Source : Straits Times - 13 Feb 2009
STAMFORD Land Corp has defied the downturn by fully pre-leasing a 14-storey office block in downtown Perth to an Australian unit of energy giant Chevron Corporation.
Chevron Australia has committed to a 10-year deal for the Grade A building - a clear sign of the firm’s confidence in the Western Australian mining industry.
Chevron is the largest holder of untapped natural gas resources in Australia.
‘Given the abysmal global economy, it is heartening to secure a long-term lease of 10 years with a blue-chip name like Chevron,’ said Stamford Land chief financial officer Tay Lai Wat.
‘The rent level secured is comparable if not higher than (that for) Sydney’s Grade A buildings. We expect to enjoy a stable income flow.’
The firm’s Perth project - it consists of the office tower still under construction and three smaller existing buildings - has an estimated on completion value of A$130million (S$136million).
The expected net rental income of all three buildings is about A$9.5million a year, the company said.
Two of the three existing blocks are heritage-listed and have been leased out; the other building has been ’spoken for’ but has not yet been rented, said Mr Tay.
The vacancy rate in Australia’s office market is rising and rents are dropping. Even the market in Perth, which had nearly zero vacancy in the first half of last year, is weakening.
Stamford Land negotiated the rent for the office tower, which will be completed next year, a few months ago at about $650 per sqm per year.
Separately, Stamford Land’s net profit for the nine months ended Dec31 fell 51per cent to $10.76million.
Revenue was down 16per cent at $180.2million. The hotel business contributed $160.7million in revenue, down from $174.8million in the same period a year ago.
Earnings per share was 1.25 cents, down from 2.53 cents a year ago, while net asset value per share dropped from 51 cents at the end of March last year to 40 cents.
Its shares closed 0.5 cent higher at 25 cents yesterday.
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