DBS (Development Bank of Singapore)

I have been vested in ckh since 2011.

Sell low buy high? Track record has been wrong term - time will heal wounds just like DaoHeng.

Rents for top-grade offices fall

Published on Dec 29, 2012



AVERAGE rents of Grade A offices in the Central Business District (CBD) declined a modest 0.9 per cent in the fourth quarter, propped up by steady demand amid limited supply, said Savills.

The property consultant noted in a report yesterday that the creme de la creme office space, also known as Grade AAA, in the Marina Bay precinct once again showed the highest quarterly drop of 3.4 per cent to $10 per sq ft (psf) per month. This takes the fall for top-grade office space in Marina Bay to 14.9 per cent for the whole year.

On the other hand, other Grade A building rents softened by 3.3 per cent year-on-year on the back of healthy occupancy rates.

Overall, the monthly rents of all Grade A offices averaged $8.31 psf during the quarter, representing a dip of about 5 per cent from $8.72 psf a year ago.

Meanwhile, vacancy rates for CBD Grade A offices improved to 7.8 per cent from 8.1 per cent in the previous quarter.

Better occupancies were recorded in most areas, except for those around Beach Road and Middle Road as well as in the vicinity of City Hall. Beach Road offices saw vacancy rates edge up 0.5 per cent to 4.2 per cent by the end of this month, while City Hall suffered a sharp deterioration due to the more than doubling of vacant stock after Citibank vacated its premises in Millenia Tower.

Demand for CBD Grade A office space for the full year has been healthy, with a net take-up of almost 1.3 million sq ft.

This is equivalent to all the space at Marina Bay Financial Centre Tower 3 or half of the space at Suntec City office towers.

Savills reckons an uncertain economic outlook for next year will continue to cast a pall over the office leasing market.

A total of about 2.5 million sq ft of office space, mainly from The Metropolis and Asia Square Tower 2, is expected to enter the market next year. So far, these new developments have a pre-commitment level of only about 20 per cent. As a result, the office leasing market is expected to face some challenges when these two developments are completed in the second half of 2013.

On the other hand, office demand for space less than 10,000 sq ft has been, and is expected to remain, sustained. Tenants for such space may come from new set-ups and companies in the resource and business services sectors, said Savills.

"We call these real-economy companies," it said.

Demand for space may also come from tenants relocating from old buildings scheduled for redevelopment in the Robinson Road, Shenton Way and Tanjong Pagar areas in the coming years, like Keppel Towers, GE Tower, Robinson Towers and International Factors Building.

Grade AAA office rents are expected to weaken by a further 5 to 10 per cent next year, said Savills.

"For most of other CBD Grade A buildings, however, rents should stabilise on the back of healthy occupancy levels, with demand coming from real-economy companies."

Like hugh young from Aberdeen said, DBS lacks of management stability, which makes it difficult to focus on long term profitability which may suffer short term underperformance. DBS will always the last choice of investment of the 3 local banks.

Buy high sell low is the expertise of Temasek. Their track records are v good testimonies.

How do we assess if DBS should be purchasing this asset? From the news articles,
1. Comparing it to the NIM and interbank market is like comparing property purchase to loans business. If it makes so much sense, why don't banks all go out and acquire more buildings? And well, why did DBS sell theirs in the first place?
2. Better manage occupancy cost in the long term? I don't see the whole connection here. The purchase of the asset should be judged on its ability to generate returns on capital in the long-run and not about whether it can manage the occupancy costs isn't it? Are they going to discount the rent to themselves as they have an equity stake? Or will there be some fancy accounting to show some offsetting? both doesnt' sound right. Back to whether the asset will generate returns on capital- how much can a property generate in ROA? Maybe 3% (i'm just inversing from an office REITs div yield of 5-6% (inversing it back to 100% and applying the ~40% gearing they have). Can DBS gear up multiple times more on the asset? Unless, they can get gearing of >3.3x on the asset, their ROE will be lower than 10%.
3. Also, wouldn't the new banking regulations affect investments in such illiquid assets?
The size is not huge relative to their entire market cap (~36bn) but I still struggle to see the rationale behind this acquisition


SINGAPORE: DBS Group on Monday announced plans to acquire a stake in Marina Bay Financial Centre Tower 3 (MBFC), where the bank's headquarters is located.

In a filing with the Singapore Exchange, the bank said it will pay S$1.035 billion for a 30 per cent share in Central Boulevard Development Pte Ltd - a joint venture of Cheung Kong (Holdings) Ltd and Hutchison Whampoa Ltd.

DBS also has an option to take up another 3.3 per cent interest in the development for an estimated S$115 million.

MBFC Tower 3 is a 46-storey Grade A office building with about 1.35 million square feet (sq ft) of net lettable area. DBS is the anchor tenant at the tower, occupying over 600,000 sq ft or 18 floors of space.

DBS Chief Executive Piyush Gupta said: "The decision to acquire a stake in our new headquarters in MBFC Tower 3 enables us to better manage our occupancy costs in the long-term.

"The Marina Bay area is a location of choice for top financial institutions and businesses and the desirability and value of being housed here is only going to grow as Singapore strengthens its position as a leading Asian financial hub."

Property consultancy Knight Frank said the potential deal could work out to a sale price of around S$2,555 per sq ft -- that is about 10 percent lower than similar Grade A+ offices.

Knight Frank added that it is a good buy for DBS if the deal pans out, as the average price of older prime offices hover around S$2,560 per sq ft.

Other analysts said given the low-interest rate environment, it probably makes more business sense for DBS to use the funds for acquisition rather than disbursing loans.

Savills research head Alan Cheong said: "For banks, it makes sense to pay S$1.035b because the opportunity cost is more pegged to the net interest margin and how much it can get from the interbank market rate."

- CNA/ck/lp

{vested}

The Straits Times
www.straitstimes.com
Published on Feb 07, 2013
DBS' net profit rises 4% but below expectations

By Magdalen Ng

DBS Group Holdings failed to beat market expectations for the first time in 12 quarters when it released its results yesterday.

The bank's fourth-quarter net profit of $760 million was up 4 per cent from a year earlier but below the $795 million consensus from eight analysts surveyed by Bloomberg.

Chief executive Piyush Gupta said yesterday that he is not that concerned about coming in slightly under analyst estimates, as the "headline number is not demonstrative of the underlying business".

He noted that while the China business was expected to pick up in October, the numbers only came through in December.

The net profit figure excludes a $450 million divestment gain from the sale of a partial stake in the Bank of the Philippine Islands.

If the one-time gain is included, the earnings for the three months to Dec 31 would be $1.21 billion, up 66 per cent on a year ago.

DBS posted a record net profit of $3.81 billion, including the divestment gain, for the full year.

Net interest income for the quarter was unchanged at $1.29 billion as total loans growth of 8.2 per cent to $210 billion was offset by compressed net interest margins.

Fee and commission income was up 9 per cent at $372 million, as weak market sentiment affected investment banking deals.

Other non-interest income increased 4 per cent to $294 million.

Expenses were up 7 per cent at $943 million, on the back of increased computerisation costs and seasonal charges.

Net interest margins, a measure of loan profitability, was 1.62 per cent, down from 1.67 per cent in the previous quarter, and the lowest in more than three years.

Mr Gupta said the five-basis- point decline in net interest margins was not expected.

He said: "Out of five basis points, we saw about one basis point or more from the continued China pressure. That's basically done.

"An unanticipated part was that we saw margin pressure outside China. Not in Singapore, where we were able to price up mortgages, but Singapore business loans and outside in the region."

Mr Gupta expects the loans book to grow by about 10 per cent this year, down from 12 per cent last year.

He also expects mortgage loans to come off by about 20 per cent in the wake of the latest property cooling measures.

He added that excluding pre-January options to purchase, DBS' mortgage loan book is still holding up.

"But there is a shift in the mix. Resale bookings are down 25 to 30 per cent, but buildings under construction are coming in about 25 to 30 per cent higher because the new developments have been discounted, and the new launches are still picking up," he said.

CIMB analyst Kenneth Ng said that he is not too concerned about the below-expectation performance.

He said: "Reflecting seasonality, investment banking and trade fees were weak although wealth management and credit card fees increased. Some of the negatives look one-off in nature. Catalysts are still expected from a variety of fee earnings drivers."

DBS announced a final dividend of 28 cents per share. The scrip dividend scheme will apply to the final dividend, and the price of the shares issued will be the average of the last dealt share price on May 13, 14 and 15.

Earnings per share rose from $1.23 to $1.42 for the fourth quarter including the one-off gain, and net book value was $12.96, up from $11.99 a year earlier.

DBS shares fell 24 cents to $14.96 yesterday.

songyuan@sph.com.sg

It makes spending easier than before, not even need a signature...

DBS to offer virtual credit card to mobile subscribers

SINGAPORE – DBS Bank announced today that its virtual credit card, DBS One.Tap, is now available to mobile subscribers from all three mobile network operators in Singapore.

The new partnership with M1 and SingTel makes it possible for all DBS/POSB cardholders to make payments with their Near Field Communication-enabled (NFC) mobile handsets upon signing up for DBS One.Tap. Previously, only StarHub mobile subscribers could sign up for the service.

http://www.todayonline.com/singapore/dbs...ubscribers

What are the chances of fraudulent use of this virtual credit card since no signature is required?

(12-04-2013, 07:01 PM)a74henry Wrote: What are the chances of fraudulent use of this virtual credit card since no signature is required?

There are already credit card usage without signature. I believe the chance of fraudulent is the same. Now only HP required, no more bringing along a piece of plastic all the time.

Indonesia is an important market...

Bank Indonesia approves DBS-Danamon deal: Sources

SINGAPORE – Bank Indonesia has approved DBS’ acquisition of Bank Danamon, with an initial stake of 40 per cent, the Dow Jones news agency reported on Friday, citing unidentified sources.

Legal documentation for the acquisition is likely to be completed in May, the sources said.

DBS will likely be allowed to acquire more shares in future, the sources said.

http://www.todayonline.com/business/bank...al-sources