Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
An upcoming venture, anticipated to be launched next year, is a new 500-unit exclusive housing development at Clementi Avenue 1. MCL Land and joint venture partner CSC Land Group defeated five others to win the spot with a bid of $633.45 million ($ 1,250 psf per story ratio) last November.
JP Morgan has preserved its “neutral” ranking on Hongkong Land, with a target price of US$ 4.10. “We think HKL’s current assessments are decent, and thus we stay Neutral, however we might convert more favorable if Hongkong Land shows its capability to carry out value-accretive agreements.”
In any case, the research house highlights that selling MCL Land over book worth might be “a little bit challenging”, provided existing market conditions and that it “would definitely not be stunned if the firm winds up dealing with MCL Land at slightly listed below book value” to meet its capital recycling targets. Alternatively, the group may take its moment marketing its development real estate projects and diminishing its land bank.
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Last week, Bloomberg reported that Asian real estate group Hongkong Land Holdings is thinking about marketing its 100%- owned Singapore real property development subsidiary, MCL Land. The move, if true, would be in channel with the previous’s method to cease acquiring development properties, states JP Morgan in an equity research study information.
In October, Hongkong Land disclosed in a calculated assessment that the group may no longer focus on purchasing the build-to-sell segment across Asia. Rather, the group is assumed to begin recycling funds from the segment into brand-new integrated business estate options as it completes all occurring projects.
In November, MCL Land introduced the 552-unit Nava Grove in Pine Grove, District 21. A joint project with Sinarmas Land, the 99-year leasehold condominium accomplished 65% sales on launch weekend at an average price of $2,448 psf.
Sources cited by Bloomberg said that Hongkong Land is aiming to divest MCL Land at a fee 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) documented since end-June, it presents around 8% of the team’s complete funding reprocessing target of US$ 10 billion and about 14% of its US$ 6 billion capital recycling target for innovation real properties, according to JP Morgan.
