Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
In November, MCL Land kicked off the 552-unit Nava Grove in Pine Grove, District 21. A conjoint development with Sinarmas Land, the 99-year leasehold condominium attained 65% sales on launch weekend at an average price of $2,448 psf.
An upcoming venture, anticipated to be opened next year, is a brand-new 500-unit exclusive housing project at Clementi Avenue 1. MCL Land and joint project companion CSC Land Team defeated 5 others to win the site with a proposal of $633.45 million ($ 1,250 psf per plot ratio) last November.
In October, Hongkong Land disclosed in a strategic assessment that the group may no longer focus on buying the build-to-sell section across Asia. Rather, the group is anticipated to begin reusing funds from the segment into new incorporated retail property options as it completes all existing projects.
JP Morgan has kept its “neutral” rating on Hongkong Land, with a target cost of US$ 4.10. “We believe HKL’s existing values are fair, and thus we keep Neutral, yet we could transform much more favorable if Hongkong Land shows its ability to carry out value-accretive offers.”
Last week, Bloomberg announced that Asian real estate group Hongkong Land Holdings is thinking about selling its 100%- acquired Singapore real property development subsidiary, MCL Land. The action, if true, would be in line with the former’s strategy to discontinue obtaining development properties, claims JP Morgan in an equity research report.
Regardless, the research study house highlights that selling MCL Land above book price may be “a bit complicated”, provided present market issues and that it “would definitely not be shocked if the company winds up disposing of MCL Land at a little below book value” to meet its capital recycling targets. Alternatively, the group might take its moment selling its development real estate ventures and depleting its land bank.
Sources mentioned by Bloomberg said that Hongkong Land is wanting to unload MCL Land at a costs to its book value of $1.1 billion. Although this is lower than Hongkong Land’s net investment for Singapore project properties of US$ 1.362 billion ($ 1.83 billion) showed since end-June, it presents approximately 8% of the team’s total funding reprocessing target of US$ 10 billion and around 14% of its US$ 6 billion capital recycling target for development properties, according to JP Morgan.
