Saturday, April 12, 2008

CapitaLand, HPL Secure S$2b Financing Facilities For Farrer Court Acquisition

Source : Channel NewsAsia, 11 April, 2008

Property developers CapitaLand and Hotel Properties Limited (HPL) have secured financing facilities worth nearly S$2 billion for their collective purchase of Farrer Court estate in prime district 10.

CapitaLand and HPL, along with their partners, had bought Farrer Court for S$1.34 billion last June.

The financing facilities will be used to refinance the acquisition costs of the purchase, as well as to fund the construction and development of the new project.

CapitaLand, which owns a 35-percent stake in the joint venture, intends to redevelop the site into a 36-storey condominium project with some 1,500 high-end units.

Other than HPL, the other partners in the JV are Wachovia Development Corp and a Morgan Stanley real estate fund.

Farrer Court currently comprises 618 units and has a remaining lease of 69 years.

According to estimates, the total acquisition cost works out to about S$783 per sq ft per plot ratio.

DBS Bank, UOB Asia, Standard Chartered, OCBC Bank and The Royal Bank of Scotland are the lead arrangers and bookrunners for the secured term loan, revolving credit and bank guarantee facilities.

In its stock exchange filing, CapitaLand said United Overseas Bank will act as facility agent and security agent for the facilities.

These will be secured by a mortgage over the Farrer Court property and a debenture over the assets of the joint venture.- CNA/so

Market & Hawker Centre At Mei Chin Road To Close For Upgrading

Source : Channel NewsAsia, 11 April 2008

The market and hawker centre at Block 159 Mei Chin Road will be closed for upgrading from May to the second quarter of 2009.

This makeover comes under the National Environment Agency's (NEA) Hawker Centres Upgrading Programme (HUP).

The S$4 million upgrading programme will make the two-storey market and hawker centre more accessible for the elderly and handicapped.

The centre will feature improved facilities like lifts and ramps. Its layout will also be reconfigured so that seating capacity can be increased.

New mechanical exhaust systems will be added to improve the centre's overall ventilation.

Most stallholders have chosen to take a break during this upgrading period, with less than 10 percent of them operating at stalls provided at other hawker centres.

The NEA manages 112 markets and food centres, out of which 62 have been upgraded.

Two centres at the Geylang Serai Market and Block 335 Smith Street are currently being upgraded. - CNA/so

Global Recession - Are Asians Ready for A Storm?

Source : TODAY, Weekend, April 12, 2008

Riding it out involves open and frank cooperation

AMERICA'S unfolding financial woes continue to surprise. The impact on Asia has been limited thus far, and some think that Asia's rise is irresistible.

But connections in finance, trade and investment can still bring the storm to Asia. Indeed, regional bourses and currencies have already felt shocks.

After all, Asia's boom has coincided and benefited from growth in the United States, easy and abundant capital and low inflation.

Conditions on all three fronts have changed. The US economy has slowed and seems headed for recession. Inflation is rising sharply, especially in US dollar terms. The ready availability of credit is also under pressure with the uncertainties in the market.

If the American economy continues to worsen, are Asians ready for a storm?

Historically, what happens in America affects Asia. However, some now argue for a decoupling of the regions. Growing domestic demand in Asian markets, especially China, and greater intra-Asian trade, they say, will keep the region booming, even as America declines.

South-east Asian central banks' governors expressed such optimism when they met in Jakarta in March. Their statement hoped "that intra-regional trade will provide some buffer against the likely slowing down of exports to the United States and Europe".

But much of intra-Asian trade is in intermediate goods that, after assembly in China or elsewhere, are intended for final export to the US or Europe.

Concurrently, reports show that global trade is at a standstill. If more problems emerge in the US, this will affect the volume of Asian exports.

The fall in the US dollar compounds the situation. Asian producers are finding that, even as costs and the value of their currencies rise, they cannot increase US dollar prices without losing American customers. Even if sales and trade continues, profit margins are being squeezed or even end up in the red.

Domestically too, inflation in Asia will be tricky. This is more than just an economic issue. It affects the poorest and strains political stability, especially as the most basic Asian staple, rice, is affected.

In response, some states will continue and even increase subsidies for essential goods.

Such measures in Indonesia, for example, will strain public coffers, but are unlikely to be changed, especially with a presidential election due.

For states that hold up an ideal of social equity, there is pressure to dampen inflation, even if this erodes growth rates. Thus, in Vietnam, where inflation early this year hit a record 15.7 per cent, growth is predicted to slow to 5-6 per cent.

Thailand faces a similar challenge. After two years of slow growth under the military-backed government, the new government seems set on an expansionary fiscal policy and reopening the economy to foreign investment. But the appreciation of the baht against the US dollar may affect competitiveness.

In Singapore's open economy, the last quarters have turned sluggish. Some help can be expected from close ties with India and China, and if sectors like pharmaceuticals pick up.

But the city state's performance seems to verify the thinking of analysts such as Morgan Stanley who argue that Japan and other advanced Asian economies, instead of de-coupling, are re-coupling with the US economy.

Across Asia, financial systems will be tested by the challenge of delivering growth while dealing with inflation, and aligning currency exchange and interest rates.

Surges and swift falls in short term capital flows can unsettle and even swamp a country's financial system. Unless well managed, domestic demand in Asian markets may fall victim.

The complexity of financial systems will make this challenging. This is especially for countries that may have banks and regulators who are less used to financial management in a global economy and may have less tools of influence.

There are dangers that have not been seen in the region since the crisis of 1997.

The danger of a black swan event — unexpected in nature and of severe consequence — should not be ruled out. But another crisis is not inevitable.

One key to avoid a crisis is to openly and frankly recognise the problems ahead. Too much talk of a decoupling between Asia and the US, in this regard, runs the danger of hubris that Asians are sheltered from the storm.

Another key is to increase exchanges among financial ministries and central bank regulators. Recall that the lack of transparency and coordination was a major contributor to the turmoil in Asia in 1997.

Hopefully, a decade on, the lesson has been learnt. The Chiang Mai initiative has set up currency swap agreements that can help shield Asia from short term surges in currency values.

Yet, many reforms have yet to be undertaken to strengthen domestic systems and create a closer economic community in the region.

Indeed, without a regional mechanism wider than the Chiang Mai initiative, Asia may again need to turn to the International Monetary Fund (IMF) for wider surveillance, despite the acrimonies after 1997.

Underlying this issue is political leadership. US economic turmoil may be turning into a global storm but American leadership is still focused on their own economy, and not the world.

As such, Asians should prepare to fend for themselves, coordinating more closely as a region. To do so, Asians will need to rise above their domestic politics, and work towards regional resilience.

Fending off a potential crisis can bring the region closer together and provide, in this way, an opportunity as well as a danger.

The writer is chairman of the Singapore Institute of International Affairs and associate professor at the National University of Singapore. Riding it out involves open and frank cooperation

JTC To Get Less Than 5% Of Awarded Damages

Source : TODAY, Weekend, April 12, 2008

Jurong Town Corporation (JTC) had won an appeal in a civil suit brought against it by a former sub-contractor and was awarded $8.1 million in damages. But in the latest twist to the four-year legal wrangle between JTC and sub-contractor Wishing Star, JTC will receive only $339,823.

The saga began in Nov 2003 when Hong Kong-based Wishing Star cried foul over the way JTC terminated its services after it was awarded a $54-million contract to build the glass walls of the 185,000-sq-m Biopolis (picture). JTC argued that Wishing Star had made fraudulent misrepresentations in its tender to win the contract.

In the event, Justice Choo Han Teck ruled in favour of the sub-contractor, prompting JTC to launch an appeal in Dec 2004. In May 2005, JTC won its appeal and subsequently claimed losses of more than $8.1 million.

The bulk of the sum was accounted for by the $7.81 million difference between the value of Wishing Star's contract and that of Bovis Lend Lease — the sub-contractor that JTC engaged after a second round of tenders.

Other costs arose from expenses JTC had incurred from travelling to Dongguan, China to inspect Wishing Star's facilities, and fees for consultancy and surveying services.

Wishing Star countered with its own appeal. Its lawyers, led by Mr Tan Liam Beng, argued that the sum of $7.81 million JTC incurred was not a direct consequence of Wishing Star's misrepresentations.

On Thursday, the Court of Appeal ruled that JTC had failed to give sufficient proof or evidence of this loss. It also ruled that JTC has to pay three-quarters of the costs incurred in the Appeal Court and High Court.

Jurong The Desirable

Source : The Straits Times, Apr 12, 2008

THE Urban Redevelopment Authority's (URA) plans to gentrify Jurong, long associated with factories and warehouses, have a successful working model in Tampines. As with Tampines, a dispersal of commerce and smaller office operations from the city centre and its fringes is the pivot of the new regional plan. The URA is working to a time frame of up to 15 years to develop Jurong Gateway, a dedicated commercial and recreational district that has been evolving naturally around the Jurong East train station for some years. This is intended partly to relieve anticipated pressure on the Central Business District and the Marina Bay new downtown coming up, partly as a second-tier node for smaller businesses to operate at much lower cost. Jurong residents will be delighted with job opportunities coming so close to home. But office space becoming available in the next few years in the prime areas and Tampines is making property analysts nervous about a glut. This could be overstated. The risk of commercial space going a-begging is not to be waved aside as boom-bust cycles get shorter, but the experts have forgotten to factor in population growth.
This brings us to what has to be a key reason for regional urban planning - population distribution. National planners are working on a population of six million to seven million over the next two decades, mainly through immigration, as a planning assumption. The Jurong area and its surrounding catchment are at present home to one million people. With the recreational and lifestyle improvements envisioned under what the URA beguilingly dubs the Jurong Lake District plan, this area could turn out to be a desirable place to live in. The residential housing component of the plan calls for 1,000 new homes, all landed homes or condominiums. The surprise is that there is no known provision for HDB housing despite the ample land. There is also no provision for a regional hospital. The National University Hospital is admittedly in roughly the same geographic location, but it has reached its capacity. What about schools? These social services are prerequisites if Jurong were to function as a new population magnet.

As for the recreation planned, serious thought should go into making the most of the two green lungs, the Chinese and Japanese gardens. These are gems, but in need of polishing. They can be redesigned as parks along the lines of the Botanic Gardens, but not to be crammed with unsightly plastic attractions. All told, the mix of commerce, recreation, the nearness of the two national universities and their research cluster - all set in a green environment - could turn Jurong into a sought-after address when the programme matures.

Clients Of MLM Firm Sunshine Empire Cry Foul

Source : The Straits Times, Apr 12, 2008

Many now worry they may lose their principal sums after their rebates were discontinued

PEOPLE who have put money with the controversial multi-level marketing (MLM) firm Sunshine Empire are crying foul after their monthly cash rebates were discontinued.
Many are also now worried about losing their principal sums worth millions of dollars.

MOVING BUSINESS TO HONG KONG?: 'I'm under investigation, so I'm not at liberty to reveal anything.' - MR PHANG, on an alleged offer urging Sunshine participants to transfer their accounts to Hong Kong -- ST, BT FILE PHOTOS

Several participants have told The Straits Times that they have been offered an option by their 'upline' - the person who recruited them to Sunshine - to cancel their accounts in Singapore and transfer them to a Hong Kong company called EmMax.

They have been told that once the Hong Kong business is built up, their rebates will start flowing again.

The Straits Times reported in November that the Commercial Affairs Department (CAD) was investigating Sunshine, as its activities appeared more like those of a pure investment scheme, for which it was not licensed.

The firm invites people to become 'merchants' of online goods, ranging from health supplements to electronics. Concerns centre on the fact that participants can potentially pocket big monthly 'rebates', which are not guaranteed, without ever buying or selling these goods.

The rebates are based on the participants' cash outlay, as well as Sunshine's global turnover.

Six Sunshine participants were applying for refunds when The Straits Times visited the company's headquarters in Toa Payoh yesterday.

One, who declined to be named, said he placed $12,500 in a gold plan in August. He received two monthly rebates of about $700 each, but these stopped once the CAD began its investigation.

Another participant, who also sought anonymity, said she was 'very worried' about losing her savings of $35,000, which she placed in four gold plans from November to early this year. Her rebates have ceased in recent months.

'If Sunshine is declared bankrupt, I will not get my money back,' she said. 'Can the authorities give direction on what to do?'

She will not transfer her accounts to Hong Kong, as she is unsure if the move is legal because of the ongoing investigation.

Sunshine adviser and spokesman James Phang denied any knowledge of the alleged Hong Kong option when he spoke to The Straits Times recently.

'I'm under investigation, so I'm not at liberty to reveal anything,' he said.

'To my knowledge, there were no meetings at Sunshine (about the Hong Kong option). People can come in and out. They can join any company. I have no control over the members. They are independent people.'

Mr Phang did confirm that Sunshine had stopped giving rebates in the past few months.

It was earlier reported that Mr Phang was linked to a failed investment scheme that resulted in 1,000 Singaporeans losing about $2 million.

The Consumers Association of Singapore's executive director, Mr Seah Seng Choon, cautioned participants against transferring their money to Hong Kong, as it would put their investment outside Singapore's jurisdiction.

'Recovering money from a foreign entity is always difficult if the company is unable to continue its operation here as a result of the current investigation,' he said.

Mr Seah advised consumers unprepared to stomach further risks to ask Sunshine for refunds - advice he also gave in November. He urged consumers to report to the police any new development or changes made by Sunshine.

Sunshine was placed on the Monetary Authority of Singapore's investor alert list in September. This means it is not allowed to conduct regulated activities.

It is reported to have attracted 20,000 clients since it set up in Singapore in July last year.

The police declined to comment yesterday, as its investigation was still ongoing.

Related Articles : - What Water Theme Park Projects? Source : The Electric New Paper, October 29, 2007

CapitaLand-Led Group Lands $2b Property Loan

Source : The Business Times, April 12, 2008

Biggest ever loan syndicated in S'pore will be applied towards Farrer Court project

THE largest syndicated residential property development loan ever arranged in Singapore - a huge $1.996 billion - has been issued to the CapitaLand-led consortium that clinched Farrer Court.

The five-year facilities have been fully underwritten by DBS Bank, UOB Asia, Standard Chartered Bank, OCBC and Royal Bank of Scotland.

The proceeds will be used to refinance the acquisition cost of the site and to partly finance the development and construction of a new condo on it.

CapitaLand has a 35 per cent stake in Morganite Pte Ltd, a joint-venture vehicle it set up with Hotel Properties Ltd (HPL), Morgan Stanley Real Estate Special Situations Funds III and Wachovia Development Corporation to acquire Farrer Court for $1.3388 billion - the biggest-ever collective sale in Singapore.

HPL and Morgan Stanley each own 22.5 per cent of Morganite, while Wachovia holds the remaining 20 per cent.

Farrer Court's acquisition was completed on March 10. The consortium plans to build a 36-storey condo designed by Pritzker Architecture Prize winner Zaha Hadid.

The 99-year leasehold project, with about 1,500 units, is expected to be launched next year.

The facility agreement for nearly $2 billion comprises a secured term loan for the land, a revolving credit facility that will be progressively drawn down for the project's construction and bank guarantees.

Stanchart managing director (syndications-origination) Harrison Ong said that the facility agreement has a five-year tenure. When asked about interest rate, he would only say: 'It is reasonable, given the strength of the sponsors, the size of the facility and the location of the project.'

The facilities will be secured by, among other things, a mortgage over the Farrer Court site and a debenture over the assets of Morganite.

In addition, the sponsors - the four shareholders of Morganite - will provide certain project and facility undertakings.

Issues Of Cost, Procedures Bubble Up In New En Bloc Rules

Source : The Business Times, April 12, 2008

Fine-tuning and improving the rules revised in October is an ongoing process, says Law Ministry

The Ministry of Law is understood to be planning a review soon of the revised en bloc legislation, which took effect on Oct 4 last year.

When queried, a MinLaw spokeswoman said: 'Fine-tuning and improving the legislation is an ongoing process. We will continue to monitor the effect of the changes in practice, and will make further changes, if necessary.'

She added: 'Since the amended Land Titles (Strata) Act came into effect on Oct 4 last year, we have received feedback in letters from the public and through our service enquiry line. We have also noted the feedback from letters to the press and media articles.

'The types of feedback received, mainly from affected owners, include welcoming the changes; requests to make the collective sale process even more rigorous by introducing more safeguards; suggestions on how the legislative provisions can be further amended to make the collective sale processes more efficient; and requests for clarification on the amended legislation.'

Property agents and lawyers have told BT that the new rules, while introducing more safeguards and transparency for owners, have made the en bloc process longer, more tedious and increased costs for owners. The total cost (including legal fees) of a collective sale to an owner may have doubled or increased even beyond that.

And with weaker sentiment today and a slimmer chance of success of an en bloc deal materialising, the increasing tendency among property consultants is to pass costs such as development baseline searches upfront to owners, instead of bearing them first and then seeking reimbursement later from sales proceeds as in the past, said Savills Singapore director Steven Ming.

'Some owners baulk at having to make upfront payments and that may prove to be a stumbling block to en bloc sales,' he added.

Calling for extraordinary general meetings (EGMs) has also become more troublesome under the new rules. And some agents questioned the need for giving owners a five-day cooling-off period after they have signed the collective sale agreement (CSA) on top of requiring a lawyer to witness signatures. 'We should have just one or the other,' said Credo Real Estate managing director Karamjit Singh.

But on a more positive note, Mr Singh added: 'The requirement for extraordinary general meetings gives owners a clear-cut time schedule of events in any upcoming exercise so they can know what to expect. The new rules also streamline requirements for submitting an application to Strata Titles Board (STB), thereby cutting the advertisement costs payable by the owners. And STB can disregard technical irregularities in the applications if they do not prejudice owners' interests.'

A chunk of the higher costs of an en bloc sale stems from legal fees.

The fees have at least doubled in some cases to reflect the greater scope of work for lawyers under the new rules, said Lee & Lee partner Ow Yong Thian Soo.

Even before they are appointed, lawyers may have to help owners requisition the first EGM where the sales committee is appointed. After being appointed, lawyers' additional duties, under the revised rules, include witnessing signatures and updating consent levels every four weeks instead of every eight weeks - with no guarantee that they will secure the 80 per cent minimum consent, or that there will be an eventual sale.

Rodyk & Davidson partner Norman Ho said that as a result, his firm has become more circumspect in accepting new en bloc sale appointments, preferring to choose cases where owners' expectations are realistic and hence chances of a sale are higher.

'Generally in the industry, lawyers may have charged about $70-150 per unit for upfront disbursements for doing searches to verify ownership of the units, etc, previously. Today, this may cost anywhere from $250-300. And the professional legal fee, collected upon completion of an en bloc sale, has also increased from about 0.15 to 0.2 per cent of the sale price previously to around 0.3 to 0.4 per cent today.'

Mr Ho added: 'I know of some firms that are proposing to charge an upfront professional fee of $1,000 to $2,000 per unit, which will be offset from the final fee of say 0.4 per cent, if there is a successful sale.'

Property consultants' fees is also understood to have also increased by about 50 to 60 per cent because of more work, longer gestation period and more meetings.

Also, owners will now have to cough up the cost of a mandatory land valuation, typically about $5,000 to $25,000 (shared among owners) which has to be submitted at the close of tender. They may also have to be prepared to pay for a development baseline search - which could cost $7,000 to $20,000 - in cases where it may be necessary to ascertain the development baseline to provide certainty in calculating the development charge (DC) payable.

In the past, management corporation funds were sometimes used for such searches, while in other instances, majority owners paid first. In some cases, even property consultants footed the bill initially (but were later reimbursed from sales proceeds) - but that was when the market was buoyant. These days, agents are reluctant to pay upfront for development baseline searches.

Mr Singh suggested that the authorities should make it clear whether the management corporation's funds may be used for development baseline searches to allow owners to price the asset accurately.

Previously, the sales committee could independently call for EGMs but under new rules, these must be requisitioned by at least 25 per cent of owners, or by owners controlling at least 20 per cent of share values in the development, Rodyk's Mr Ho said.

However, some property consultants and lawyers said that it is not clear whether the sales committee can still call for general meetings without such requisitions under the new rules - and sought for greater clarity on this issue.

Savills' Mr Ming said that it is not realistic to expect a lawyer to witness signatures as owners may have questions and 'it should be very much the agent's role to persuade them on the merits of the en bloc sale'.


《联合早报》Apr 11, 2008