Forterra Trust (formerly: Treasury China Trust)

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Just want to add: Shanghai is big enough to have 5-10X Raffles Places.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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(23-09-2013, 10:27 PM)opmi Wrote: Just want to add: Shanghai is big enough to have 5-10X Raffles Places.

it does not make sense. China is so big, so companies should have multiple HQs?

Why should a financial company set up multiple offices for similar functions in one city?

In Shanghai, there should be only one place crowded with financial institutions.

Just like New York is big, but only one wall street.
Reply
(24-09-2013, 08:58 AM)freedom Wrote:
(23-09-2013, 10:27 PM)opmi Wrote: Just want to add: Shanghai is big enough to have 5-10X Raffles Places.

it does not make sense. China is so big, so companies should have multiple HQs?

Why should a financial company set up multiple offices for similar functions in one city?

In Shanghai, there should be only one place crowded with financial institutions.

Just like New York is big, but only one wall street.

'Raffles Place' CDB dont only have financial institutions as tenants.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
Reply
(24-09-2013, 09:09 AM)opmi Wrote:
(24-09-2013, 08:58 AM)freedom Wrote: it does not make sense. China is so big, so companies should have multiple HQs?

Why should a financial company set up multiple offices for similar functions in one city?

In Shanghai, there should be only one place crowded with financial institutions.

Just like New York is big, but only one wall street.

'Raffles Place' CDB dont only have financial institutions as tenants.

But if financial institutions move out of Raffles Place, what do you think will be left there?
Reply
(24-09-2013, 09:12 AM)freedom Wrote:
(24-09-2013, 09:09 AM)opmi Wrote:
(24-09-2013, 08:58 AM)freedom Wrote: it does not make sense. China is so big, so companies should have multiple HQs?

Why should a financial company set up multiple offices for similar functions in one city?

In Shanghai, there should be only one place crowded with financial institutions.

Just like New York is big, but only one wall street.

'Raffles Place' CDB dont only have financial institutions as tenants.

But if financial institutions move out of Raffles Place, what do you think will be left there?

'Raffles Place' CDB dont only have financial institutions as tenants.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
Reply
(23-09-2013, 04:47 PM)Boon Wrote:
(23-09-2013, 04:19 PM)opmi Wrote: another question: How to move the onshore money to offshore to pay off unit-holders?

Hi opmi,

9.42% of the SGD 193.87 million is "onshore" in China, the rest 90.58% is not in China (offshore) - sale of Central Plaza was conducted "offshore" in HK.

As a matter of fact, loan facilities for the HQ Extension had been obtained prior to the sale of Central Plaza - Forterra has the option of contintuing to drawdown on this loan to complete the project.

(23-09-2013, 11:49 AM)MINX Wrote:
(21-09-2013, 10:09 AM)Boon Wrote:
(20-09-2013, 10:33 AM)MINX Wrote: The location where the HQ is located cannot be compared to SHKP's Xujiahui property. The former is more suburban , the latter in a prime shopping area.

Hi MINX,
1) The HQ is located in the “Hongqiao CBD” (HQCBD) which is about 4 km away from Xujiahui centre “XJH”– about 10 minutes by taxi
2) “HQCBD” is part of Shanghai CBD – the western part of Shanghai CBD
3) As to which is “more suburban” than the other – it is debatable. If “more suburban” = “less prime in retail” then I would agree.
4) “HQCBD” used to be the high end prime shopping area in Shanghai before shopping areas emerged in XJH and other parts of Shanghai – see historical development of “HQCBD” below.
5) Please note that SHKP’s site is for mixed-use development – with hotel, office and retail
6) Hotel rates (and hence capital values) of similar standard hotels in both areas are comparable IMO.
7) Office rents (and hence capital values) of similar grade offices in both areas are comparable IMO.
8) In Shanghai, the major retail/shopping areas are:
- Nanjing Road East (NJE) : Primary
- Nanjing Road West (NJW) : Primary
- Huaihai Road Middle (HHM) : Primary
- Xujiahui (XJH) : Primary
- Lujiazui (LJZ) : Primary
- Zhongshan Park (ZSP) : Secondary
- Wujiaochang (WJC) : Secondary
- Sichuan Road North (SCN) : Secondary
- Hongqiao CBD (HQCBD) : Secondary
9) No doubt, XJH is considered prime retail area of Shanghai and therefore retail rents in Xujiahui are higher than in “Hongqiao CBD”– but “Hongqiao CBD” is not far behind - The gap is closing with the opening of L’ Avenue. IMO, after the completion of the HQ, Shanghai Arch Walk and SOHO Tianshan project, and the underground links to the subway line, this shopping strip could rival that in XJH.
10) In short, the difference in capital values of mixed-use assets of similar grade (with typical average mix) on per square meter basis between the two areas should not be that big IMO – this is the point I am driving at.
_____________________________________________________________________________________________________________________________________________

Renaissance For Shanghai’s Hongqiao CBD?
February 14th, 2013 by Evian Zhu (JLL)

Recent years have seen maturing urban infrastructure combine with strong office and retail demand to give rise to new commercial clusters along the periphery of Shanghai’s city centre. One of the most prominent emerging areas is Hongqiao, which has a unique history. Hongqiao, previously an important office and retail area in Shanghai, faded from prominence in the 1990s, but today returns stronger than ever. New developments are restoring Hongqiao to its former prominence.
Once a rural area in western Shanghai, Hongqiao was designated as a state-level development zone in 1986. Authorities took advantage of the zone’s location between Hongqiao Airport (Shanghai’s only international airport at the time) and Shanghai’s traditional centre to develop a commercial hub with exhibition space, offices, hotels, and diplomatic facilities. The 1990s saw a wave of development that cemented Hongqiao’s rise as one of Shanghai’s key early business districts. More than ten office towers were built, and the zone attracted a range of multinational companies like 3M, Chrysler, GE, and LG. In addition, at least half a dozen foreign consulates were established in the area. Hongqiao’s Friendship Department Store opened in 1994 and became the most high-end retail property in Shanghai, with international brands and imported products. As other areas like Lujiazui (the financial district) and Xujiahui (in the southwest) took centre stage in the late 1990s and early 2000s, demand and supply in Hongqiao’s office and retail sectors declined, and Hongqiao’s brightness began to fade (see chart below). The turning point came in 1999 when Pudong International airport, 60 km east, took over all international flights to Shanghai.
Hongqiao is experiencing a surge of construction of prime office and retail space that is giving it a new lease on life. Notable new mixed-use projects include L’avenue by LVMH, The HQ (Shanghai City Centre) by Treasury Holdings, GIFC Phase II (Takashimaya) by Gubei Group, Jin Hongqiao by APP and SOHO’s Tianshan Road Project. All of these have just completed or will complete within the next three years, doubling the retail stock of the area. We reclassified Hongqiao from a decentralised area to a part of Shanghai’s CBD in 2011, due to the comprehensive upgrade of the area’s business environment. For example, L’avenue will be home to the first Louis Vuitton and Tod’s stores in west Shanghai.
Meanwhile, the commitment rate of GIFC Phase II’s office portion (70,000 sqm) has already exceeded 60%, higher than the average of other CBD projects that delivered in the same quarter.
Hongqiao’s profile will be further boosted by the rising prominence of the west Shanghai region, which is underpinned by the new Hongqiao Transportation Hub, including a hugely expanded airport. Tenants are attracted to Hongqiao for its new properties, strong government support, and large, wealthy population base. As a result, we expect that Hongqiao’s rental performance will remain sound and will experience stronger rental growth than most areas in Shanghai.

http://www.joneslanglasalleblog.com/APRe...jw4njmS3IV
__________________________________________________________________________________________________________________________________________

“In Hongqiao, there has been a major transition in recent months. Two new commercial zones are beginning to emerge: a high-end area around L’Avenue, The HQ’ and the upgraded Hongqiao Friendship Store; and a mid-market area on Tianshan Road, centered around the Huijin Department Store, Parkson Hongqiao store and the nearby Hongqiao Tiandu....................................

A significant amount of activity is forecast in the coming quarters for the Hongqiao area. District government plans call for the linking of Zunyi Road’s underground corridor with The HQ, L’Avenue and an upgrade of the Hongqiao Friendship Store. The three projects combined will form an emerging center for high-end shopping. A second, mid-market commercial hub is also forming nearby, centered around the Huijin Department Store, Parkson Hongqiao store and the nearby Hongqiao Tiandu”.

http://www.colliers.com/en-GB/China/~/me...-2012.ashx

____________________________________________________________________________________________________________________________________________

Shanghai’s retail property market landscape will continue to evolve, with a burgeoning retail precinct in the Hongqiao area. The effects of brand clustering and the reputation of LVMH, an owner of L’Avenue, are expected to attract new retail tenants to the area and promote the overall positioning of Hongqiao retail market. Together with the launch of Shanghai Arch Walk and the HQ in 2014, the retail ambience of this neighborhood will be enhanced, rendering a positive financial outlook for the retail assets.

See page 4 of https://s3-ap-southeast-1.amazonaws.com/...02972b.pdf

L' Avenue is opened
http://maosuit.com/real-estate/lvmh-open...-shanghai/
http://www.lavenue-shanghai.com/en/

(Vested)
Hi Boon,
Xujiahui is a well established prime retail area in Shanghai, Hongqiao is a "has been" area in a not so central locality. There is a discernible difference between properties located in these 2 areas. However, i do take your point that there have been new developments in the area which could revive it's potential, but even so, it is unlikely to unseat Xujiahui simply because it is located more in the suburbs.

Hi MINX,

Interesting perceptions.

What's your take on the following:

Between “Orchard Road Area” and “Raffles Place Area”, in Singapore

1) Which do you think is more “centrally located” than the other?

2) Which do you think is more “suburban” than the other?

Xujiahui is in the heart of old Shanghai city, Hongqiao is the district where the domestic airport is located, it's pretty obvious that the 2 locations are not the same. Shanghai is many times larger than Singapore, so using 2 localities in Singapore to compare distort things a little.
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(24-09-2013, 09:15 AM)opmi Wrote:
(24-09-2013, 09:12 AM)freedom Wrote:
(24-09-2013, 09:09 AM)opmi Wrote:
(24-09-2013, 08:58 AM)freedom Wrote: it does not make sense. China is so big, so companies should have multiple HQs?

Why should a financial company set up multiple offices for similar functions in one city?

In Shanghai, there should be only one place crowded with financial institutions.

Just like New York is big, but only one wall street.

'Raffles Place' CDB dont only have financial institutions as tenants.

But if financial institutions move out of Raffles Place, what do you think will be left there?

'Raffles Place' CDB dont only have financial institutions as tenants.

true but financial institutions are the KEY ANCHOR tenants... the dynamics and tenant mix would be very different
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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(24-09-2013, 09:51 AM)MINX Wrote: Xujiahui is in the heart of old Shanghai city, Hongqiao is the district where the domestic airport is located, it's pretty obvious that the 2 locations are not the same. Shanghai is many times larger than Singapore, so using 2 localities in Singapore to compare distort things a little.

1) “Xujiahui is in the heart of old Shanghai city” – something new to me – have to check this out.
2) “Hongqiao” is situated in the Changning District – Hongqiao itself is not a district.
3) Both Hongqiao and Pudong airports serve domestic and international flights – more international flights (less domestic flights) in Pudong than in Hongqiao.
4) Agreed. The 2 locations are not the same – there are differences in attributes of the two localities – but how big are the differences – and how influential are these differences has on the property values in both locations – that’s the question.
5) What is your criteria and methodology in determining whether one location is “more centrally located” than the other? Proximity to core CBD, expressway, MRT station, airport etc? And how would these affect the values of various property types – office, retail, residential etc?
6) What is your criteria and methodology in determining whether one location is “more suburban” than the other? And how would these affect the values of various property types – office, retail, residential etc?
7) Is “more suburban” necessarily equates to “less value”?
8) IMO, these criteria and methodology should be equally applicable when comparing two locations in Shanghai or Singapore.
9) To me, Orchard Road Area is “more suburban” than Raffles Place – easy call- big contrast – based on definition of “suburban” from wiki – more residential in Orchard
10) Is Raffles Place more “centrally located” than Orchard Road area? – tough and close call to me – depends on once criteria and methodology. Distance between UOB Plaza and ION Orchard is around 5 km. Difference in distances from these two locations to airport is small.
11) Distance between L’ Avenue (situated next to the HQ) to Grand Gateway (situated next to SHKP site) is also about 5 km. Distance to Hongqiao Airport- it is obvious, the HQ is nearer. Difference in distances from these two locations to Pudong airport is small. As to which is “more centrally located” than the other – to me it would be a tough and close call. To you, it sounds like an easy call. –I think we should leave this as it is.
12) The cluster of commercial space in Xujiahui is surrounded by high rise residential apartments, to me this is not less “suburban” than Hongqiao – again, it would be a tough and close call to me but was an obvious call to you. Again, I think we should leave the discussion as it is.
13) No doubt Xujiahui is a prime retail area but 65% of the above grade GFA of SHKP project is for office usage.
14) That said, the main contention of our discussion is – is paying SGD 2.98 per share for Forterra a better deal than paying what SHKP is paying for the land in XJH on the basis of per unit cost of GFA? – to me, it is.

(vested)
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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(25-09-2013, 12:38 PM)Boon Wrote:
(24-09-2013, 09:51 AM)MINX Wrote: Xujiahui is in the heart of old Shanghai city, Hongqiao is the district where the domestic airport is located, it's pretty obvious that the 2 locations are not the same. Shanghai is many times larger than Singapore, so using 2 localities in Singapore to compare distort things a little.

1) “Xujiahui is in the heart of old Shanghai city” – something new to me – have to check this out.
2) “Hongqiao” is situated in the Changning District – Hongqiao itself is not a district.
3) Both Hongqiao and Pudong airports serve domestic and international flights – more international flights (less domestic flights) in Pudong than in Hongqiao.
4) Agreed. The 2 locations are not the same – there are differences in attributes of the two localities – but how big are the differences – and how influential are these differences has on the property values in both locations – that’s the question.
5) What is your criteria and methodology in determining whether one location is “more centrally located” than the other? Proximity to core CBD, expressway, MRT station, airport etc? And how would these affect the values of various property types – office, retail, residential etc?
6) What is your criteria and methodology in determining whether one location is “more suburban” than the other? And how would these affect the values of various property types – office, retail, residential etc?
7) Is “more suburban” necessarily equates to “less value”?
8) IMO, these criteria and methodology should be equally applicable when comparing two locations in Shanghai or Singapore.
9) To me, Orchard Road Area is “more suburban” than Raffles Place – easy call- big contrast – based on definition of “suburban” from wiki – more residential in Orchard
10) Is Raffles Place more “centrally located” than Orchard Road area? – tough and close call to me – depends on once criteria and methodology. Distance between UOB Plaza and ION Orchard is around 5 km. Difference in distances from these two locations to airport is small.
11) Distance between L’ Avenue (situated next to the HQ) to Grand Gateway (situated next to SHKP site) is also about 5 km. Distance to Hongqiao Airport- it is obvious, the HQ is nearer. Difference in distances from these two locations to Pudong airport is small. As to which is “more centrally located” than the other – to me it would be a tough and close call. To you, it sounds like an easy call. –I think we should leave this as it is.
12) The cluster of commercial space in Xujiahui is surrounded by high rise residential apartments, to me this is not less “suburban” than Hongqiao – again, it would be a tough and close call to me but was an obvious call to you. Again, I think we should leave the discussion as it is.
13) No doubt Xujiahui is a prime retail area but 65% of the above grade GFA of SHKP project is for office usage.
14) That said, the main contention of our discussion is – is paying SGD 2.98 per share for Forterra a better deal than paying what SHKP is paying for the land in XJH on the basis of per unit cost of GFA? – to me, it is.

(vested)

I have shared my views. Let it be.
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All Eyes On the HQ – Latest updated report from Edison Research dated 27 September 2013

http://www.directorstalk.com/edison/fort...update.pdf

Edison holds the view that “It is relatively early stage to comment on Nan Fung’s intentions for the group, but the acquisition removes a perceived source of uncertainty for the units”

On the Forum convertible bonds:

“The terms of the S$59.7m Forum convertible bond give the bondholder the right to call for early redemption in the event of any change of ownership. The sale of the Trustee-Manager and Property Manager to Nan Fung Group provides such an opportunity, subject to a 27 September 2013 deadline. Forterra has not received any indication of the bondholders’ intentions at this time.
These bond were issued by Forterra in March 2011 to finance its acquisition of Huai Hai Mall and Central Park Mall, The conversion price is S$2.10, below the current unit price. If the deadline passes, the next opportunity to convert will be in September 2014.
Forterra has the resources in place if needed to redeem these bonds from the recent sale of Central Plaza. We have not adjusted our forecasts at this stage. If the bonds are redeemed group cash, debt and debt financing costs would reduce this year and next.”

(Vested)
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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