & Singhaiyi Group
An upcoming project, expected to be opened next year, is a brand-new 500-unit exclusive housing project at Clementi Avenue 1. MCL Land and joint venture partner CSC Land Group beat 5 others to win the location with a proposal of $633.45 million ($ 1,250 psf per plot ratio) last November.
In October, Hongkong Land released in a vital review that the group will no longer focus on investing in the build-to-sell sector across Asia. Rather, the group is expected to begin reusing funds from the segment right into new combined commercial estate options as it completes all existing projects.
