Frasers Property (formerly: Frasers Cpt (FCL))

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Sekisui House will not be interested as it is awaiting its share of ALZ post FCL's completion of takeover...

Devine puts itself on the block
THE AUSTRALIAN JULY 17, 2014 12:00AM

Sarah Danckert

Property Reporter
Melbourne
RESIDENTIAL builder Devine Limited has put itself on the sales block after its majority shareholder Leighton Holdings decided to exit the business. Potential buyers are expected to vie for the $3 billion pipeline.

Some believe Devine could sell for as much as $1.32 a share, valuing the business at $210m, and private developers as well as larger listed groups are expected to ­review the Brisbane company.

The Devine sale comes as Australian property companies go through a process of consolidation including the takeover of Australand by Frasers Centrepoint.

The sale process also coincides with a considerable uplift in the residential property market.

Devine, with housing estates and an apartment projects in Queensland, Victoria and South Australia, has been mooted as a takeover prospect since Leighton announced it would sell its 50.6 per cent stake in the company last month.

Yesterday Devine managing director David Keir announced the sale process.

“There are no assurances that a sale of Devine will be finalised or what form the transaction (if any) will ultimately take,” Mr Keir said.

Goldman Sachs has been appointed as an adviser to the sale, as revealed by The Australian.

Leighton also is looking to offload its $5 billion property arm, which includes major developments in Melbourne and Perth.

According to sources, ARA Asset Management is considering a tilt for the Leighton Properties business, potentially vying with Mirvac and Lend Lease.

Devine has posted losses for the past three years as the property downturn in Queensland ate away at revenues and it wrote down the value of several projects.

It has flagged a profit of between $7m and $8m this year after a raft of asset sales.

Lend Lease and David Devine’s Metro Properties also have been mentioned as possible buyers of Devine, which has a land bank, apartment projects and a construction business.

Three other potential bidders for Devine — Japan’s Sekisui House and Daiwa House, and Singapore-controlled AVJennings — have all but ruled themselves out of the race.

AVJennings chief executive Peter Summers said the group was confident in the direction of the Australian and New Zealand residential markets. “As a result we are certainly looking to increase our land holdings and we are actively looking at opportunities. However, our main focus is on specific plans around other types of activities at this stage,” he said.

Sources said a sticking point in the sale of the company was the $50m debt guarantee Leighton has provided to Devine at the behest of the group’s lender, ANZ.

A would-be bidder would be required to cover the guarantee, according to banking sources.

Other possible buyers such as Cedar Woods, Villawood, Peet and Sunland are all thought to be cool on buying Devine.

An analyst who declined to be named said Devine showed “more upside” and could sell for as much as $1.32 a share, based on its current book value of $1.52.

Devine closed down 1c at $1.08.

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City & Country: Cover Story - Frasers Centrepoint unveils $35 mil bungalows
By Cecilia Chow
1790 words
7 Jul 2014
The Edge Singapore
EDGESI
English
© 2014 The Edge Publishing Pte Ltd. All Rights Reserved.
A pair of newly completed Good Class Bungalows in Holland Park designed by K2LD Architects is now on the market. While the number of GCB transactions has fallen, prices are still holding up. Will buyers bite?

Property developer Frasers Centrepoint Ltd may be better known for its portfolio of mass market condos and mixed use developments in recent years. Notable projects include the 748-unit Eco in Bedok, the 495-unit Rivertrees Residences in Sengkang and the 992-unit Watertown in Punggol, in collaboration with Far East Organization and Sekisui House.

A departure from this well-trodden path is the debut of two new Good Class Bungalows (GCBs) in the prestigious Holland Park neighbourhood. The GCBs at 65 and 67 Holland Park sit on the last remaining plot of a much larger freehold site totalling 203,550 sq ft. It was a legacy site from parent company, Fraser and Neave (F&N), which Frasers Centrepoint subsequently bought over. It master planned the development of 12 houses, which included four conservation bungalows.

From 2006 to 2009, the developer sold the conservation bungalows, as well as developed eight new GCBs which were sold. These latter two GCBs are a redevelopment of a site on which an old bungalow once stood. “We were waiting for the right time to develop the site,” says Cheang Kok Kheong, CEO of Frasers Centrepoint’s development and property division. “We understand the lifestyles and expectations of these home owners and briefed the architect on the requirements, finishing and features, such as sizes of bedrooms and bathrooms, as well as back-of-house facilities. So, we planned the floor area and K2LD focused on the design.”

K2LD Architects is no stranger to the Holland Park neighbourhood, having worked in collaboration with other architects in the renovation of the colonial-era Lien Villa — the former residence of late banker Lien Ying Chow — and the design of five new bungalows on the grounds. The architectural firm was also involved in the restoration of a colonial-era black-and-white bungalow in Holland Park that was originally designed by renowned British architect Frank Brewer in the 1920s. Over the years, the colonial-era property was converted into four apartments, and K2LD was engaged by the current owner to conserve it as well as to restore it to its original use as a single-family home.

The two GCBs by Frasers Centrepoint sit on almost-identical land plots of 15,070 sq ft, with similar built-up areas of about 11,000 sq ft. Both have five en suite bedrooms, including a guest bedroom on the first level, and master and junior master suites on the second level. The living and dining areas are spacious and designed for those who like to entertain at home, says Ko Shiou Hee, director of K2LD. The wet and dry kitchens are fully fitted with Miele kitchen appliances and Boffi kitchen cabinetry. There is a concealed temperature-controlled wine cellar for up to 2,000 bottles, as well as ample storage space concealed behind white oak panels. Both houses come with a 20m to 25m swimming pool with a changing room, and a dedicated chauffeur’s washroom.

While the sizes of both GCBs are similar, the layout is completely different, says K2LD’s Ko. For instance, the house at No 67 has one great room instead of the separate living and dining area featured in the house at No 65. Ceilings are 3m high, with a built-in home lift, a ramp for wheelchairs from the driveway, and privacy screens. When one of the Tembusu trees in the grounds had to be cut down, the timber was recycled for use as “art pieces” on the façades of both houses.

The GCBs are now on the market for sale by private viewing. The price tag is $35 million ($2,322 psf) each, subject to negotiation, says the developer. Instead of appointing an exclusive real estate agent, the developer has an open listing.

Priced to sell

Like most listed developers, Frasers Centrepoint had to apply for a Qualifying Certificate (QC) to develop the GCBs in Holland Park. One of the conditions stipulates that the residential units have to be sold within two years of obtaining temporary occupation permit (TOP). The developer is also not allowed to hold the houses for rent. This implies that the GCBs at 65 and 67 Holland Park, which obtained TOP in February this year, have to be sold by 2016.

The last transaction in Holland Park was in June last year, according to a caveat lodged with URA Realis. The house sitting on a land area of 15,210 sq ft was sold for $28.8 million ($1,894 psf) to an entrepreneur and head of a luxury watch brand, in a deal brokered by Samuel Eyo, director of Savills Prestige Homes. The previous owner, who purchased the house for $18.89 million ($1,242 psf) in 2010, engaged K2LD as the design architect in the redevelopment of the property, including a new swimming pool. Prior to that, the property, which was one of the bungalows developed by Frasers Centrepoint, was sold in 2007 for $7 million.

The number of GCB transactions has declined precipitously over the last three years — from 54 in 2012 to 28 last year, and down to just nine in 1H2014. If smaller bungalows that do not meet URA’s definition of a GCB (those with a minimum land area of 15,070 sq ft), but sit within designated GCB estates are included in the count, the total sold in 1H2014 would increase from nine to 12. The three bungalows sold are a property in Oriole Crescent sitting on a land area of 8,514 sq ft, which fetched $12.98 million ($1,524 psf) in April; another in Chestnut Drive, which changed hands for $13.2 million ($1,234 psf) last month; and a third on Margoliouth Road, with a land area of 7,624 sq ft, that fetched $13.8 million ($1,810 psf). The sales on Chestnut Drive and Margoliouth Road were brokered by RealStar Premier.

Average GCB prices have remained relatively stable since end-2012 hovering around $1,400 psf, although transactions have plummeted, acknowledges Douglas Wong, CBRE’s head of luxury homes. In 1H2014, the average price based on 12 transactions was $1,434 psf, according to CBRE Research. It would be even higher, at $1,442 psf, if the three smaller bungalow transactions on Oriole Crescent, Chestnut Avenue and Margoliouth Road were excluded, based on Savills’ calculations (see table and charts).

“Overall market sentiment has been subdued as a result of the cumulative effect from the ABSD [additional buyer’s stamp duty] and TDSR [total debt servicing ratio],” Karamjit Singh, JLL’s head of investments and residential. “Mismatched expectations between buyers and sellers, the low motivation to buy or offload, have all resulted in softer market activities in the recent past.”

However, those who were hoping that the government would roll back some of the property cooling measures will be disappointed, as the Ministry of National Development was quoted in The Straits Times as saying that “it’s still too early” to do so. The reason is that, even though the number of housing transactions have dropped, prices have remained relatively stable.

William Wong, managing director of RealStar Premier, reckons measures could be tweaked next year. “Overall housing transactions have dropped almost 70% so far,” he says. While there are “genuine Singaporean investors” who really want to buy a second property, they are deterred by the ABSD. “The TDSR has already proven to be effective in ensuring prudence in investment,” he adds.

Languishing sales

Savills’ Eyo forecasts 2014 will see 15 GCB deals by the close of the year, while CBRE’s Wong and JLL’s Singh are both predicting sales of 20 to 25. The GCB market is now dominated by end-users. “Buyers in this segment of the market are very discerning,” says Eyo. “Beyond price and location, they will also look at who the architect is, the design, layout, bedroom sizes, shape of the land, whether the terrain is upslope or downslope, and other such details before they even consider making an offer.”

It is not uncommon these days for sellers to put a GCB on the market for two years before finding a buyer. For instance, a five-bedroom bungalow on Belmont Road that has a built-up area of 11,000 sq ft and sits on a land area of close to 26,500 sq ft was put on the market with an indicative price of $50 million two years ago. The asking price was probably pegged to two GCBs on Chatsworth Road that were sold at $1,985 psf and $2,107 psf earlier that year, says Eyo. The asking price was revised to $39.68 million ($1,500 psf) last year, and has been further reduced to $35 million ($1,320 psf) recently.

Meanwhile, another GCB on Jervois Road was put up for sale in 2011 with an indicative price of $25 million to $27 million. The seven-year-old, five-bedroom house, with a built-up area of 12,000 sq ft and sitting on a land area of 15,073 sq ft is now on the market for $19.8 million ($1,313 psf).

There are more instances of sellers quietly lowering their asking prices, but they make up fewer than 5% of all sellers, says K H Tan, managing director of Newsman Realty. “By and large, most of the GCB owners have strong holding power.”

CBRE’s Wong agrees, and believes chances of a fire sale are “remote”. He warns, however, that the price chasm between sellers and buyers in this challenging environment will continue to widen. Currently, the gap is about 20%.

The moribund sales in the second quarter are likely to continue into the third quarter, says Newsman’s Tan. There could be a slight pickup in buying activity in the fourth quarter coming from “new Singapore citizens”. He also sees those who had been actively investing overseas, especially in London, Malaysia and the US, returning to the Singapore market over the next six months. RealStar’s Wong agrees. “Traditionally, transactions in the last two quarters of the year tend to be higher than those in the first two quarters,” he observes.

In the meantime, Frasers Centrepoint’s Cheang remains confident that the GCBs in Holland Park will find buyers even in today’s subdued market. “There is a finite number of GCB lots in Singapore and, with a growing economy, demand is healthy,” he says.


The Edge Publishing Pte Ltd

Document EDGESI0020140708ea770000b

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Backers get into student beds
Samantha Hutchinson
451 words
17 Jul 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
International property investor TIAA Henderson Real Estate is the latest institutional grade investor plotting an entry into Australia's growing market for student accommodation.

The fund has $326 million to invest in Australian property and sources say it has asked Savills Australia for advice on getting into Australia's market for student beds.

The agent would not comment on its relationship with the group, except to say there was a growing demand for the asset class.

Australia's growing student accommodation sector has attracted interest from international groups including Singaporean sovereign wealth fund GIC and other, offshore student bed ­providers and developers, including Urbanest and Frasers Property.

But transactions in the sector have ground to a halt in past six months, as residential developers muscle student bed providers out of contention for sites close to universities in the inner-city.

Institutional investors, including LaSalle Investment Management, are scouring sites in Sydney, Melbourne and Brisbane. GIC is seeking more sites for Iglu which provides student beds. Both groups declined to comment.

"There's recognition that right across the sector there's a structural under-provision of beds," JLL director Conal Newland told The Australian Financial Review.

Student accommodation providers around the country, including Iglu, Campus Living Communities, and UniLodge, trade at occupancy rates of 97 per cent or more, and enjoy year-on-year rental growth.

A strong outlook for growth in student numbers, particularly international students from Asia, also boded well for the sector, Mr Newland said.

The proportion of students studying outside their home country is likely to increase by more than seven million by 2020, say OECD and UNESCO statistics.

Agents downplay the likelihood of an institutional tie-up in the vein of GIC and Macquarie Capital and Iglu, but site sales are predicted with at least two sites coming onto the market in Sydney in the coming weeks.

"I think we're more on track to see acquisitions rather than any sort of deal," Mr Newland said.

TIAA Henderson is a joint venture between the US pension fund, Teachers Insurance and Annuity Association- College Retirement Equities Fund, and European investment manager, Henderson Global Investors, formed in April. TIAFF-CREF entered Australia in late 2013 buying a Sydney office block at 20 Hunter Street for more than $96 million. In February, the group struck an alliance with Mirvac, guaranteeing an exclusive first right to purchase a half-stake in office assets sourced or developed by Mirvac in the next three years.

The group exercised the right in April by snapping up a 50 per cent stake in one of Melbourne's prime ­commercial properties at 699 Bourke Street for $73 million.


Fairfax Media Management Pty Limited

Document AFNR000020140716ea7h0001o

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http://www.theage.com.au/business/proper...zuh4x.html

Infrastructure boosts demand for industrial property
Date
July 18, 2014 - 11:45PM

Carolyn Cummins
Commercial Property Editor

The growth in infrastructure by the NSW government will provide long term income for the industrial property trusts, including Goodman, DEXUS, GPT and the new owners of Australand, according to property analysts.

It is expected that if Frasers Centrepoint is successful in its offer for Australand, there maybe some sales of industrial assets, which would be in high demand. Stockland’s chief executive, Mark Steinert, has ear-marked industrial business parks as a growth area for the business and Australand’s assets was a key trigger for his original offer.

DEXUS has also pinpointed the industrial market for expansion and would also be a buyer of any assets that Australand may sell.

According to Savills, about 580,600 square metres of industrial property was reported leased in Sydney in the 12 months to June 2014, with about $1.57 billion worth of transactions recorded completed in the same 12 months.

Simon Hemphill, divisional director of research NSW at Savills said indicative yields for prime and secondary industrial stock have broadly tightened in the year to June 2014.

‘‘The western precinct has experienced a flurry of development in the last 12 months, which has been predominantly driven by precommitment activity. This is expected to continue with about 300,000 sqm of industrial space in the pipeline due to complete by the end of 2015 on sites owned by Goodman Group, Australand, DEXUS, GPT, Fitzpatrick Investments and Fife Capital,’’ Mr Hemphill said.

‘‘The scope of works include the widening of the M4 east of Parramatta, a duplication of the M5 East and new sections of motorway to provide a connection between the two key corridors. Transport for NSW is responsible for delivering transport infrastructure projects that meet time, cost and quality objectives, and constantly conducts feasibility studies into seeking ways to improve the NSW rail networks.’’

He said Transport for NSW cite the need for a number of infrastructure projects including the Northern Sydney Rail Freight Corridor, which will improve freight times from Sydney to Newcastle, north of Sydney. In order to support the growing demand for imports and exports, NSW Ports is developing the Intermodal Logistics Centre (ILC) development at Enfield.

Leighton Contractors have been awarded the contract to undertake the main construction phase of the ILC.

In another deal, a site has been sold to Goodman by Orica for $33.1 million at Banksmeadow. The only larger site transacted in recent years in the wider South Sydney area was a 109,560 sqm industrial development site at Lot 4, 260 Captain Cook Drive, Kurnell in December 2012 for $6.11 million, sold by Perpetual Nominees to a private developer.

JLL’s NSW managing director and national head of industrial, Michael Fenton managed the sale with JLL’s head of metropolitan sales and investments NSW, Sam Brewer.

The Orica property, comprising 9.3 hectares, is located at 2-28 McPherson Street, Banksmeadow strategically situated opposite Port Botany. The property includes 6.3 hectares of developable land area, with the balance being dedicated to a landscaped open area.

[greengiraffe]

I m vested in FCL and that has been clear to many buddies.

I think based on the following, the price that FCL is paying for ALZ may not as steep as the market is fearing. Note that Stockland's failed share swap offer was valued at slightly above A$4.30.

in addition, Towkay Chaoren's plans post the full buyout of ALZ has not yet been spelt out apart from maintaining the present ALZ management team intact - ie value extraction and how he eventually execute it may determine if A$4.48 is a good price to pay for a rarely available integrated Australian focused property platform that is sizable with proven track record.

I have just refreshed on the announcements released by ALZ in the runup to the Stockland failed bid and FCL's eventual accepted offer:

http://phx.corporate-ir.net/External.Fil...lwZT0z&t=1

Australand’s Managing Director, Bob Johnston, said, “Following the takeover proposal from Stockland in April, we indicated at the Group’s AGM that our regular independent valuation process would be accelerated and would encompass the Group’s entire Investment Property portfolio. This has resulted in an increase in the portfolio’s valuation of approximately 3% since December 2013.”

Property Portfolio refers to:

http://phx.corporate-ir.net/External.Fil...lwZT0z&t=1

http://phx.corporate-ir.net/External.Fil...lwZT0z&t=1

There is no mentioned of a revaluation of ALZ's residential landbank and developments though earnings guidance have been upgraded:

Upgraded earnings guidance
Australand Property Group has completed a further review of its operating earnings outlook for the full year 2014 and advises that earnings per security for 2014 are now expected to increase by 20-25% on 2013. This compares favourably to the Group’s prior guidance of 17-20% growth announced on 25 March 2014. In addition, assuming the current strength in the residential market is maintained, the Group expects to deliver 10-15% per annum growth in earnings per security to the end of calendar year 2016.
Australand’s Managing Director, Bob Johnston, said, “We have continued to see strong momentum in our Residential division which underpins the increase to our full year earnings guidance. The medium term outlook for the Group remains strong.”
The Group continues to expect to distribute 25.5 cents per security for the full year with the first half distribution expected to be 12.75 cents per security.

http://www.australand.com.au/New-Homes/P...rty-Search

http://www.australand.com.au/New-Land-Es...and-Search

http://www.australand.com.au/New-Apartme...ent-Search

How much revaluation surplus can be attributable to ALZ's residential landbank?

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ALZ interim results out this morning:

http://phx.corporate-ir.net/External.Fil...lwZT0z&t=1

http://phx.corporate-ir.net/External.Fil...lwZT0z&t=1

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Banking sources said Stockland was likely to seek a carve out of some of Australand’s assets in return for selling its 19.9 per cent stake into the Frasers deal.

Residential boosts Australand half
THE AUSTRALIAN JULY 22, 2014 12:00AM

Sarah Danckert

Property Reporter
Melbourne

TAKEOVER target Australand has posted a 49 per cent jump in net profit to $131.5 million for the first half of 2014, buoyed by increased valuations of its investment property portfolio and an uplift in the residential market.

The company’s result comes ahead of the exclusivity period for its suitor, Singapore’s Frasers Centrepoint, lapsing today.

It also comes as fund managers and banking sources remain divided as to whether rival bidder Stockland will return with a higher offer this week.

Frasers lobbed its $4.48-per-share cash offer for Australand, which values the company at $2.6 billion, last month — trumping a rival $2.5bn bid for the company by local group Stockland.

Australand’s strong first-half showing maintained full-year guidance of earnings per share growth of between 20 per cent and 25 per cent on 2013.  

For the first half, Australand recorded a 30 per cent rise in operating profit to $80.8m, earnings before interest and tax rising 7.6 per cent to $128.13m.

Dividend for the period was 12.75c, up on the 10.5c in the previous corresponding half.

The company’s investment property EBIT rose to $97.8m from $96.2m in the first half of 2013, while its commercial and industrial development business recorded a fall in EBIT to $8.2m, from $9.9m a year earlier.

Residential business recorded EBIT of $30.7m for the period, up from $22.3m a year earlier, due to improved sales in Victorian apartment projects and housing estates in NSW and Victoria.

“Residential earnings are up, strongly reflecting favourable market conditions and the performance of key projects during the half. Contracts on hand are in a very healthy position, securing a significant amount of earnings for delivery in the second half,” Australand managing director Bob Johnston said.

The company’s bottom line was also boosted by a $75.7m uplift in the value of its $2bn-plus investment portfolio.

JPMorgan said the result was mostly in line with its forecasts.

“But the more meaningful difference came from the residential numbers, which were circa 15 per cent below ours, despite being 38 per cent higher year on year. It is Important to take this lesson into the second-half results season, in my view,” JPMorgan analyst Adam Fairfax said.

Fund managers that hold shares in Australand are now thin on the ground, as many have exited the company as hedge funds have poured onto Australand’s registry.

Banking sources said Stockland was likely to seek a carve out of some of Australand’s assets in return for selling its 19.9 per cent stake into the Frasers deal.

[greengiraffe]

ALZ takeover circular is out:

http://phx.corporate-ir.net/External.Fil...lwZT0z&t=1

On Page 57, KPMG's independent expert report included a revaluation of ALZ's development division.

The valuation of ALZ ranges from A$4.22 - 4.54, ie at the top end of the range FCL may not have paid a huge premium.

Further details of the computation are revealed on pg 107 - appears to be a simplistic multiple of 1 line EBIT number... doesn't appear to have conducted a detailed revaluation of landbank.

Perhaps, given Australia's vast land mass and the diverse geographical locations, such valuation methodology is acceptable for independent valuation purposes.

Herein lies the hidden values of the landbank that Towkay Chaoren and his team could be eyeing.

Vested
GG

[greengiraffe]

Higher Australand bid touted
THE AUSTRALIAN JULY 23, 2014 12:00AM

Sarah Danckert

Property Reporter
Melbourne
TAKEOVER target Australand has released its target statement, urging investors to accept a $2.6 billion offer from Singapore’s Frasers Centrepoint, although some say the offer could soon be trumped.

Acceptances for Frasers $4.48-a-share cash offer remain stubbornly low, leading to speculation rival bidder Stockland would raise its scrip-and-cash based offer, which had valued its rival at $2.5bn.

Most fund managers have sold their stakes in Australand — leaving Stockland with 19.9 per cent and mostly hedge funds on the company’s register.

Frasers offer opened on July 7 and closes on August 7, although the group has reserved its right to extend the offer period.

CLSA says Stockland’s mostly scrip offer is equivalent to $4.54 a share. “In our view, Stockland will come in for at least one more higher bid. And we believe this is a non-consensus view, after two weeks of investor meetings in Asia and the US,” CLSA analyst John Kim said in a note to clients seen by The Australian.

CLSA says Stockland could alter its bid to become 70 per cent cash and 30 per cent scrip, valuing its target at $4.65.

“It would be highly earnings and adjusted fund from operations accretive,” Mr Kim said. “Stockland purchased its original 19.9 per cent stake at $3.78, so its average cost would be lower than Frasers’ on an equivalent bid.”

Fund managers holding stakes in Stockland say the company could risk paying too much for its rival, which has an investment portfolio of office and industrial buildings, a commercial property development arm and a residential business with key NSW holdings.

“The accretion is there, in our view. The ‘discipline’ can be addressed if Stockland were to line up a capital partner(s) to take on Australand’s office,” Mr Kim added.

It is understood Stockland has lined up a partner for Australand’s office portfolio but its management — stacked with former investment bankers — is having trouble getting board approval for a higher bid.

At the same time, JPMorgan says the chance of Stockland returning with a higher bid is small. JPMorgan analyst Richard Jones said a higher offer from Stockland would need to be more than $4.60 to be considered and such a bid would put Stockland over its desired gearing level of 30 per cent. Australand closed up 1c to $4.50.

On Monday Australand posted a 49 per cent jump in net profits for the first half of 2014

[Madmoney]

Why should Stockland bother to come in with a higher offer ?

Just sit tight for Frasers Centrepoint to improve their bid. One (wrong) move lead to another ?