Archive | Frasers

World property T6Oct15 – Frasers’ big Australian plans, Foreigners dominate new German deals

Frasers plans retail & masterplanned community growth in Australia
Foreigners now in half of big German deals

Frasers plans retail & masterplanned community growth in Australia

Frasers Property Australia has big growth plans, particularly for retail at the moment, and will show the value of cross-border investment by selling some assets to funds controlled by the Singapore-listed parent, Frasers Centrepoint Ltd.

Frasers Centrepoint, controlled by Thai billionaire Charoen Sirivadhanabhakdi, bought the ASX-listed Australand Property Group last year for $A2.6 billion.

In an extensive interview in The Australian on 28 September, Frasers Australia chief executive Rod Fehring (above) said the company had established a retail division to grow that part of its portfolio from $A300 million to $A1 billion over the next 3-5 years, and wanted to develop more masterplanned communities containing retail centres.

He also responded to a warning from Westpac chief economist Bill Evans that tightening of lending rules by the Australian Prudential Regulation Authority would mean many buyers of homes off the plans 2 years ago would now struggle to settle. Mr Fehring said buyers were going outside the big 4 banks and looking for mortgages from overseas banks.

Mr Fehring joined Frasers Property Australia in 2010 and took charge in July this year. He was chief executive of Lend Lease Corp’s retirement living/aged care & venture capital businesses for the previous 9 years and chief executive of Delfin Lend Lease for 6 years before that, in a 30-year career in the property industry.

Links: The Australian 28 September 2015: Home buyers look offshore for funds
Frasers gets $10bn shot in arm
ValueBuddies investment blog, comments on The Australian stories

Earlier story:
World property W29Apr15 – Frasers trust buys Melbourne tower

Foreigners now in half of big German deals

Foreign investors are paying more attention to German property, according to the latest figures from JLL. Domestic investors have traditionally dominated, but JLL said yesterday foreign investors in the market for assets over €100 million had gone from 20% last year to 50% this year.

North American private equity funds accounted for 28% of deals so far this year, and French investment had increased from €1.7billion for the whole of last year to €2.4billion in the first half of 2015, accounting for 17% of deals.

Middle Eastern & Korean investors were showing more interest. The head of JLL’s international capital group for Asia & the Pacific, Alastair Meadows, said Koreans were the most active Asian investors in Europe, while other Asian investors were bidding but so far not buying. “Germany has become the second European destination of choice after London for Asian investors, who are drawn in by attractive cash-on-cash returns driven by historically low financing costs.”

The head of JLL’s international capital group for EMEA (Europe, the Middle East & Africa), Matt Richards, said of investment in Germany: “As Europe’s largest economy, properties come at a premium, but in terms of capital values Germany has yet to catch up with London or Paris, and this is appealing to many investors looking to expand in Europe.”

Link: JLL, Germany increasingly international

Attribution: Frasers Property, The Australian, ValueBuddies, JLL
Regular leads: Europe Real Estate, Mingtiandi, Planetizen

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World property W2July14 – Frasers goes ahead with Australand bid, Goodman increases German portfolio

Frasers Centrepoint lodges full Australand takeover offer

Singapore-listed Frasers Centrepoint Ltd, controlled by Thai billionaire Charoen Sirivadhanabhakdi, looked to have control of Australand Property Group yesterday, 4 weeks after trumping Stockland Property Group’s “increased & final” offer for the ASX-listed residential& commercial developer.

Stockland bought 19% of Australand in March, when another Singaporean property company, CapitaLand Ltd, sold the remaining 39% of its original 59% stake. Stockland went on to a full takeover bid which rose to a value of $A4.55. Frasers entered the picture on 4 June with an offer worth $A4.48 before various extras. The values of the 2 bids were complicated by the changing values of scrip components.

Frasers Centrepoint has had an exclusive due diligence period since 4 June, and yesterday entered a bid implementation agreement for an off-market cash takeover offer of $A4.48/stapled security. In addition, Australand securityholders will get a pro rata share of the company’s A12.75c/security second-half distribution up to the earlier of Frasers going unconditional or the end of this year. That’s worth about 2.1c/security/month more.

The bid values Australand at about $A2.6 billion.

Earlier story, World property F6June14 – Goodman starts US rollout, Australand bidding war

Goodman continues German expansion

Goodman Group’s Goodman European Logistics Fund has acquired 2 properties in Germany totalling 112,000m² from Union Investment Real Estate GmbH – a 53,000m² facility in Mönchengladbach’s Regiopark and a 59,000m² facility in Muggensturm, in the Karlsruhe area.

Goodman didn’t state the price of the acquisitions, but said it now had 2.7 million m² of assets worth €1.56 billion under management in Germany.

Goodman is also expanding a design-build development next to the Regiopark site from 78,000m² to 134,000m². It’s leased to German online fashion retailer Zalando.

Attribution: Australand, Goodman

Regular leads: Europe Real Estate, Mingtiandi, Planetizen, World Property Channel

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World property F6June14 – Goodman starts US rollout, Australand bidding war

Goodman starts $US1.4 billion US rollout
Bidding for Australand gets complicated

Goodman starts $US1.4 billion US rollout

After 2 years securing sites around the US, ASX-listed Goodman Group’s North American subsidiary, Goodman Birtcher, has started the rollout of a 1.4 million m², $US1.4 billion development pipeline in 8 logistics markets over the next 3 years.

First up is a $US150 million 148,000m² logistics centre at Rancho Cucamonga, about 70km from Los Angeles into the hills of Southern California’s Inland Empire.

Goodman Group chief executive Greg Goodman said yesterday: “Our focus over the past 2 years has been to assemble a high quality portfolio of class A sites in our target locations, and we are now ready to commence the rollout of a significant development programme, at a time when key US investment demand drivers are recovering and the supply of high quality, big box warehouse space remains limited.”

Goodman has a $US24.5 billion portfolio of assets under management and $US2.5 billion of development under way globally.

Bidding for Australand gets complicated

Stockland Property Group issued its “increased & final” offer for Australand Property Group on 28 May, and learned on Wednesday it had been trumped by a new Singaporean bidder, Frasers Centrepoint Ltd.

Then the bid values got complicated: Australand’s share price shot up A38c to $A4.58, A2.75c short of Fraser’s all-up bid value. Stockland’s share price also shot up, going over $A4 before settling back to $A3.97. The immediate effect was that Stockland’s offer rose to a value of $A4.55, while Fraser’s offer before various extras was at $A4.48.

Both bids are worth about $A2.6 billion and are well above the level at which Singaporean property company CapitaLand Ltd exited its final 39% in March, $A3.75/security.

CapitaLand owned 59% of Australand until last November, when it sold 20%. Stockland entered the picture when CapitaLand sold the remaining 39%, buying 19%.

Frasers is now controlled by Thai billionaire Charoen Sirivadhanabhakdi.

Attribution: Goodman, Australand, Stockland

Regular leads: Europe Real Estate, Mingtiandi, Planetizen, World Property Channel

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Australand promotes $A315 million securitisation over 21 properties

Singapore-controlled Australian property developer & investor Australand Property Group began a roadshow today to promote the $A315 million commercial-backed securitisation of 21 of its total portfolio of 38 office & industrial properties.


 


Australand will issue 5-year notes in 4 tranches – $A193 million with expected Standard & Poor’s rating AAA notes, $A34 million AA notes, $A39 million A notes & $A49 million BBB notes.


 


Westpac Institutional Bank is arranger & lead manager, with St George Bank Ltd & ANZ Investment Bank as co-managers.


 


Australand has $A1.3 billion market capitalisation and is listed in Australia & Singapore. Last November it stapled its Australand Property Trust & Australand Holdings Ltd securities, and also drew 2 wholesale trusts into the new Australand Property Group. It added a 3rd wholesale trust in May.


 


Group assets now total $A2.23 billion, with net debt of $A628.9 million. While net debt has risen more than 50% since 2001, gearing (liabilities: total assets) has been cut from 58.1% to 46.5%.


 


The 21 properties have an independent valuation of $A535.9 million with current passing income of $A44.3 million (8.27% yield), but an S&P capital valuation for rating purposes 9.6% lower at $A484.5 million, with stabilised cashflow of $A40.6 million. 68% of the portfolio is in New South Wales & 69% is office. Weighted average lease expiry is 7.9 years.


 


44% of the total security value is at 2 sites – 3 buildings in the Rhodes corporate office park, 14km west of the Sydney central business district, and 2 buildings (Gateway & Henry Deane) on the southern fringe of.the Sydney cbd.


 


Managing director Brendan Crotty said in May that Australand wanted to reduce its reliance on development earnings and to increase recurrent property investment income.


 


Australand’s major shareholders is listed Singapore Government company CapitaLand Ltd, which owned 58% at the end of 2003.


 



Website: Australand


 

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Australand profit up 2.9% for half

Residential developer whines about gst

Sydney-based Australand Holdings Ltd increased its June half profit by 2.9% to $A33.1 million on sales up 47% to $A627.3 million but pretax operating profit down 8.8% to $A45.4 million.

Managing director Brendan Crotty blamed gst. He said the substantial gst charges incurred during the period — $A26 million — offset a 39% increase in underlying profitability, and that gst charges reduced earnings/share by A3.7c to A6.39c.

Net tangible assets rose from $A1.11 to $A1.24. The fully franked quarterly dividend has been maintained at A3c/share.

Land & housing division revenue fell $A25 million as weaker market conditions in the December half continued through the March quarter, but Melbourne and Sydney projects performed strongly.

The apartments division earned $A70 million more as three major Sydney projects were completed.

The commercial & industrial division earned $A36 million more from greater construction activity in Sydney and Melbourne.

Australand secured development sites worth $A144 million and expects to add $A60-80 million of sites in the second half.

The gst complaints

Mr Crotty said the introduction of gst on 1 July 2000 had three major adverse effects for the residential property development industry. Developers can claim gst but homebuyers can’t, so developers have absorbed most or all of applicable gst out of sales revenue.

Housing construction contracted more than expected after gst’s introduction, subduing price growth for nine months and substantially eroding post-gst margins.

Mr Crotty said the transitional provisions applied very unfairly to residential developers. The Government gave 18 months’ notice that gst would apply to value added after 1 July 2000 to all residential presales entered into during the intervening period.

Many apartments on largescale projects are being delivered 12-15 months after gst’s introduction and developers have been required to pay all applicable gst.

This has been a common whine from the whole of an industry which was happy to create a pre-gst boom (and glut), which has added to the tax cost.

Two years to get margins back up

Mr Crotty said it could take two years before land and housing project margins are restored to pre-gst levels. The company’s interim answer is to lift sales revenue and operating margins where possible to counteract the gst impact.

Mr Crotty said the company’s inability to recover gst in some market segments had influenced its acquisition strategy, expanding the commercial/industrial business and allocating less capital to land and housing short-term.

Lower interest rates and a rise in the first home owners grant for new housing boosted June quarter sales in all states and could flow through to higher prices and margins in the December half.

Australand sold 806 apartments for $A349 million, mostly in Sydney. It has three projects to complete in Melbourne in the next 18 months, has two new Sydney projects and further stages of joint ventures at Balmain Shores and King St Wharf in Sydney. Presales at 3 June were $A440 million on wholly owned projects and $A249 million on joint ventures.

Its commercial & industrial division earned $A111 million from 12 precommitted projects and negotiation of 18 pre-leases for 163,750m². Six are for Australand’s Wholesale Property Trust, in which the company intends to retain a 15% stake.

It will form a second wholesale trust in the December half, with assets of about $A120 million.

Mr Crotty expects Australand’s full-year profit to be slightly ahead of 2000, and said the company should pay less tax in 2002, which will cut franking of dividends by 50%.

Pretax profit:revenue fell from 11.7% to 7.2%, while aftertax profit:equity fell from 5.4% to 5%.

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