Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
In November, MCL Land launched the 552-unit Nava Grove in Pine Grove, District 21. A joint property with Sinarmas Land, the 99-year leasehold condo accomplished 65% sales on launch weekend at an average price of $2,448 psf.
An upcoming venture, anticipated to be opened next year, is a new 500-unit nonpublic non commercial development at Clementi Avenue 1. MCL Land and joint venture partner CSC Land Group defeated 5 more to win the location with a quote of $633.45 million ($ 1,250 psf per plot ratio) last November.
In October, Hongkong Land announced in a strategic review that the group will no longer pay attention to investing in the build-to-sell sector across Asia. Instead, the group is anticipated to start reusing funds from the segment right into new integrated retail estate prospects as it finalizes all occurring projects.
JP Morgan has kept its “neutral” ranking on Hongkong Land, with a target rate of US$ 4.10. “We believe HKL’s present values are reasonable, and thus we remain Neutral, yet we could change much more beneficial if Hongkong Land shows its capability to carry out value-accretive arrangements.”
Last week, Bloomberg announced that Asian real estate group Hongkong Land Holdings is considering offering its 100%- owned Singapore real property development subsidiary, MCL Land. The move, if real, would be in channel with the previous’s strategy to cease acquiring development properties, claims JP Morgan in an equity research record.
Regardless, the research study house highlights that selling MCL Land over book price could be “a little bit complicated”, granted present market conditions and that it “would not be stunned if the company winds up dealing with MCL Land at a little listed below book value” to suit its capital recycling targets. Alternatively, the group may take its period reselling its development property ventures and depleting its land bank.
Sources mentioned by Bloomberg said that Hongkong Land is seeking to divest MCL Land at a premium to its book worth of $1.1 billion. Whilst this is less than Hongkong Land’s net investment for Singapore development properties of US$ 1.362 billion ($ 1.83 billion) showed as of end-June, it stands for about 8% of the team’s total capital reprocessing target of US$ 10 billion and around 14% of its US$ 6 billion capital reusing target for innovation real estates, according to JP Morgan.
