Forterra Trust (formerly: Treasury China Trust)

[KopiKat]

2) It appears to me that Nanfung has never embarked on a China real estate development project on its own – always on JV basis – and never in the driver seat or lead role. (Note: I could be wrong on this)

From their website, found 3 projects where they have 100% interest (1st 2 are Commercial & last is Residential),


GZ NF Int’l Convention & Exhibition Ctr./ Langham Place

In 2010, this development won the “Highly Commended” Architecture Award (Mixed Use) China category in the International Commercial Property Awards – Asia Pacific, and was named as one of Guangdong’s “Top 500 Modern Industrial Projects”. The top floors of this 22-storey development will be a luxury five-star hotel managed by Langham Hotels International, attracting both business and leisure travellers. The hotel will offer 499 spacious rooms as well as facilities supporting large-scale banquets and international conferences. The 4-storey podium floors are designed for commercial and exhibition use, with a capacity to accommodate up to 1,500 world-class exhibition booths. It will be the region’s only exhibition complex with its own associated 5-star hotel.

Address : Guangzhou, Guangdong Province
Group's Interest : 100%
Project Development Status : Scheduled for completion in 2013
G.F.A. : 965,000 sq. ft.


WX City-Ctr Commercial Complex

The project is located in the NanChang district in the city center of Wuxi, in close vicinity of multiple Grade A office complexes and two 5-star hotels: the Wuxi Kempinski and The Intercontinental Hotel. Our project is only 600m away from the subway line no. 1 station, and enjoys an unblocked view of the greenery of the Taihu People’s Square. It is currently designed to encompass two Grade A Office & SOHO towers, with a commercial podium catered for retail shoppers with plenty of F&B options including alfresco dining, to take advantage of our strategic location and its panoramic view over the square.

Address : NanChang District, Wuxi, Jiangsu
Group's Interest : 100%
Project Development Status : Currently under planning and construction
G.F.A. : 2,515,000 sq. ft.


WX Palazzo Del Lago

Located at the 4A-level scenic zone of Taihu Lake National Tourist Resort, Palazzo del Lago enjoys the spectacular natural views of Taihu Lake. The development features 196 villas built in classic Italian style.

Address : Wuxi, Jiangsu Province
Group's Interest : 100%
Project Development Status : The first phase is completed and the second and third phases are under construction.
G.F.A. : 973,000 sq. ft.

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Nan Fung Group's New Boss
Forbes 1/05/2011

Under her watch, Nan Fung has regained its vigor in managing core real estate portfolios, after years of lapses, to bid in government land auctions, further expand its international financial investments and wade deep into China. For the full year of 2010, Chen expects to generate net profit in excess of HK$6 billion ($773 million).

She sets for herself a lofty goal, planning to eventually increase profits from China to 50% of the group total, a target that would make Nan Fung the preeminent Hong Kong developer in China. At present, China accounts for 20% of Nan Fung’s net assets.

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Lengthy article on family feud plus background of Nan Fung dated 8-Jun-12. Interesting extract,

Also in the 1990s, he became a white knight in the stock market by buying 10 percent of Sino Land, which was meshed in debt.

Sino Land is different from Sino Ocean Land, which was only listed in 2007. Sino Land is currently controlled by Mr Ng Teng Fong's family. I wonder what happened to Nan Fung's stake in Sino Land...

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Looks like they have been reducing their stake in Sino Ocean Land after the passing of Mr Chen Din Hwa... From a high of 26.65% on 20-Oct-11 to 14.08% on 30-Jul-13.. Recent transactions started from 26-Jul-13 (reduced from 23.09% to 19.18%).... May be related to "Repurchased Convertible Securities" in Sino Ocean Land announcements. Hmm... preparing cash for Forterra stake??

[Boon]

Thanks again KopiKat, it looks like I have underestimated the capability of Nanfung, ha-ha ! That would make my argument “less convincing”.

Nevertheless, the other two major risks still exist, which if not probably mitigated, could still lead to disastrous consequences:

1) No experience in the running of a public/listed entity.
2) Lacking experience/ good expertise in retail project development

These are risks which Nanfung has to mitigate, if they intend to be at the helm of Forterra, without taking it private.

In addition, I think Nanfang may have to do a strategic review on its strategic relationship with PCRT, simply because of the fact that:
- The basis and condition on which strategic partnership had been forged in the first place between Nanfung and PCRT have changed – Nanfung never own a listed business trust before - but it now owns the “controlling stake ” in Forterra. Conflict of interest would certainly have increased - as Forterra, in many ways, is a competitor to PCRT.

Questions to ponder over:
a) How would PCRT look at the “Forterra deal” made by its strategic partner- Nanfung?
b) What is the likelihood of Nanfung injecting pipeline projects into PCRT, now that it has its own listed platform?
c) If so, how would Nanfung decide which pipeline project is to be given to Forterra and which to PCRT?
d) Would PCRT co-invest with Nanfung in mixed-used projects where PCRT would be responsible for the retail component while Nan Fung would be responsible for the residential component – if the completed retail component of the projects would not be injected into PCRT ultimately?
e) Would Nanfung co-invest with PCRT in mixed-used projects where PCRT would be responsible for the retail component while Nan Fung would be responsible for the residential component – if the completed retail component of the projects would not be injected into Forterra ultimately?
f) Being the “controlling unit-holders” of Forterra and a substantial unit-holders cum strategic partner of PRCT, how would Nanfung handle all the conflict of interests?
g) Are there still scopes for future mutually beneficial collaborations between Nanfung and PCRT?

Nanfung certainly has an ambitious target of growing its net assets in China to being 50% of group total eventually, from its current level of about 30%, but there are many ways to get there.

Nanfung would have to confront with all the above risks/problems/challenges if it were to keep Forterra as a listed entity. Or it could choose to avoid those risks/problems/challenges by taking Forterra private.

That said, I think there is one other possibility - merger between Forterra and PCRT - a very good fit IMO.

Am I stretching my imagination a little bit too far? Ha-ha !

Nanfung’s estimated stake in PCRT:
Number of shares own = 135.23 million (12.04%)
Share price = SGD 0.55
Value = SGD 74 million (based in share price)

Nanfung’s estimated stake in Forterra :
Number of shares own = 76,083,379 (29.98%)
Price per share paid = SGD 2.98
Value = SGD 226 million (based on acquisition price) = 3 times that in PCRT
(note: to take Forterra private at SGD 2.98 per share, additional amount needed = SGD 528 million)

Nanfung’s estimated stake in Sino-Ocean-Land:
Number of shares own = 826.67 million (14.08%)
Share price = SGD 0.70
Value = SGD 578 million (based on share price) = 2.5 times that in Forterra; 7.8 times that in PCRT.

(vested)

[KopiKat]

Look at the total Vol = 68,554,000 ! Range $2.13 to $2.36

Looks like the Nan Fung deal is thro' as 68,268,000 @ $2.98

[opmi]

ya. No annc leh.

[KopiKat]

ya. No annc leh.

Out now, 3 hrs headstart to see the ups and downs...

[Boon]

More information on Nan Fung

http://infopub.sgx.com/FileOpen/33010425...leID=19115

[KopiKat]

More information on Nan Fung

http://infopub.sgx.com/FileOpen/33010425...leID=19115

Haiz... I was hoping for a Forterra related announcement on their acquisition of their stake, being now in the driver seat, their plans,... blah... blah.. and perhaps to even rename it to NFPT (Nan Fung Property Trust) or NPCPT (C - for China) to give it a more prominent link to them.

Perhaps you're right, they just want the undervalued properties...

[opmi]

Either they want platform or want undervalued stuff, will serve as a catalyst to realise the big discount to RNAV (growing).

[HitandRun]

More information on Nan Fung

http://infopub.sgx.com/FileOpen/33010425...leID=19115

Haiz... I was hoping for a Forterra related announcement on their acquisition of their stake, being now in the driver seat, their plans,... blah... blah.. and perhaps to even rename it to NFPT (Nan Fung Property Trust) or NPCPT (C - for China) to give it a more prominent link to them.

Perhaps you're right, they just want the undervalued properties...

Boon san

Thanks for highlighting this opportunity.

Kopikat san

IMHO, quite unlikely for Vivien Chen to change her father's modus operandi, i.e. keeping things very private, which had allowed NF to move very swiftly and stealthily. Act II will probably involve NF talking to major MIs to buy over their stakes.

[KopiKat]

Kopikat san

IMHO, quite unlikely for Vivien Chen to change her father's modus operandi, i.e. keeping things very private, which had allowed NF to move very swiftly and stealthily. Act II will probably involve NF talking to major MIs to buy over their stakes.

HitandRun 様,

お久しぶりですね... 日本語 は お上手 ですか?

The power of Google Translate...

I'm wondering about the need for the Put/Call Option of 3.08% which is exercisable only within Jan-14. Is that a "smoke-screen"? Or perhaps Nan Fung wanted John Ronan to continue to stay interested (by being vested) during this transition period? So, if what you expect turns out to be true, Act II will come after that? Unless, it's a smokescreen??

The other possible interesting development would be what Nan Fung will do with their PCRT interest, as mentioned by 'Boon' previously.

The real show may only be just starting.. but perhaps in slow motion...