Frasers Property (formerly: Frasers Cpt (FCL))

Too bad, Stockland will have to try very hard to find a similar platform that ALZ can provide for...

Stockland accepts Frasers bid for Australand stake
BUSINESS SPECTATOR AUGUST 15, 2014 2:37PM

Elizabeth Redman

Business Spectator Reporter
Melbourne
STOCKLAND has accepted the Frasers Centrepoint takeover offer for its stake in Australand, pocketing a capital profit of around $80 million after earlier losing the bidding war for the target.

Singapore’s Frasers took control of Australand last week, securing a 56.8 per cent stake in the target just two hours before the offer closed.

Only 24 hours before the offer was set to lapse, Frasers had only 28.65 per cent of Australand shares.

The offer was extended for two weeks, with all conditions removed.

Frasers’ $2.6 billion bid, worth $4.48 per share plus accrued distribution, trumped an earlier $2.5bn offer from Stockland.

Stockland held a relevant interest in 113 million Australand shares, bought at an average price of $3.78 each.

Stockland managing director Mark Steinert said the group would reinvest the profit prudently into its growth strategy.

“We have been disciplined with our investment in Australand with a clear strategic intent and view of value,” Mr Steinert said.

“We will accelerate our expansion into medium density residential and mixed use development, grow our logistics and business parks capabilities, invest in community and our people and accelerate planned system and process enhancements.”

Charoen could be leveraging 10 times to invest into FCL. How much leverage are other investors taking? Charoen can endure 1% return in the end, which could be 10% on capital invested. If the return on FCL is 10%, he could get 100%. Can you invest the same as him?

Why not, he is the main driver with 88% stake and when he dares borrow from UOB Wee and got away relatively unscalded there is no fear.

Certainly better than a bunch of civil servants driving straight into the light of a on coming train and still justifying 1.5% returns...

There should be more risk takers like Charoen in Singapore Inc. In fact, he has already taken the lead by buying over ALZ now that City Dev is seriously looking Down Under. Unfortunately Leighton's non core property holdings are no where comparable to ALZ's quality. Far East is the other major Singapore Inc that is making waves Down Under.

With decent population growth and quality of life, Australia is a rare bright spot amongst the Global property markets. There is every reason to believe that the momentum remains healthy otherwise why would so many inexperience Singapore developers such as Aspial, Fragrance, Hiap Hoe, Sim Lian, CES, Roxy etc etc making forays Down Under? Some of these wannabes are facing the usual development issues that faces typical Aussie developments and hence buying into an established platform will help ease these unnecessary worries.

Whilst Australia property market is a well regulated one, the confusing development guidelines that differs from state to state, local council to council and even amongst neighbours are the biggest minefields. These landmines are the most minute but critical ones facing law abiding structured but inexperienced Singapore developers in Australia.

GG

(16-08-2014, 03:57 PM)freedom Wrote: Charoen could be leveraging 10 times to invest into FCL. How much leverage are other investors taking? Charoen can endure 1% return in the end, which could be 10% on capital invested. If the return on FCL is 10%, he could get 100%. Can you invest the same as him?

Move money out of Thailand before the King goes??

basically, the businesses in Thailand are largely cash cow that self funds... dun think they will ever quit but obviously they are building an external wing but if that coincided with the ongoing political turmoil is subjective.

quite similar to say G Corp and LKH, Genting Berhad and Genting Singapore, HK and Linc Energy... not much of a difference really.

GG

(16-08-2014, 10:38 PM)opmi Wrote: Move money out of Thailand before the King goes??

Move money out of Thailand before the King goes??

(16-08-2014, 11:10 PM)greengiraffe Wrote: basically, the businesses in Thailand are largely cash cow that self funds... dun think they will ever quit but obviously they are building an external wing but if that coincided with the ongoing political turmoil is subjective.

quite similar to say G Corp and LKH, Genting Berhad and Genting Singapore, HK and Linc Energy... not much of a difference really.

GG

(16-08-2014, 10:38 PM)opmi Wrote: Move money out of Thailand before the King goes??

Personally I feel GG's views might be a little jaundiced becos of his stake in FCL. But the concerns raised by OPMI & freedom are valid concerns. Australia has it's fair share of issues, high unemployment, the depreciating aussie, Australia is probably the less ugly amongst the ugly sisters.
When one chooses to shut out the risks, then investing becomes even more risky, IMHO.

We shall see... time will be the best judge. I m deemed biased cause I m vested which is not wrong otherwise I won't have convictions to stay vested despite all the noise.

Property market is extremely tough in Singapore. Otherwise why would so many local developers head overseas... so far Australia is the top choice followed by UK. Apart from Singapore developers, mainland Chinese property developers are also heading down under. Even our makan cannot finish property kingpin Hong Leong Group Kwek Leng Beng had mentioned about Australia.

If they are actively looking down under, there must be a strong reason. I m no developer. I m a mere allocator of my capital. If everyone thinks that I m the ultimate Sorchai so be it.

Personally I think not much of the ongoing anti-speculation measures will be lifted especially TDSR. It is an important measure that will help maintain social harmony going forward - no money, don't be a Rambo and try to make money using other people's money.

Housing prices in Singapore remains very high relative other global capital cities and hence the people in the office have little choice but to listen to the messes in order to keep their jobs. What this means is that property developers have little choices but to take calculated risks overseas. Between Australia, China and UK, my pick is Australia.

Buddies here have a choice - there is no need to be in property stocks but if you have to be in, then you really don't have much choices.

Let time be the judge.

GG

Some price weakness.

I wonder if it is due to market pp guessing of cash call. Anyone heard anything?

Or just pure trader behaviour?

For a company with just 10-12% retail float, the liquidity is remarkable.

Flaw In Australand Development Unit Valuations?

ALZ's development unit is touted to be the growth division comprising 30 - 40% of EBIT over time. The development division has a projected end value of A$7.5bn based on the annual report.

http://infopub.sgx.com/FileOpen/Target_s...eID=306200

The independent valuer of Australand uses the above simplistic method to value its development divisons - available under section 8.4 from page 103 - 108.

I searched high and low in ALZ's 2013 annual report and found on page 84 value of landbank:

i) http://phx.corporate-ir.net/External.Fil...U9MQ==&t=1

and the independent valuation report for details of landbank and found none. There are no details of development landbank. However, FCL spent 1 month performing due diligence at Australand before going ahead with the final offer.

I think Charoen and his team must have done a more detail analysis of the market value of the land bank instead of relying on the simplistic EBIT multiple approach.

Only time will tell.

Vested
GG