Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
JP Morgan has preserved its “neutral” ranking on Hongkong Land, with a target rate of US$ 4.10. “We assume HKL’s current values are reasonable, and thus we keep Neutral, however we could turn more favorable if Hongkong Land shows its capability to perform value-accretive deals.”
Regardless, the study house highlights that selling MCL Land over book value could be “a bit difficult”, provided existing market problems and that it “would most likely not be stunned if the firm ends up disposing of MCL Land at a little below account worth” to meet its capital recycling targets. Alternatively, the group may get its period offering its development real estate projects and diminishing its land bank.
In November, MCL Land kicked off the 552-unit Nava Grove in Pine Grove, District 21. A mutual development with Sinarmas Land, the 99-year leasehold condo achieved 65% sales on launch weekend at an average price of $2,448 psf.
Sources cited by Bloomberg said that Hongkong Land is wanting to divest MCL Land at a costs to its account worth 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) reported since end-June, it represents around 8% of the team’s total capital reprocessing target of US$ 10 billion and about 14% of its US$ 6 billion capital recycling target for property development properties, according to JP Morgan.
Recently, Bloomberg disclosed that Asian real estate group Hongkong Land Holdings is thinking about marketing its 100%- owned Singapore real estate development subsidiary, MCL Land. The action, if correct, would remain in line with the previous’s strategy to stop obtaining development properties, says JP Morgan in an equity research record.
An upcoming venture, anticipated to be debuted next year, is a new 500-unit exclusive residential project at Clementi Avenue 1. MCL Land and joint venture companion CSC Land Team beat 5 others to win the site with a bid of $633.45 million ($ 1,250 psf per plot ratio) last November.
In October, Hongkong Land disclosed in a calculated evaluation that the group will most likely no longer focus on investing in the build-to-sell section across Asia. Rather, the group is expected to begin reclaiming funds from the segment into new incorporated retail property prospects as it finalizes all continuing projects.