HAFARY HOLDINGS has good reason to end the year with lots of cheer.
The company has announced that it would make a gain of $22.35 million from the sale of a property project for $65.28 m.
The gain is significant relative to Hafary's market cap of about $51 million currently (based on stock price of 26 cents) and relative to its net profit of S$6.9 million for FY2011 ended June 30.
Hafary's $22.35 million gain arises from its sale of all 59 units of a freehold industrial property called Atrix that it would develop next to Aljunied MRT station.
Not only is the gain outsized relative to its market cap and FY2011 profit but it means its net margin is a whopping 52% on its total cost, including development cost.
Hafary said the gain would be recognised only upon completion of the building which would be before 31 Dec 2013 -- instead of the progressive recognition method.
Hafary's property development venture, its first, came about by chance. It had purchased the site with the intent to develop a 6-storey building to house its HQ and a showroom.
It said that it decided to develop the property for sale as it had acquired three other properties and it wanted to maintain an "acceptable leverage".
Hafary's core business is actually the distribution of tiles and building materials, and it is believed to be the biggest player in a very fragmented industry in Singapore.
Following its record profit in FY2011, Hafary declared a 0.9 cent dividend, up from 0.4 cent in FY10, translating into a yield of 3.46% based on the recent stock price of 26 cents.
It remains to be seen if Hafary would declare a special dividend after it recognises the property gain.
Hafary's official announcement can be accessed here.
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Fortune REIT to boost distribution per unit via acquisition of 2 HK properties
This REIT, which is dual listed in Singapore and Hong Kong, has entered into agreements to acquire two retail properties in Hong Kong -- the Belvedere Garden Property and the Provident Centre Property -- for a total of HK$1,900 million.
The respective purchase prices are HK$1,250 million and HK$650 million, both at a discount to their independent valuations.
Belvedere Garden Property had a value appraised by Knight Frank Pretty Limited to be HK$1,300 million as at 30 September 2011, with an estimated net property yield of 5.2%.
Provident Centre Property had an appraised value of HK$680 million as at 30 September 2011, with an estimated net property yield of 4.8%.
The acquisitions will increase Fortune REIT’s gross rentable area by 23% and will be beneficial to its unit holders.
Based on the pro-forma financials for the six months ended 30 June 2011, the Distribution Per Unit (DPU) of the enlarged portfolio would be 13.66 HK cents, an increase of 6.7% from the DPU of 12.80 HK cents of the existing portfolio.
The Acquisition will be funded by Fortune REIT’s available bank facilities and internally generated funds.
Mr Justin Chiu, Chairman of the REIT's manager, ARA Asset Management, said, “Starting with five retail malls in 2003, Fortune REIT has delivered eight consecutive years of growth in total revenue, net income and distributable income as our property portfolio expanded to 14 malls over the years.
"The Acquisition again demonstrates that we can sustain this growth story by acquiring another two quality assets of a total area of 457,100 sq. ft. through efficiently utilizing our available debt headroom, thus optimizing the financing cost of the Acquisition and bringing about increased returns to our Unitholders.”
Fortune REIT's official announcement can be accessed here.
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