30-01-2023, 11:06 AM
(This post was last modified: 30-01-2023, 11:09 AM by swakoo.
Edit Reason: removed replicate at bottom
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(30-01-2023, 08:36 AM)weijian Wrote: Hi Swakoo,
- 825mil x 2 is equal to the property valuation of 1.65bil in 2012. But 652.5mil x 2 is not equal to the 2.08bil property valuation in 2023. As such, we can reasonably assume that these 2 numbers are not apple-to-apple comparative. Therefore we cannot use them directly to derive the capital gain/loss by just a subtraction.
- As mentioned earlier, 825mil (2012) is probably the enterprise value. It means that this price tag is not only the cash exchange but also includes the debt that it assumes at the point of purchase.
- As for 652.5mil (2023), more details have been revealed and so we know that the Fraser folks are folking out this quantum of cash (ie. 652.5mil) for the property.
- Then you may ask, why is a 50% share of the property been sold in 2023 at a "smaller quantum" than 2012? (well, not exactly a "smaller quantum" if you understand what I m trying to say earlier). My guess is that after 2012, NTUC refinanced and took a bigger mortgage loan. The Frasers folks are probably faced with a bigger percentage mortgage loan than in 2012 when NTUC bought it.
Hi Weijian,
There are actually 3 property valuations:
2012: S$1.65 bil
30 Sep 2022: S$1.31 bil
31 Dec 2022: S$2.08 bil
Gold Ridge is the vehicle that owns, manages and operates Nex. It handles capital management, not the stakeholders like Mercatus (NTUC).
Mercatus paid S$825 mil for 50% stake in Gold Ridge in 2012.
It sells the 50% stake for S$652.5 mil in 2023.
It probably received income distributions from Gold Ridge over the years, not disclosed in the communications.
Think any refi done by Gold Ridge would impact the risk profile of stakeholders like Mercatus (NTUC) but would not involve cash flowing to or from stakeholders at time of refi.
Separate question is why valuation was bumped up significantly between Sep and Dec 2022 though it did not seem to affect actual sale value. If this is due to omicron coming under control and is realistic, it should begin to show up in the earnings reports of upcoming reits that have retail assets?