Homepage
PR Newswire
29-10-2014, 06:47 PM
Singapore Landlords Build World Empires With Bond Sales
By Tanya Angerer and Christopher Langner Oct 28, 2014
Singapore landlords are tapping the fourth-lowest local borrowing costs in Asia to fund record overseas purchases of hotels, office blocks and luxury apartments as property prices fall at home.
CapitaLand Ltd.’s (CAPL) Ascott Residence Trust and Malaysian tycoon Quek Leng Chan’s GuocoLand Ltd. were among real estate companies that sold the equivalent of $5.04 billion of Singapore dollar-denominated notes in 2014, the most for the same period in any year, data compiled by Bloomberg show. The island’s 10-year government bond yield has tumbled 30 basis points since Dec. 31 to 2.24 percent, the lowest rate in Asia after Japan, Taiwan and Hong Kong.
Singapore developers have spent more than $9.8 billion on foreign purchases this year, almost double the same period of 2013, snapping up real estate from malls in Beijing to luxury apartments in Sydney and London. The island’s house prices fell 0.7 percent in the third quarter and shop values dropped 0.2 percent, the Urban Redevelopment Authority said last week.
Property companies’ “upside potential is limited in Singapore amidst an increasingly challenging operating environment,” said Yvonne Voon, an equity analyst at Credit Suisse in Singapore. “The lower cost of funds in Singapore has allowed local corporates to bid more competitively for overseas acquisitions, particularly in higher-yielding markets like Australia and the U.K.”
Bond Financing
Ascott REIT sold $150 million of perpetual notes to yield 5 percent to fund a 8 billion yen ($74 million) hotel purchase in Tokyo and three serviced apartments in Sydney for A$83 million ($73 million), according to a Moody’s Investors Service report Oct. 24.
Singapore-based Frasers Centrepoint Ltd., controlled by Charoen Sirivadhanabhakdi, Thailand’s richest man, issued S$800 million ($627 million) of bonds this year in Singapore. The developer in September acquired Sydney-based Australand Property Group in a deal that valued the company at A$2.6 billion. Frasers derives more than half its revenues from properties outside Singapore, according to its first quarter report.
Borrowing Costs
“Singapore banks and investors are quite willing to lend at good levels to these companies because of the familiarity,” said Jacintha Poh, an analyst and assistant vice-president at Moody’s in Singapore. “In some of the markets where they are investing not only are rates higher, selling bonds is also much more difficult.”
Average yields on Singapore-dollar bonds sold by companies and the government are at 2.35 percent, close to the one-year low of 2.33 percent on Oct. 16, according to HSBC Holdings Plc indexes.
Chip Eng Seng Corp. sold S$150 million of three-year notes at 4.25 percent on Oct. 9. The company is completing 581 apartments in Tower Melbourne on Queen Street in Melbourne, Australia.
“As the property market continues to soften due to global economic uncertainty, pockets of opportunity may emerge within the property and construction arenas,” Lim Tiam Seng, chief executive of Chip Eng Seng said in a release on Oct. 10. “In order to scale up our business at such opportune times, we would require a ready amount of funds in hand.”
Going Overseas
Singapore developers buying land offshore have been mindful of the foreign exchange risk they are getting exposed to, so they have been hedging their revenues and trying to fund locally, Poh from Moody’s said.
The Singapore dollar has fallen 0.9 percent against the dollar this year, behind a 0.8 percent advance by the Thai baht and 0.1 percent gain by the Indonesian rupiah. Singapore’s economy expanded an annualized 1.2 percent in the third quarter after contracting a revised 0.1 percent in the previous period.
Between 2009 and mid-2013, the Monetary Authority of Singapore implemented eight rounds of property cooling measures to address its concerns the low interest rate environment would lead to a property price bubble, Moody’s said in an Oct. 6 report.
“Most developers in Singapore know it’s not easy here with all the property curbs,” Adeline Tan, a Singapore-based analyst at UOB Asset Management Ltd., said in an interview. “So many developers are being squeezed in Singapore. And in a bid to diversify, they head overseas.”
http://www.bloomberg.com/news/2014-10-27...sales.html
By Tanya Angerer and Christopher Langner Oct 28, 2014
Singapore landlords are tapping the fourth-lowest local borrowing costs in Asia to fund record overseas purchases of hotels, office blocks and luxury apartments as property prices fall at home.
CapitaLand Ltd.’s (CAPL) Ascott Residence Trust and Malaysian tycoon Quek Leng Chan’s GuocoLand Ltd. were among real estate companies that sold the equivalent of $5.04 billion of Singapore dollar-denominated notes in 2014, the most for the same period in any year, data compiled by Bloomberg show. The island’s 10-year government bond yield has tumbled 30 basis points since Dec. 31 to 2.24 percent, the lowest rate in Asia after Japan, Taiwan and Hong Kong.
Singapore developers have spent more than $9.8 billion on foreign purchases this year, almost double the same period of 2013, snapping up real estate from malls in Beijing to luxury apartments in Sydney and London. The island’s house prices fell 0.7 percent in the third quarter and shop values dropped 0.2 percent, the Urban Redevelopment Authority said last week.
Property companies’ “upside potential is limited in Singapore amidst an increasingly challenging operating environment,” said Yvonne Voon, an equity analyst at Credit Suisse in Singapore. “The lower cost of funds in Singapore has allowed local corporates to bid more competitively for overseas acquisitions, particularly in higher-yielding markets like Australia and the U.K.”
Bond Financing
Ascott REIT sold $150 million of perpetual notes to yield 5 percent to fund a 8 billion yen ($74 million) hotel purchase in Tokyo and three serviced apartments in Sydney for A$83 million ($73 million), according to a Moody’s Investors Service report Oct. 24.
Singapore-based Frasers Centrepoint Ltd., controlled by Charoen Sirivadhanabhakdi, Thailand’s richest man, issued S$800 million ($627 million) of bonds this year in Singapore. The developer in September acquired Sydney-based Australand Property Group in a deal that valued the company at A$2.6 billion. Frasers derives more than half its revenues from properties outside Singapore, according to its first quarter report.
Borrowing Costs
“Singapore banks and investors are quite willing to lend at good levels to these companies because of the familiarity,” said Jacintha Poh, an analyst and assistant vice-president at Moody’s in Singapore. “In some of the markets where they are investing not only are rates higher, selling bonds is also much more difficult.”
Average yields on Singapore-dollar bonds sold by companies and the government are at 2.35 percent, close to the one-year low of 2.33 percent on Oct. 16, according to HSBC Holdings Plc indexes.
Chip Eng Seng Corp. sold S$150 million of three-year notes at 4.25 percent on Oct. 9. The company is completing 581 apartments in Tower Melbourne on Queen Street in Melbourne, Australia.
“As the property market continues to soften due to global economic uncertainty, pockets of opportunity may emerge within the property and construction arenas,” Lim Tiam Seng, chief executive of Chip Eng Seng said in a release on Oct. 10. “In order to scale up our business at such opportune times, we would require a ready amount of funds in hand.”
Going Overseas
Singapore developers buying land offshore have been mindful of the foreign exchange risk they are getting exposed to, so they have been hedging their revenues and trying to fund locally, Poh from Moody’s said.
The Singapore dollar has fallen 0.9 percent against the dollar this year, behind a 0.8 percent advance by the Thai baht and 0.1 percent gain by the Indonesian rupiah. Singapore’s economy expanded an annualized 1.2 percent in the third quarter after contracting a revised 0.1 percent in the previous period.
Between 2009 and mid-2013, the Monetary Authority of Singapore implemented eight rounds of property cooling measures to address its concerns the low interest rate environment would lead to a property price bubble, Moody’s said in an Oct. 6 report.
“Most developers in Singapore know it’s not easy here with all the property curbs,” Adeline Tan, a Singapore-based analyst at UOB Asset Management Ltd., said in an interview. “So many developers are being squeezed in Singapore. And in a bid to diversify, they head overseas.”
http://www.bloomberg.com/news/2014-10-27...sales.html
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.