Source : Business Times - 10 Nov 2008
Four pieces of industrial assets in Singapore are believed to be coming to the market following a shift in the group’s strategy
PROPERTY giant CapitaLand is understood to be looking to sell its portfolio of four industrial properties in Singapore.
The assets are said to be worth more than $300 million and comprise Kallang Bahru Complex and the adjoining Kallang Avenue Industrial Centre, Corporation Place in Jurong, and Technopark@Chai Chee.
Market watchers reckon CapitaLand may be open to selling the properties individually or as a portfolio.
CapitaLand’s plan to divest the portfolio reflects its recent strategy of exiting the industrial/logistics arena and focusing on its core strengths in commercial, residential and serviced residences, market watchers say.
Even up to six months ago, the property giant had ambitions to grow in the industrial/logistics real estate space. It is said to have bid, unsuccessfully, last year for the $1.7 billion portfolio of industrial properties divested by JTC Corporation. And not too long ago, CapitaLand had its eye on listing an industrial Reit, some analysts noted.
But just a few months ago, the Singapore-listed group made a strategic decision to focus on its core strengths with the crash in financial markets.
‘What this also means is that within the Temasek stable of property companies, the logistics/industrial sector will be left pretty much to Mapletree Investments group,’ a market watcher noted.
In September, BT reported that CapitaLand had put on hold its tie-up with subsidiary Australand to set up a pan-Asian development platform in the industrial/ logistics business announced in February this year.
The two adjoining industrial properties at Kallang Avenue that CapitaLand owns are understood to have redevelopment potential. Kallang Avenue Industrial Centre comprises four blocks of two-storey workshops, while Kallang Bahru Complex is a nine-storey flatted warehouse.
The two sites are zoned for Business 1 use (similar to light industrial use) with a 3.0 plot ratio, of which at least 2.5 must be set aside for B1 use, with the rest for white uses. (The plot ratio is the ratio of maximum potential gross floor area to land area.)
Kallang Bahru Complex is on a site with about 70 years of remaining lease, while the Kallang Avenue Industrial Centre plot has a balance lease term of some 67 years.
The two properties were part of the former Pidemco Land portfolio. In 2000, Pidemco and DBS Land merged to form CapitaLand.
Corporation Place and Technopark@Chai Chee used to be under DBS Land. Technopark@Chai Chee, with a book value of $205.9 million as at Dec 31, 2007, comprises six high-tech industrial blocks with a total net lettable area of about 1.14 million sq ft on a sprawling site that also has a gymnasium and other amenities.
The building is almost 100 per cent occupied by tenants such as Flextronics, SIA Engineering, British Telecom, Sun Microsystems, Alacatel-Lucent and DBS Bank.
The property may offer a high-yield investment play to potential investors.
On the other hand, the Chai Chee site could also be redeveloped. The site has enjoyed an enhancement in use under the Urban Redevelopment Authority’s Draft Master Plan 2008, with a Business Park zoning (2.5 plot ratio), compared with Business 1 zoning (2.5 plot ratio) under Master Plan 2003.
Corporation Place in Jurong is a seven-storey high-tech flatted factory development boasting tenants such as Siemens, Hewlett-Packard, Panasonic and Rockwell Automation.
The property has total net lettable area of about 622,000 sq ft and is 75 per cent owned by CapitaLand, with Ascendas Land owning the remaining 25 per cent. BT understands that Corporation Place will be offered for sale on a 100 per cent basis, that is, by both owners. CapitaLand fully owns the other three industrial properties.
CapitaLand reported a 25.6 per cent year-on-year drop in third-quarter net earnings to $419.4 million, on weaker home sales. However, the group reported stronger rentals from investment properties and higher fee-based income from Reits and funds under management.
The counter closed five cents higher on Friday at $3.17.
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