Keppel Land - signs of increasing leasing activity

Mgmt is positive on the housing market and plans to launch Madison (56 units) and The Promont (15 units) soon. Comparable prices are ~ S $1,700psf and S$2,000psf respectively. The 168 units in Caribbean @ Keppel Bay currently held for investment could also be released for sale this year. Recent resale transactions at $1,100-1,200psf implies gross rental yield of ~5%. Mgmt is likely to time the launch of Marina Bay Suites and the later phase of Reflections closer to the opening date of the 2 IRs.

There are signs of increasing leasing activity in the S'pore office market . Mgmt comments that no tenants have given up pre-committed space thus far and believes that the worst of rental declines could be over and the market could be approaching the trough. Current carrying cost of BFC & OFC is conservative due to low land cost and could see a revaluation surplus at year end.

In offshore markets, trends continue to be positive. In China, sales have picked up strongly with ~1,020 units sold in 2Q (vs 420 in 1Q). While prices were initially trimmed ~5% on 1Q, they have been raised again to pre-2009 levels and mgmt believes they are on track to sell around 2,000 units this year. In Vietnam, it has sold 50 units in Estella with prices maintained at US $2,000-2,200psm. Mgmt plans to accelerate launches in China, Vietnam and other markets (2,194 planned units).

Balance sheet has been significantly strengthened post rights-issue with gearing at a conservative 0.23x. Mgmt is comfortable gearing up to 0.5x which gives them around S$1bn of acquisition firepower. Mgmt is actively looking to replenish its landbank, focusing mainly in S'pore and in China, especially in cities where it has existing operations.

Sponsored Links

Related Posts by Categories