Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Last week, Bloomberg disclosed that Asian real estate group Hongkong Land Holdings is taking into consideration selling its 100%- managed Singapore property development subsidiary, MCL Land. The step, if real, would remain in line with the former’s plan to cease obtaining development properties, claims JP Morgan in an equity research report.
Regardless, the research study house highlights that selling MCL Land above account price could be “a little bit complicated”, given existing market conditions and that it “would not be stunned if the business winds up disposing of MCL Land at slightly below account worth” to meet its capital recycling targets. Alternatively, the group may take its time offering its development property ventures and depleting its land bank.
Sources pointed out by Bloomberg stated that Hongkong Land is looking to unload MCL Land at a premium to its account value of $1.1 billion. Although this is less than Hongkong Land’s net financial investment for Singapore project real properties of US$ 1.362 billion ($ 1.83 billion) showed since end-June, it presents around 8% of the team’s complete funding recycling target of US$ 10 billion and about 14% of its US$ 6 billion capital reusing target for development real properties, according to JP Morgan.
An upcoming plan, anticipated to be launched next year, is a brand-new 500-unit exclusive non commercial development at Clementi Avenue 1. MCL Land and joint project partner CSC Land Group defeated five more to win the site with a proposal of $633.45 million ($ 1,250 psf per plot ratio) last November.
In November, MCL Land released the 552-unit Nava Grove in Pine Grove, District 21. A joint project with Sinarmas Land, the 99-year leasehold condo accomplished 65% sales on launch weekend at an average price of $2,448 psf.
In October, Hongkong Land released in a calculated assessment that the group will most likely no longer concentrate on buying the build-to-sell section across Asia. Instead, the team is anticipated to start recycling funds from the segment into new integrated retail property opportunities as it completes all occurring projects.
JP Morgan has maintained its “neutral” ranking on Hongkong Land, with a target cost of US$ 4.10. “We assume HKL’s existing evaluations are fair, and therefore we stay Neutral, yet we might convert more positive if Hongkong Land indicates its capability to carry out value-accretive agreements.”
