Large-scale asset sale may be on the cards

DUBAI: Dubai World's debt crisis is likely to result in a large-scale sell-off of assets as varied as the QE2 cruise liner, Turnberry championship golf course, and a raft of properties worldwide.

Mr Paul Reynolds, head of Rothschild's advisory operations in the Middle East, was this week asked to assess the group's assets alongside Mr Aidan Birkett of Deloitte, who was appointed last Wednesday.

A spokesman for the Dubai Department of Finance told Britain's Telegraph newspaper that all options and asset sales would be considered, except for the DP World subsidiary that bought P&O, the British port company.

'I'm sure all of the assets of Dubai World will be reviewed,' he was quoted as saying.

'It's part of the restructuring process, though it's too early to say whether there's any sale in mind.'

Dubai rocked the financial world last Wednesday when it said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree to let it cease payments on billions of dollars of debts until a restructuring agreement has been negotiated.

Abu Dhabi - the richest state in the United Arab Emirates (UAE), the federation to which Dubai belongs - is seen as one of the main buyers of Dubai's assets. Analysts say Abu Dhabi will probably insist on Dubai selling some assets as part of its conditions for rescuing it.

On Sunday, the Abu Dhabi-based UAE central bank moved to quell fears that Dubai's debt crisis could escalate, by promising to provide liquidity for both foreign and local banks that had been expecting repayments, effectively covering any short- term losses.

Last year, when rumours about Dubai's debt problems first surfaced, sources said Abu Dhabi had offered to buy Emirates airline, but Dubai had refused to part with its flagship carrier.

Abu Dhabi is also said to be interested in Emaar, the property company that owns the Burj Dubai skyscraper, the Dubai Mall shopping centre, and Dubai's aluminium company Dubal, the Telegraph reported.

Dubai World's venture capital arm, Istithmar, owns stakes in global assets, including MGM Mirage, the Las Vegas gambling operation; Barneys, the New York department store; Cirque du Soleil; South African entrepreneur Sol Kerzner's hotel chain; and Standard Chartered Bank.

The group's London properties include Adelphi on The Strand and the Grand Buildings in Trafalgar Square.

Source: Straits Times, 1 Dec 2009

Residential site at Bartley Road put on Reserve List

THE Urban Redevelopment Authority (URA) yesterday said that a residential site along Bartley Road is now open for applications from interested developers.

The 99-year leasehold plot is located within an established residential estate next to the Bartley MRT.

It has a site area of about 2.21 ha and can generate a maximum gross floor area of 61,865 square metres.

The site is being offered under the Government's Reserve List system. Sites on the Reserve List are only put up for tender if a developer indicates a minimum bid price in an application, and that bid price is deemed to be acceptable.

The land parcel, which is located between Bartley Road and Lorong How Sun, was first unveiled during the Government land sales programme for the second half of this year.

It was officially put on the Reserve List yesterday.

Analysts said that the site could be triggered soon as interest in it is likely to be high.

Estimates for the eventual top bid range from $450-$550 per square foot per plot ratio (psf ppr).

'The site should be well received because it is attractive and there is lots of local and foreign interest in State tenders,' said Donald Han, the managing director of Cushman & Wakefield. He expects the top bid for the site, once it is triggered, to be between $450 and $520 psf ppr.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak is more bullish - he expects the winning bid to come in between $500 and $550 psf ppr.

The analysts also pointed out that increased interest from foreign developers in state land tenders could push up the price of the site.

In November, the top bid for a 99-year condo site on Upper Thomson Road came from Hong Kong tycoon Li Ka-shing's Cheung Kong Holdings. Cheung Kong unit Treasure Well Investments offered $251.3 million or about $533 psf ppr - the highest seen for a private housing site at a state land tender this year.

The company's top bid was 21.5 per cent above the next highest offer, which was made by Singapore's Far East Organization.

Source: Business Times, 1 Dec 2009

CIT shaves its MI-Reit stake after EGM tussle defeat

CAMBRIDGE Industrial Reit (CIT) sold half of the shares it owned in MacarthurCook Industrial Reit (MI-Reit) last Tuesday, the day after MI-Reit unitholders narrowly approved a controversial rescue plan.


CIT bought 26 million MI-Reit shares at an average of about 40 cents each early last month following news that MI-Reit was issuing new shares at a steep discount to market price and net asset value.

MI-Reit's move to issue new shares was intended to raise funds to meet $315 million in obligations due by the end of the year.

Yesterday, MI-Reit announced that CIT was left with 13.3 million units or 2.73 per cent of total holdings, from 9.76 per cent previously.

The changes were due to sales of about 12.7 million units at an undisclosed price as well as the dilutive effect of the placement exercise carried out last week.

The new units, placed to cornerstone investors, AMP Capital Holdings and present sponsor AIMS Financial Group, severely diluted existing unitholders, including CIT and angered many minority unitholders.

CIT used its units to mount a week-long campaign to get unitholders to reject the refinancing proposal. It wanted unitholders to vote for CIT to manage MI-Reit instead, arguing that it had plans to save costs and secure financing to save the Reit.

But just days before a crucial meeting to vote on the proposal, CIT said the Monetary Authority of Singapore had blocked its plan to manage both Reits due to a possible conflict of interest.

Without a credible alternative, unitholders eventually voted for the recapitalisation proposal in a stormy general meeting last Monday. The meeting also approved a two-for-one rights issue and the purchase of four industrial buildings from new sponsor AMP.

MI-Reit yesterday lodged an offer information statement for the proposed rights issue and said it had completed the purchase of the four buildings from AMP.

This was funded by a bridge loan of $39.6 million from Standard Chartered Bank plus $49.3 million of the gross proceeds of the $62 million raised in the recent share placement exercise

Source: Business Times, 1 Dec 2009

Keppel, SembCorp not hit by Dubai fallout

(SINGAPORE) Singapore's two major conglomerates with interests in the Middle East yesterday allayed fears of any fallout from Dubai World's credit woes.

'Keppel Corp does not have any exposure to Dubai World from its projects in the Middle East,' said a Keppel spokesman.

Keppel, through its infrastructure arm Keppel Integrated Engineering, is involved in Qatar's $1.5 billion Doha North Sewage Treatment Works - the largest greenfield wastewater treatment, water reuse and sludge treatment plant in the Middle East.

Keppel also has a $1.7 billion domestic solid waste management centre in Qatar, which is due to come on stream soon.

Major utilities and infrastructure player Sembcorp is also seen as unlikely to suffer any problems as a result of Dubai World's troubles.

Sembcorp's contracts are not with Dubai World, and its plants in the Middle East are for power generation and water treatment - both essential utilities.

Sembcorp has a 40 per cent stake in the US$1.7 billion 887 megawatt Fujairah 1 independent water and power project (IWPP) in Fujairah, another of the UAE's seven emirates, which are all separately run entities.





Sembcorp also recently secured finance from a consortium of international banks - none of them Dubai-linked - for the US$1 billion Salalah IWPP in Oman. This is scheduled to start operating in the first half of 2012.

Township development, building and infrastructure consultancy Surbana also said yesterday it will see little effect on its Middle Eastern operations.

'We do not really have projects in Dubai,' said a spokesman. 'Most of our Middle East projects are in Abu Dhabi.

'Because of the economic situation, some of our Middle East projects are facing some slight delays but they are still on-going.'

Surbana is lead consultant for the US$109 million Abu Dhabi Tourism Authority Headquarters, the US$110 million Abu Dhabi Corniche Waterfront Hotel and the US$230 million Emirates Morocco Hotel, among other projects.

The consultancy is also involved in the US$435 million redevelopment of Abu Dhabi's Al Bateen district.

Keppel shares closed 28 cents lower at $8.10, while Sembcorp shares ended the day 10 cents lower at $3.70.

Source: Business Times, 1 Dec 2009

CDL open to raising South Beach stake

(SINGAPORE) City Developments Ltd (CDL) says it is open to exploring the possibility to raise its stake in the South Beach project - in which Dubai World also has a share - if such an opportunity arises.

'South Beach is an iconic development and one which has excellent potential,' a CDL spokesperson noted.

She added that the joint venture company that owns the South Beach site may also choose to issue further notes if more funds are required in due course and it is open to any note holder and/or shareholder to subscribe for the notes.

CDL bought the South Beach site in 2007 jointly with Dubai World and El-Ad Group for $1.69 billion. In June this year, the JV company refinanced an earlier $1.2 billion land loan through an $800 million two-year secured bank loan and $400 million five-year secured convertible notes. Hong Kong's Nan Fung group subscribed for $205 million of the notes while CDL mopped up the remaining $195 million.

Dubai World is now asking all providers of financing to itself and its unit Nakheel to 'standstill' and extend debt maturities until at least May 30, 2010.

South Beach will have offices, hotels, residences and and retail space. Some market watchers suggest that in addition to the options outlined by CDL yesterday, another avenue for the JV company to fund the site's development would be to sell all or part of the project. If the apartments are launched and sold, sales proceeds would help to fund part of the development's construction. The hotels could also be divested to CDL's hotel units Millennium & Copthorne Hotels plc and CDL Hospitality Trusts, or a third-party buyer. Alternatively, the entire development, when completed, could be spun off into a real estate investment trust. Rough calculations show that Dubai World and El-Ad would have pumped in about $200 million each of equity in the project. As at Sept 30, 2009, CDL had cash and cash equivalents of about $979.5 million at group level. Market watchers reckon the South Beach consortium partners may have received offers for their stakes from potential buyers.

CDL said in August that South Beach's construction is likely to begin around Q3 2010, with CDL and Nan Fung probably the ones that will pump in further money. El-Ad and Dubai World are likely to be passive investors who may see their share in the project diluted.

Source: Business Time, 1 Dec 2009

Slide in prime retail rents levels off in 3rd quarter

RENTS for prime retail space began to stabilise in key global markets in the third quarter after falling during the worldwide downturn.

New York, Hong Kong and Paris maintained their top three places as cities with the highest prime retail rents. Singapore inched up one notch from the second quarter to 18 in the top 20 rankings.

Prime retail rents here were estimated at US$448 (S$619) per square foot per year, while in New York the same space cost US$1,640.

Rents in most Asian cities either declined at a slower rate, stabilised or showed a slight uptick in the third quarter, said CB Richard Ellis (CBRE), which compiled the rankings.

Singapore retail rents across the market fell just 0.9 per cent in the third quarter after falling by 2 per cent in the second quarter this year, according to the Urban Redevelopment Authority.

But Mr Peter Gold, CBRE's head of cross-border retail in Europe, the Middle East and Africa, said suburban areas are not faring so well.

'Prime retail rents in the top locations are generally quite stable and able to attract tenants, but secondary locations and smaller markets are experiencing rising vacancy, reduced retailer demand and falling headline rents,' he said.

Singapore's situation could be altered by the number of new malls being built, which will increase the supply of retail space and so put pressure on rents.

A recent report by DTZ Research found 500,000 sq ft of new retail space is expected to hit the market before the end of the year. This will bring the total retail space completed this year to about 2.6 million sq ft, the highest level seen.

This year has seen many changes on the retail front, particularly on Orchard Road with the opening of Ion Orchard and Orchard Central. Mandarin Gallery reopened last month while 313@Somerset makes its debut this week.

Sentiment about the retail landscape is mixed.

Property firm DTZ earlier reported that despite the rise in investment activity, retail spending remains weak and would depend on the extent of economic recovery. It expects retail rents to drift along with minimal decline for the rest of this year and next year.

CBRE's outlook for next year is more bullish. In a separate report, it predicts that the opening of the integrated resorts will draw in a line-up of old and new international brands against a backdrop of convention facilities, theme parks, hotels and other leisure amenities, all of which will perk up the retail scene.

Source: Straits Times, 1 Dec 2009

Eunos HDB lift woes unresolved

THE offer was laid on the negotiation tables by the HDB. But a group of Eunos residents who have been unhappy for years over external lift shafts which block their homes are refusing to budge

Some of the 42 affected flat owners in Blocks 411, 415 and 417 in Eunos Road 5 refused to accept any of the four options offered over the weekend by the HDB in its latest bid to solve the problem.

Some of them crossed out all the options with marker pens and wrote on the form that they were still not happy with the olive branches offered.

Some want the offending lift shafts totally torn down instead.

These Eunos residents face a rather unique problem because of the way the three blocks were constructed. Each block is in a U-shape and the two staircases are located at both ends of the U while existing lifts are located in the middle.

Because odd-numbered floors do not share a common corridor - the building combines double-storey maisonettes with single-storey corner units - just upgrading the existing lift shafts was not sufficient to give all units lift access.

When the estate went through a lift upgrading programme which started in early last year, the two additional lift shafts per block could not be built facing a staircase like how it is done with most other blocks.

The new shafts ended up blocking residents' flats from sunlight and wind, making their homes dark and hot. They have had to switch on lights and air-conditioning during the day, increasing their utility bills. One resident even reported mildew growing on his walls.

Since 2006, some of the 42 flat owners have been taking on the HDB since they found out where the new lifts would be positioned. They have had numerous meetings with the HDB and the area's Member of Parliament Ong Seh Hong.

At a discussion last month, it was agreed that the project consultants to the lift upgrading works would come up with several options on tweaking the designs of the lift shafts. But at a survey conducted over the weekend on residents' preferred options, most residents who came by to look at the mock-ups were still unhappy.

Some of them surrounded HDB's deputy director of upgrading programmes management Chee Kheng Chye last Saturday morning, firing questions at him. The questions included why the lift shaft was built blocking most of the front door and one bedroom unit, when in a brochure given out to residents, the lift shaft had appeared different on the floor plan. The diagram, explained Mr Chee, is schematic and not drawn to scale.

Residents said the suggested changes were too minor to make a real difference.

One design suggested replacing part of a newly constructed wall linking the lift shaft to the corridor with aluminium fins to improve the ventilation and lighting. But as the fins are tilted at an angle to prevent people from looking into affected homes, residents said it did not make much difference. Yet, not doing so would compromise their privacy - the windows would expose their homes, including the bedroom, to the full view of anyone using the lifts.

Retiree Chew Keng Woh, 64, who rejected all the options, said: 'They have to give us an alternative, then we can make suggestions.'

Corporate planner Khng Hwee Peng, 40, who also said no to all the options, said: 'I wouldn't go to the extreme of tearing down the whole thing but we're still hoping that they will come up with a solution to add ventilation and light.'

Others, like retiree Eng Ah Hee, 63, suggested the HDB buy back their flats so they can relocate elsewhere. They said the value of their flats have been affected.

While the HDB had earlier said it would proceed with only options picked by a majority of the affected residents, it said yesterday that it would be referring the survey results to the working committee and the area's MP to decide what to do next.

Dr Ong said he hoped residents would consider the choices offered, saying that the project had been delayed for six months while solutions were explored. 'You cannot say the HDB has been short of trying,' he said.

The lift upgrading was scheduled to be completed by the first quarter of next year but now, it is likely to be done in the last quarter instead.

But at least one affected resident will be choosing from existing options. Madam Asia Mahwan, 44, said that if the project continues to be delayed and left as a construction site, the dust and debris would be a continuing inconvenience. 'We have no choice. We have to compromise...I don't think HDB will pull down the lift shafts.'


Source, Straits Times 30 November 2009