I forgot to add that Hiap Hoe may book a profit from the latest exercise. Based on my estimates, Skyline’s breakeven is about $1,100psf (or lower), so a profit margin of $474psf multiplied by 22,239sf will give a total gross profit of about $10.5m. Over at Signature at Lewis, where the 2 unsold penthouses are transferred at an average price of about $1,075psf, this is probably done at breakeven price (against asking price of about $1,500psf), so no profit will arise.
Hiap Hoe's high RNAV of above $1.60 should provide the stock some support, although weakness in the general stock market may lead to some selling and shorting now and then. For prudence, I have excluded its Aussie projects from this $1.60 figure.
JLL launches Expression of Interest exercise for Parklane Shopping Mall portfolio on behalf of Hiap Hoe
JLL has launched an Expression of Interest (EOI) exercise for a portfolio of strata-titled shops on behalf of the Hiap Hoe Group as part of the group's exercise to divest non-core assets while capitalising on the strong investor demand for retail space and income-generating assets.
Hiap Hoe has identified a total of 39 shop units to be divested, the largest of which includes a a single portfolio of 33 strata units located at the basement of Parklane Shopping Mall at Selegie Road.
"While there are another two units located at the fourth floor of Parklane Shopping Mall for sale, the remaining retail units are located in other city-fringe developments at Bukit Timah Plaza and Balestier Point," said Karamjit Singh, JLL's head of investments and residential, in a statement issued by JLL.
The 33 strata-titled units at the basement have a combined floor area of 25,317 square feet and represent more than 94 per cent of the total strata floor area in the basement level. By share value, this portfolio comprises approximately 17 per cent of the entire development.
"The units are fully occupied by a variety of tenants, generally catering to the young and active, such as gaming and entertainment centres, a dance studio, a musical instruments retailer, etc. The largest unit in the basement has been leased to McDonald's," said Mr Singh.
The vendors expect offers in the region of S$55.6 million, which works out to an average of S$2,200 psf over the strata floor area.
One of the four units in the basement of Parklane Shopping Mall that does not belong to Hiap Hoe changed hands last year at S$2,192 psf. The passing yield based on the indicative price of S$55.6 million is approximately 3.5 per cent per annum.
Interested parties can submit their offers by 2.30pm on Nov 4.
I believe Hiap Hoe valued Superbowl’s 35 units of commercial assets at $79.7m during the takeover last year. These include the 33 units put up for sale now, and 2 other units at Orchard Tower and Orchard Plaza.
I think the asking price of $55.6m is reasonable, and will lead to a small profit . Based on my estimates, Orchard Tower and Plaza units (not part of the 33) are worth about $58m ($2,500psf for 23,196sf of FH and leasehold space), which means that Hiap Hoe is looking at a surplus of about $34m from the 35 units of commercial space. As to how much is the book value apportioned to the 33 units on sale, I will wait for the figures to be revealed upon a successful sale.
I like Hiap Hoe’s current divestment strategy, and see it as the company’s shift in focus to core big-ticket properties rather than piecemeal property units. Perhaps it will sell off its bowling business next.
"HIAP Hoe Group is selling all 48 units in its District 10 project, Treasure on Balmoral, to avoid paying further extension fees under the qualifying certificate (QC) rules."
Hiap Hoe Holdings is taking one for the team. This will take away some uncertainty in Hiap Hoe's residential portfolio. I believe they have also made some headway in disposing off some of Superbowl's commercial units as well. Good Job!