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 taking into consideration marketing its 100%- owned Singapore real estate development subsidiary, MCL Land. The action, if correct, would be in channel with the previous’s method to discontinue investing in development properties, says JP Morgan in an equity research study information.
An upcoming project, anticipated to be opened next year, is a brand-new 500-unit exclusive non commercial project at Clementi Avenue 1. MCL Land and joint project partner CSC Land Team defeated five others to win the spot with a proposal of $633.45 million ($ 1,250 psf per plot ratio) last November.
Resources cited by Bloomberg said that Hongkong Land is looking to unload MCL Land at a costs to its book 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) reported since end-June, it presents approximately 8% of the group’s overall funding recycling target of US$ 10 billion and around 14% of its US$ 6 billion capital reusing target for development real properties, according to JP Morgan.
In October, Hongkong Land announced in a calculated assessment that the group will most likely no longer focus on purchasing the build-to-sell section across Asia. Rather, the team is expected to begin reusing funds from the segment into new combined retail estate opportunities as it completes all occurring projects.
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In any case, the study house feature that selling MCL Land over book worth could be “a bit challenging”, given existing market conditions and that it “would most likely not be shocked if the business winds up disposing of MCL Land at a little listed below book worth” to meet its capital recycling targets. Alternatively, the group might take its period selling its development property ventures and diminishing its land bank.
JP Morgan has maintained its “neutral” score on Hongkong Land, with a target rate of US$ 4.10. “We assume HKL’s existing values are decent, and therefore we remain Neutral, but we could convert a lot more beneficial if Hongkong Land shows its capacity to perform value-accretive offers.”
In November, MCL Land launched 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.
