August 14, 2008
BHP Billiton to lease office space at MBFC
Aussie firm will take up 150,000 sq ft at Marina Bay Financial
Centre's Tower 2
By KALPANA RASHIWALA
(SINGAPORE) Mining and resources giant BHP Billiton of Australia is
leasing about 150,000 sq ft at Marina Bay Financial Centre, BT
understands.
The space will be in MBFC's 50-storey Tower 2, under the mega
project's first phase, which is slated for completion in second
quarter 2010.
BHP Billiton is one of the world's biggest producers of primary
aluminium, copper, lead, zinc, nickel, iron ore and metallurgical
coal. It is also a major producer and marketer of export thermal coal
and has a significant oil and gas business with production operations
in Australia, the UK, Gulf of Mexico, Algeria and Pakistan, according
to information on the group's website.
Singapore is already one of BHP Billiton's three centralised
marketing hubs (the other two are in The Hague in The Netherlands and
Antwerp in Belgium) focusing on the Asian energy market, base metals,
stainless steel materials and carbon steel-making raw materials. The
centre in The Hague focuses on aluminium, petroleum and the European
energy coal market, while the Antwerp office serves the group's
diamond customers around the world.
BHP Billiton's Singapore operations are currently located at Capital
Tower and Springleaf Tower, both near Tanjong Pagar MRT Station.
Market watchers expect the group to give up its existing premises
when it moves to MBFC. The 150,000 sq ft or so it will be leasing at
MBFC is said to be more than twice the group's existing space in
Singapore, suggesting expansion plans in Singapore.
BHP Billiton, which is listed on the Australian and London bourses,
posted profit after taxation of US$13.5 billion for the year ended
June 30, 2007, up 28.2 per cent from the preceding year.
Some property market watchers were pretty impressed with news of BHP
Billiton's leasing deal at MBFC given the slower office leasing
market.
MBFC is iconic of Singapore's ambitions to be a major financial
centre. Including the latest leasing deal with BHP Billiton, MBFC's
2.9 million sq ft total net lettable area of offices is about 60 per
cent pre-committed.
Monthly rents in the development are in the region of $16 per sq ft,
said Kevin Wong, chief executive of Keppel Land, at a results
briefing last month. KepLand is developing MBFC jointly with Hongkong
Land and Li Ka-shing's Cheung Kong Holdings/Hutchison Whampoa.
However, BHP Billiton will probably be paying less than the $16 psf
rental being quoted, given the size of space it is leasing, market
watchers reckon.
Earlier tenants clinched at MBFC include Standard Chartered, which is
taking 508,298 sq ft at the 33-storey Tower 1, also in the project's
first phase. Barclays and American Express International have signed
up for Tower 2, also in Phase 1 and where BHP Billiton will be housed.
The second phase of the project, expected to be completed in 2012,
will include Tower 3, with about 1.3 million sq ft of offices, of
which about 700,000 sq ft have been leased by DBS.
Thursday, August 14, 2008
Blackstone eyes four Shanghai buildings
August 14, 2008
Blackstone eyes four Shanghai buildings
Package of four commercial buildings may go for US$1b
(SHANGHAI) Global buyout funds and property investors including
Blackstone Group are vying to buy up to four commercial buildings in
Shanghai for as much as US$1 billion, three sources with direct
knowledge of the matter said.
Super Ocean Group, whose chairman is high-profile businessman Ye
Lipei, has put a package of four buildings on sale as it seeks cash
to support its growth in other sectors, the sources told Reuters
yesterday.
The four buildings to be sold by Super Ocean include the Bank of
Shanghai Tower in the Lujiazui area of Shanghai's Pudong financial
district; and Southern Securities Mansion, located on Nanjing Road,
one of China's busiest commercial streets, the sources said.
Super Ocean aims to sell the four buildings together but potential
bidders have the option to purchase three of the four, said the
sources, who did not want to be identified because the deal was not
finalised. They put the price tag for the deal at five billion yuan
(S$1 billion) to seven billion yuan.
Representatives for US-based Blackstone could not immediately be
reached for comment. Super Ocean declined to comment.
Two of the three sources said that no deal had been reached yet and
talks between Blackstone and Super Ocean could collapse over
valuation of the buildings. The third source said that Super Ocean
aimed to complete the deal by the end of this month.
'It's not easy for Blackstone and Super Ocean to reach a deal as
Super Ocean is probably asking too much for these properties,' said
one of the sources.
'There are also concerns about the ownership structure, which is a
bit complicated for some of the four buildings,' he added.
The seven billion yuan price tag for the four buildings in the
proposed package deal was offered by Super Ocean late last year for
bidders' reference, though the final price could be lowered amid
growing concerns about global property investment.
In China, the government has clamped down on bank lending for
construction and imposed various measures including taxes and new
rules to try to stamp out property speculation.
Although aimed at the residential market, the steps are cooling
appetite for land and starving property firms of funding, and could
also put downward pressure commercial property prices.
Besides Blackstone, other potential buyers include Ireland's Treasury
Holdings and an Australian asset manager, which the sources declined
to name.
Negotiations between Treasury Holdings and Super Ocean stalled over
price issues several months ago, said one source.
But Blackstone and the Australian fund are still separately in talks
with the Chinese developer, the other sources said.
Treasury Holdings declined to comment. The Dublin-based firm
established and owns a 46 per cent stake of China Real Estate
Opportunities, listed on the AIM market at London Stock Exchange in
July 2007.
In June, Blackstone agreed to pay 1.1 billion yuan for a commercial
building in central Shanghai, making it the first foray into China's
property market.
Last week, Blackstone, in which China's sovereign wealth fund holds a
stake, opened a Beijing office and hired a former government official
to expand its acquisition business in China.
Earlier this year, Morgan Stanley planned to sell at least two
service apartment projects in Shanghai, which are wholly owned by its
real estate fund, for several billion yuan, people familiar with the
situation told Reuters. That deal has not been completed yet.
Blackstone eyes four Shanghai buildings
Package of four commercial buildings may go for US$1b
(SHANGHAI) Global buyout funds and property investors including
Blackstone Group are vying to buy up to four commercial buildings in
Shanghai for as much as US$1 billion, three sources with direct
knowledge of the matter said.
Super Ocean Group, whose chairman is high-profile businessman Ye
Lipei, has put a package of four buildings on sale as it seeks cash
to support its growth in other sectors, the sources told Reuters
yesterday.
The four buildings to be sold by Super Ocean include the Bank of
Shanghai Tower in the Lujiazui area of Shanghai's Pudong financial
district; and Southern Securities Mansion, located on Nanjing Road,
one of China's busiest commercial streets, the sources said.
Super Ocean aims to sell the four buildings together but potential
bidders have the option to purchase three of the four, said the
sources, who did not want to be identified because the deal was not
finalised. They put the price tag for the deal at five billion yuan
(S$1 billion) to seven billion yuan.
Representatives for US-based Blackstone could not immediately be
reached for comment. Super Ocean declined to comment.
Two of the three sources said that no deal had been reached yet and
talks between Blackstone and Super Ocean could collapse over
valuation of the buildings. The third source said that Super Ocean
aimed to complete the deal by the end of this month.
'It's not easy for Blackstone and Super Ocean to reach a deal as
Super Ocean is probably asking too much for these properties,' said
one of the sources.
'There are also concerns about the ownership structure, which is a
bit complicated for some of the four buildings,' he added.
The seven billion yuan price tag for the four buildings in the
proposed package deal was offered by Super Ocean late last year for
bidders' reference, though the final price could be lowered amid
growing concerns about global property investment.
In China, the government has clamped down on bank lending for
construction and imposed various measures including taxes and new
rules to try to stamp out property speculation.
Although aimed at the residential market, the steps are cooling
appetite for land and starving property firms of funding, and could
also put downward pressure commercial property prices.
Besides Blackstone, other potential buyers include Ireland's Treasury
Holdings and an Australian asset manager, which the sources declined
to name.
Negotiations between Treasury Holdings and Super Ocean stalled over
price issues several months ago, said one source.
But Blackstone and the Australian fund are still separately in talks
with the Chinese developer, the other sources said.
Treasury Holdings declined to comment. The Dublin-based firm
established and owns a 46 per cent stake of China Real Estate
Opportunities, listed on the AIM market at London Stock Exchange in
July 2007.
In June, Blackstone agreed to pay 1.1 billion yuan for a commercial
building in central Shanghai, making it the first foray into China's
property market.
Last week, Blackstone, in which China's sovereign wealth fund holds a
stake, opened a Beijing office and hired a former government official
to expand its acquisition business in China.
Earlier this year, Morgan Stanley planned to sell at least two
service apartment projects in Shanghai, which are wholly owned by its
real estate fund, for several billion yuan, people familiar with the
situation told Reuters. That deal has not been completed yet.
InterContinental Q2 profit beats estimates
August 14, 2008
InterContinental Q2 profit beats estimates
(LONDON) InterContinental Hotels Group Plc, owner of the Holiday Inn
lodging brand, reported second-quarter profit that beat analysts'
estimates as demand in Europe and the Middle East helped to counter a
slowdown in the US.
InterContinental rose 3 per cent in London trading after the Denham,
England-based company also said it reached a target on room openings
six months early. Net income of US$101 million beat the US$74 million
average of three analysts' estimates compiled by Bloomberg.
The company has added 60,490 net rooms since June 2005, beating its
three-year goal. Revenue per available room, a gauge known as revpar,
rose 4 per cent, driven by the Middle East and Europe, though the
hotelier said that the market has 'become more challenging' in the
US. Rival Marriott International Inc recently forecast lower profit,
while Starwood Hotels & Resorts Worldwide Inc has said its earnings
may miss estimates.
The 'more cautious short-term outlook tone is no worse than expected
and already well highlighted in advance by US companies,' Dresdner
Kleinwort analysts including Alistair Scobie said in a note. The
company's results provided 'overall reassurance', they wrote.
The shares added 22.5 pence to 773 pence in London trading. The stock
has dropped 13 per cent this year, better than the 17 per cent
decline by the nine-member Bloomberg Europe Lodging Index.
Second-quarter net income fell 21 per cent from the US$128 million
year-earlier figure on higher taxes and costs to rebrand the Holiday
Inn chain. A year ago, the company had one-time gains of US$9 million
from property sales. Revenue climbed 12 per cent to US$504 million.
Europe, Middle East revpar grew 9.9 per cent in Europe, the Middle
East and Africa during the second quarter. That included growth of 27
per cent in the Middle East, where its hotels include the 500-room
InterContinental Dubai Festival City.
Growth on that basis slowed to 1.6 per cent during the quarter from
2.3 per cent in the previous quarter in the Americas, as a slowing
economy and higher fuel prices have hurt demand for business and
consumer travel. There was a 'general softening' of revpar in the US
in the last four to five months, and the second half will be more
challenging, chief executive officer Andrew Cosslett said at a press
conference.
'Clearly, gas price rises don't help,' the CEO told journalists on a
conference call, adding that the slowdown was mainly on weekends,
with demand on weekdays 'pretty strong'. Declining occupancy levels
rather than lower room rates prompted the slowdown, he said.
Chinese revpar growth slowed to 0.5 per cent in the second quarter
from 3.2 per cent in the prior three months, mainly because of the
Sichuan earthquake and new visa restrictions.
InterContinental Q2 profit beats estimates
(LONDON) InterContinental Hotels Group Plc, owner of the Holiday Inn
lodging brand, reported second-quarter profit that beat analysts'
estimates as demand in Europe and the Middle East helped to counter a
slowdown in the US.
InterContinental rose 3 per cent in London trading after the Denham,
England-based company also said it reached a target on room openings
six months early. Net income of US$101 million beat the US$74 million
average of three analysts' estimates compiled by Bloomberg.
The company has added 60,490 net rooms since June 2005, beating its
three-year goal. Revenue per available room, a gauge known as revpar,
rose 4 per cent, driven by the Middle East and Europe, though the
hotelier said that the market has 'become more challenging' in the
US. Rival Marriott International Inc recently forecast lower profit,
while Starwood Hotels & Resorts Worldwide Inc has said its earnings
may miss estimates.
The 'more cautious short-term outlook tone is no worse than expected
and already well highlighted in advance by US companies,' Dresdner
Kleinwort analysts including Alistair Scobie said in a note. The
company's results provided 'overall reassurance', they wrote.
The shares added 22.5 pence to 773 pence in London trading. The stock
has dropped 13 per cent this year, better than the 17 per cent
decline by the nine-member Bloomberg Europe Lodging Index.
Second-quarter net income fell 21 per cent from the US$128 million
year-earlier figure on higher taxes and costs to rebrand the Holiday
Inn chain. A year ago, the company had one-time gains of US$9 million
from property sales. Revenue climbed 12 per cent to US$504 million.
Europe, Middle East revpar grew 9.9 per cent in Europe, the Middle
East and Africa during the second quarter. That included growth of 27
per cent in the Middle East, where its hotels include the 500-room
InterContinental Dubai Festival City.
Growth on that basis slowed to 1.6 per cent during the quarter from
2.3 per cent in the previous quarter in the Americas, as a slowing
economy and higher fuel prices have hurt demand for business and
consumer travel. There was a 'general softening' of revpar in the US
in the last four to five months, and the second half will be more
challenging, chief executive officer Andrew Cosslett said at a press
conference.
'Clearly, gas price rises don't help,' the CEO told journalists on a
conference call, adding that the slowdown was mainly on weekends,
with demand on weekdays 'pretty strong'. Declining occupancy levels
rather than lower room rates prompted the slowdown, he said.
Chinese revpar growth slowed to 0.5 per cent in the second quarter
from 3.2 per cent in the prior three months, mainly because of the
Sichuan earthquake and new visa restrictions.
Japan's Urban fails with debt of 255b yen
August 14, 2008
Japan's Urban fails with debt of 255b yen
Property firm cites difficulty in raising finance due to global
credit crunch
(TOKYO) Japanese property developer Urban Corp yesterday failed with
debt of 255.8 billion yen (S$3.3 billion), caught by the global
credit crunch in the biggest collapse by a listed Japanese company in
six years.
The apartment and shopping mall developer was the latest in a string
of Japanese real estate firms to fold as banks rein in lending to
small and medium-sized developers seen at risk as the the world's No
2 economy flirts with recession.
Japanese property shares have crunched lower this year as fear of
bankruptcy has spread, although the biggest developers with more
robust financing have used the tough times as an opportunity to go
bargain hunting.
Urban said in a statement that it had had growing difficulty in
raising finance since late last year due to the global credit crunch,
while a slowing economy saw it struggle to sell properties.
The company said it had sought a new partner to help it through the
cash crunch but alliance talks had failed.
Hiroshima-based Urban's shares have lost 95 per cent of their value
this year.
Investors have become increasingly fearful about the financial health
of the Japanese property sector since developer Suruga Corp fell into
bankruptcy in June after it failed to secure new financing from
banks.
Tight financing sent fellow developer Zephyr Co to seek court
protection last month with US$893 million in debts, prompting fears
the problems were spreading.
On top of the financing squeeze, developers have been caught by
soaring energy and raw material costs.
Urban's collapse, the largest by a listed Japanese company since
financial firm First Credit Corp fell in 2002 with 260.5 billion yen
in debt, will turn even more investors off the sector, analysts said.
'Banks seem to be taking a more strict attitude in their lending to
property firms. I would not be surprised to see more (collapses),'
said Fumiyuki Nakanishi, head of investment information department at
SMBC Friend Securities.
'Urban has been said to be a winner in the industry. If today's Wall
Street falls, it will be a double whammy to the Tokyo market
tomorrow. I think there will be an Urban shock in the market
tomorrow,' Mr Nakanishi said.
Urban's shares closed down 1.6 per cent at 62 yen ahead of the
announcement, giving it a PBR (price-book value ratio) of 0.13 and a
market capitalisation of about 14.3 billion yen.
Japan's Urban fails with debt of 255b yen
Property firm cites difficulty in raising finance due to global
credit crunch
(TOKYO) Japanese property developer Urban Corp yesterday failed with
debt of 255.8 billion yen (S$3.3 billion), caught by the global
credit crunch in the biggest collapse by a listed Japanese company in
six years.
The apartment and shopping mall developer was the latest in a string
of Japanese real estate firms to fold as banks rein in lending to
small and medium-sized developers seen at risk as the the world's No
2 economy flirts with recession.
Japanese property shares have crunched lower this year as fear of
bankruptcy has spread, although the biggest developers with more
robust financing have used the tough times as an opportunity to go
bargain hunting.
Urban said in a statement that it had had growing difficulty in
raising finance since late last year due to the global credit crunch,
while a slowing economy saw it struggle to sell properties.
The company said it had sought a new partner to help it through the
cash crunch but alliance talks had failed.
Hiroshima-based Urban's shares have lost 95 per cent of their value
this year.
Investors have become increasingly fearful about the financial health
of the Japanese property sector since developer Suruga Corp fell into
bankruptcy in June after it failed to secure new financing from
banks.
Tight financing sent fellow developer Zephyr Co to seek court
protection last month with US$893 million in debts, prompting fears
the problems were spreading.
On top of the financing squeeze, developers have been caught by
soaring energy and raw material costs.
Urban's collapse, the largest by a listed Japanese company since
financial firm First Credit Corp fell in 2002 with 260.5 billion yen
in debt, will turn even more investors off the sector, analysts said.
'Banks seem to be taking a more strict attitude in their lending to
property firms. I would not be surprised to see more (collapses),'
said Fumiyuki Nakanishi, head of investment information department at
SMBC Friend Securities.
'Urban has been said to be a winner in the industry. If today's Wall
Street falls, it will be a double whammy to the Tokyo market
tomorrow. I think there will be an Urban shock in the market
tomorrow,' Mr Nakanishi said.
Urban's shares closed down 1.6 per cent at 62 yen ahead of the
announcement, giving it a PBR (price-book value ratio) of 0.13 and a
market capitalisation of about 14.3 billion yen.
In slow times, rezoning appeals to developers
August 14, 2008
In slow times, rezoning appeals to developers
Time-consuming process, so builders shy away from it in a go-go market
(NEW YORK) Property developers generally earn their money by putting
up new buildings, but when the real estate market cools, making it
difficult to obtain financing, they often look for other ways to help
turn a profit.
Some developers - and their real estate lawyers - say that rezoning
property is one of them. Juan D Reyes III, a partner in the law firm
of Riker, Danzig, Scherer, Hyland & Peretti, said he had clients
seeking zoning changes with hopes of developing or selling the
property once the market improved. This particularly applies in areas
zoned for manufacturing.
'At the height of the market, a lot of developers just wanted to buy
it, develop it and get out,' Mr Reyes said.
Getting a change in zoning, however, can be time consuming.
'With zoning, even if you're doing a variance, it's a minimum of a
year,' he said.
'A rezoning can take 2-3 years. Now is a good time to be doing that.'
Because obtaining any kind of discretionary city approval can take
time and resources, developers may shy away from doing it during a go-
go market, said Mitch Korbey, a lawyer with the firm of Herrick
Feinstein.
'Their focus is often elsewhere, on other projects, for a variety of
reasons,' he said.
But when the real estate market comes to a virtual halt, as it has
currently, many developers cannot get development financing on
favourable terms.
An attractive option is to wait out the torpid market while trying to
add value to their property with a rezoning, Mr Korbey said.
Herrick Feinstein has several clients doing just that, specifically
on properties zoned for manufacturing.
'These are areas that are not zoned in a way that permits
residential, because you can't do residential development in a
manufacturing zone,' he said.
'Yet residential is nearby, and you've got a manufacturing zone
that's not so productive, that's not generating income, that's adding
very few jobs.'
Mr Korbey said he was currently handling a case involving several
blocks of contiguous vacant lots and warehouses that were once part
of a Rheingold brewery in the Bushwick neighbourhood of Brooklyn.
The developers, Forest Lots LLC, recently applied for a zoning change
to permit hundreds of residential units and retail development.
'We're at the beginning of a process that's going to require an
environmental review and public input,' Mr Korbey said.
The developers are gambling that they will get the rezoning as the
real estate market picks up, making their land ripe for development.
Though the developers want to build, another option would be to sell
the land - most likely at a premium, Mr Korbey said. 'Obviously,
there's tremendous upside to changing the rules to allow new low- and
medium-density housing.'
During a sluggish market, the city may be more willing to approve
zoning changes, said Stuart M Saft, a partner with the firm of Dewey
& LeBoeuf.
'The city's tax revenues fall during a recessionary market, and what
the city is looking for is increased taxes,' he said. 'If the zoning
change will improve the value of the property after the building is
constructed, the city will get an increase.'
In slow times, rezoning appeals to developers
Time-consuming process, so builders shy away from it in a go-go market
(NEW YORK) Property developers generally earn their money by putting
up new buildings, but when the real estate market cools, making it
difficult to obtain financing, they often look for other ways to help
turn a profit.
Some developers - and their real estate lawyers - say that rezoning
property is one of them. Juan D Reyes III, a partner in the law firm
of Riker, Danzig, Scherer, Hyland & Peretti, said he had clients
seeking zoning changes with hopes of developing or selling the
property once the market improved. This particularly applies in areas
zoned for manufacturing.
'At the height of the market, a lot of developers just wanted to buy
it, develop it and get out,' Mr Reyes said.
Getting a change in zoning, however, can be time consuming.
'With zoning, even if you're doing a variance, it's a minimum of a
year,' he said.
'A rezoning can take 2-3 years. Now is a good time to be doing that.'
Because obtaining any kind of discretionary city approval can take
time and resources, developers may shy away from doing it during a go-
go market, said Mitch Korbey, a lawyer with the firm of Herrick
Feinstein.
'Their focus is often elsewhere, on other projects, for a variety of
reasons,' he said.
But when the real estate market comes to a virtual halt, as it has
currently, many developers cannot get development financing on
favourable terms.
An attractive option is to wait out the torpid market while trying to
add value to their property with a rezoning, Mr Korbey said.
Herrick Feinstein has several clients doing just that, specifically
on properties zoned for manufacturing.
'These are areas that are not zoned in a way that permits
residential, because you can't do residential development in a
manufacturing zone,' he said.
'Yet residential is nearby, and you've got a manufacturing zone
that's not so productive, that's not generating income, that's adding
very few jobs.'
Mr Korbey said he was currently handling a case involving several
blocks of contiguous vacant lots and warehouses that were once part
of a Rheingold brewery in the Bushwick neighbourhood of Brooklyn.
The developers, Forest Lots LLC, recently applied for a zoning change
to permit hundreds of residential units and retail development.
'We're at the beginning of a process that's going to require an
environmental review and public input,' Mr Korbey said.
The developers are gambling that they will get the rezoning as the
real estate market picks up, making their land ripe for development.
Though the developers want to build, another option would be to sell
the land - most likely at a premium, Mr Korbey said. 'Obviously,
there's tremendous upside to changing the rules to allow new low- and
medium-density housing.'
During a sluggish market, the city may be more willing to approve
zoning changes, said Stuart M Saft, a partner with the firm of Dewey
& LeBoeuf.
'The city's tax revenues fall during a recessionary market, and what
the city is looking for is increased taxes,' he said. 'If the zoning
change will improve the value of the property after the building is
constructed, the city will get an increase.'
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