Singapore Press Holdings (SPH)

[KopiKat]

i never knew we stayed that close by. i too think its impossible for them to build a clementi mall size mall there. do note at jalan kayu there is a new development.

while i welcome the development (which is a short bus ride away from my home via bus 163) i think they are freaking overpaying again!

According to DBSV report,

The 94,619sf site can house 283,856sf of GFA.

This translates to 26,371sqm


According to HDB records, for Clementi Mall,

Permissible GFA = 25,000sqm


So, the Sengkang/Fernvale site may actually be larger than Clementi Mall in terms of GFA. When I looked at the site using Google Maps, it does look kind of small, perhaps the max. allowable height (Fernvale is 90m, I don't have the Clementi Mall ones) made the difference.

[kazukirai]

So, the Sengkang/Fernvale site may actually be larger than Clementi Mall in terms of GFA. When I looked at the site using Google Maps, it does look kind of small, perhaps the max. allowable height (Fernvale is 90m, I don't have the Clementi Mall ones) made the difference.

They may have the land area but to have a mall like clementi mall at an area not serviced by an MRT station might mean very little pass-through traffic.

Case in point would be West Coast Plaza- lots of shops there have shuttered (from restaurants to babycare products) after the initial lease period. My office is nearby so I've seen the progression from when it was first opened to what it is like now. Given its proximity to Clementi Mall which has a better vibe and tenant mix, you could say that the opening of Clementi Mall affected WCP to a certain extent.

Having said all that, I guess what kind of mall to build and what tenant mix to invite would be within SPH's control given they do their homework. Also Compass Pt (which is at Sengkang MRT) has been around for some time already so SPH must have factored that into their equation.

The only question is what kind of assumptions regarding the future did they make in their bid which in turn resulted in their bid value?

[Some-one]

I have also been thinking why are they buying the site with such a high bid price. However, if you think about it, there are a total of 12 bids. Shouldn't that show that the site has at least some attractiveness?

[KopiKat]

They may have the land area but to have a mall like clementi mall at an area not serviced by an MRT station might mean very little pass-through traffic.

Agree, but there's this Fernvale LRT station and I'd already mentioned earlier it may be a better comparison with Bukit Panjang Plaza or Ten-Mile Junction.

Case in point would be West Coast Plaza- lots of shops there have shuttered (from restaurants to babycare products) after the initial lease period. My office is nearby so I've seen the progression from when it was first opened to what it is like now. Given its proximity to Clementi Mall which has a better vibe and tenant mix, you could say that the opening of Clementi Mall affected WCP to a certain extent.

I "walked" around West Coast Plaza using Google Map and it looked rather small, the front part is single-storey and at most 2-3 floors at the rear. I know for sure there's no LRT station in Clementi area, so that part also not a good comparison.

I do know what you're talking about as I'd also witnessed the decline of Ten-Mile Junction to almost ghost-town like. Finally, they must have lowered their rentals enough to attract Sheng Shiong as their key tenant plus mainly Child Education type of biz plus a couple of restaurants and others. My own analysis is the smaller GFA (too few shops to attract shoppers), "ulu"-ness (even tho' there's an LRT station, it was a special stop and not part of the main loop) plus not that many blocks of flats clusters nearby.

Having said all that, I guess what kind of mall to build and what tenant mix to invite would be within SPH's control given they do their homework. Also Compass Pt (which is at Sengkang MRT) has been around for some time already so SPH must have factored that into their equation.

The only question is what kind of assumptions regarding the future did they make in their bid which in turn resulted in their bid value?

Only time will tell if SPH and UE (their JV partner who's the owner of UE Square) had done their due diligence. But, I'm hoping there'd be a repeat of the market sell-down (when they over bid Clementi Mall - 42% higher than next bidder), so that I can collect more at a lower price.

[freedom]

UE is not part of owner of Jurong Point, if I remember correctly.


Jurong Point is owned by Lee Kim Tah and Guthrie?

[KopiKat]

UE is not part of owner of Jurong Point, if I remember correctly.

You are right. My mistake. Should be UE Square Shopping Mall. I go correct above post.

[Drizzt]

still bewildered by this competency issue. how come they can expect to do so well veruss ur FCT and capitamalls who dont dare to bid so much

[KopiKat]

still bewildered by this competency issue. how come they can expect to do so well veruss ur FCT and capitamalls who dont dare to bid so much

FCT and CMT are REITs. For any acquisitions, may need to pay acquisition fees. After that, need to pay recurring Management Fees (both Trust Mgr and REIT Mgr) and god knows what other fees.

I didn't think of the above but extracted from a UOBKH report,

- All earnings from its property business are captured with no leakage to 3rd-parties via property management fees.


From CIMB report, with UE as a JV partner, there'll be cost savings or cap on the construction cost. Extracts,

A redeeming factor could be its partnership with United Engineers, which could cap or even lower its development costs and risks– we understand that SPH has an agreement with United Engineers whereby the latter bears cost overruns during construction.

[swakoo]

A better comparison (since this is an LRT station) would be Bukit Panjang Plaza (~200m from Bukit Panjang LRT stn) or Ten-Mile Junction (Ten-Mile Junction LRT stn is within the complex).

Bukit Panjang Plaza is quite well patronised, especially more so after CMT took control and started their Asset Enhancement programmes. 10-Mile Junction was a failure and has since been re-developed into a mixed site - Junction 10 (Mall) + Tennery (condo). Not sure how they'll do as the Mall just reopened.

In CCK (Choa Chu Kang) area, the main mall is Lot1 (next to CCK MRT stn) but it does appear that as long as the cluster population is large enough, there's room for other smaller malls eg. Bukit Panjang Plaza, Junction 10, Yew Tee Point (next to Yew Tee MRT stn),.. Even for those areas like Tampines, Boon Lay, having another mall side-by-side had not diminished their appeal. In fact, more people from other parts may be attracted by the critical mass to go visit.

From CMT's latest quarterly results slides pg 18: http://info.sgx.com/webcoranncatth.nsf/V...80049AF50/$file/CMT_PresentationSlides_FY2011Results.pdf?openelement
Valuation as at 31 Dec 2011 (S$ per sq ft NLA):
Bukit Panjang Plaza 1697
Lot One 2070
Tampines Mall 2431
Junction 8: 2363

From BT 18 Jan 2012:

SPH owns Paragon along Orchard Road and 60 per cent of Clementi Mall, which opened last year and is profitable. Based on the group's top bid at yesterday's tender in Sengkang West, market watchers' estimates of the breakeven cost for a new mall project range from about $2,400 psf to $2,600 psf.

Knight Frank group managing director Danny Yeo, who estimates the breakeven cost at about $2,500 psf, said: 'Assuming an investor is looking to achieve a 5 per cent net yield based on this breakeven cost, it would need a gross monthly rental of about $14 per square foot.'

Clearly SPH in bidding at the price they did is aiming to take the Fernvale project to the performance level of or better than Tampines Mall or Junction 8.

[Drizzt]

wow i am happy about this since i live so near but if i were a shareholder i would think other wise.