SINGAPORE: Keppel Corp Ltd. has offered to buy Singapore Press Holdings Ltd. for S$2.2 billion ($1.6 billion) to expand the conglomerate’s business in retail malls, student accommodation and senior living.

The proposed deal, expected to be completed in December, would come after SPH spins off its media assets. Keppel plans to delist SPH as part of the transaction, the companies said in a statement Monday.

For Keppel, backed by Temasek Holdings Pte and with operations spanning from rig building to infrastructure and renewable energy, the move is in line with its 10-year plan to provide solutions for “sustainable urbanization,” it said. Mergers are part of the group’s efforts to unlock value in its asset portfolio.

Keppel is making the offer through a combination of S$1.08 billion of cash and S$1.16 billion worth of Keppel REIT units, the company said in a Singapore Exchange filing. Total consideration, including a distribution of SPH REIT shares, equates to S$2.099 per share, implying a total equity value of SPH at S$3.4 billion.

Keppel will look at various funding options for the acquisition, Chief Financial Officer Chan Hon Chew said at a briefing. This could include loans and even something linked to equity, he said, without elaborating.

Trading of SPH shares was halted before the announcement. The stock last closed at S$1.88. Keppel shares were also halted.

Bidding Process

SPH’s Chief Executive Officer Ng Yat Chung said the outcome is the result of a months-long strategic review and process to solicit bids from interested parties. The company announced plans in May to carve out its media business into a non-profit entity amid a decline in advertising revenue.

SPH executives said at a separate briefing that more than 20 parties, including Keppel, participated in the bidding process.

Ng said that with this privatization offer, SPH shareholders “will have a firm number on the table that they can potentially enjoy” when they consider whether or not to approve the media business spin-off around the end of August.

Last year, the group swung to its first full-year loss on record, based on data compiled by Bloomberg going back to 1990. Its media business accounted for more than half of its revenue while property made up about 38%, the data show.

SPH’s property holdings include shopping malls located in Singapore and Australia that are held under SPH REIT, student accommodation assets in the U.K. and Germany, as well as a nursing home chain in Singapore, according to its website. It also has investments in the education and events business.

If the acquisition is successful, Keppel will explore unlocking value from SPH’s assets through possible new REIT listings or monetizing certain liquid investments “when the timing is right,” the company said in its statement. This could involve a potential securitization of SPH’s student accommodation assets, its CEO Loh Chin Hua said at the briefing.

JPMorgan Chase & Co. advised Keppel, while Credit Suisse Group AG advised SPH on the strategic review and proposed transaction.

Transformation Plan

Keppel said last week it expects to achieve the higher end of its target to unlock S$3 billion to S$5 billion of assets by the end of 2023, which could include mergers or disposals. It’s also in talks to merge its offshore marine unit with Sembcorp Marine Ltd. and is evaluating bids to sell its logistics business as it shifts its focus to become a developer of renewable energy and asset management.

Under a 10-year transformation plan dubbed Vision 2030 unveiled last year, initiatives include building floating infrastructure to provide easier and cheaper access to energy and developing data centers. Keppel will also tap into its landbank to improve its return on assets and look for growth from its M1 Ltd.’s digital solutions business.

Keppel has been monetising over S$2.3 billion of assets since October, of which about half of the transactions have been completed, and it had received cash of about S$1.15 billion at the end of June, the company said in the statement. – Bloomberg

Source from The Star, 02 Aug 2021

Previndran said the majority of the overhang units were residential properties as opposed to serviced apartments in the RM500,000 to RM1 million range.

“For me, this overhang is a past legacy. It was around pre-Covid days and will be around unless corrective action is taken by the developers themselves,” he said.

Previndran said despite the ongoing pandemic, the demand for residential properties in Klang Valley remained steady.

He said mortgage approval trends continue to rise and there are more sales as developers have become creative at driving sales.

The steady demand for residential properties was mainly driven by strong digitalisation by the developers, price readjustment to suit buyers’ affordability, and new launches that catered to what the market wanted.

Previndran said demand was further boosted with Bank Negara maintaining the record-low overnight policy rate of 1.75 per cent, and the ongoing Home Ownership Campaign which ends on December 31, 2021.

He said in terms of the value of transactions, there was a growth of about 28 per cent in the first quarter of 2021 (Q12021) as compared to Q12020.

In terms of volume, there was an increase of about 19.5 per cent in Q12021 as compared to Q12020.

“We truly have a resilient market. I think the important point to note is Q12021 is actually just before the MCO (Movement Control Order) whilst the numbers you see in Q42020 and Q12021 are after MCO, truly reflecting a strong and pent-up demand of buyers,” said Previndran.

Previndran said what his firm is observing is that the high net-worth individuals (HNWI) and ultra HNWIs are still very active in the market.

“They are paying top dollar for properties that otherwise would not be in the market, and they are also looking at opportunistic deals in high-end locations. The main artery and the pump of the residential market are properties priced below RM500,000 which are sort after by our bourgeoning middle-class market,” he said.

Previndran said there also seems to be a “pricing overhaul” of the overhang, where developers with inventory that have not been moving are going into the market at discounts ranging up to 45 per cent.

Meanwhile, the Iskandar market is the most hit market in Malaysia with its overhang close to double Klang Valley.

Previndran said that last year the overhang in Iskandar grew three times more as compared to Klang Valley by 27.94 per cent in terms of the number of units.

“Again, like Klang Valley, I do see it increase next year as the properties launched in 2019, which were already part of the problem, come into the picture,” he said.

In Iskandar, 73 per cent of the overhang are serviced apartments and in the RM500,000 to RM1 million range.

“I think the very astute Johor developers saw this coming and switched to landed properties very quickly as you can see from the incoming supply, planned supply, and new planned supply, which is 100 per cent landed. This has also resulted in very good sales, as you can observe the sales numbers in Q12020 as compared to Q42020.

“However when we compare Q12020 to Q12021, in terms of the number of units, there was a drop of 10 per cent, but in terms of value, it increased to by about four per cent. Our research shows a lot of residential properties and well-located condos were picked up mainly by locals,” said Previndran.

Source : New Straits Times / Kathy B. , 28 July 2021.

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