Friday, May 9, 2008

Jim Rogers: Credit Crisis Not Halfway Through

Source : The Business Times, May 9, 2008

THE credit crisis 'isn't halfway through', said investor Jim Rogers. There may be more write-offs from European and Asian banks.

Mr Rogers said that the crisis has not bottomed as far as he was concerned. Considering the scale of the credit bubble that burst, he said that it would likely take years to 'clean it up'. He was speaking yesterday at Barclays' launch of a new agricultural commodities fund linked to an index that he designed.

Called the Global Agriculture Delta Fund in Hong Kong and Singapore, it tracks the agriculture sub-index of the Rogers International Commodity Index (RICI).

A sales charge will apply, and the annual management fee is currently 1.05 per cent.

Recently, Barclays also launched the Global Commodities Delta Fund, linked to the RICI index. The fund has raised some US$550 million in the region.

The RICI-Agriculture index is designed to reflect global demand and supply of agricultural commodities, and is one of the most diversified indices. Wheat, corn and cotton are the largest components, but the index also includes items like barley and azuki beans.

Soros Says Impact Of Crisis On US Economy Just Starting

Source : The Business Times, May 9, 2008

(WASHINGTON) Billionaire investor George Soros believes that the 'acute phase' of the financial crisis is 'largely behind us', even as the US economy is only now starting to feel the effect.

The damage done to the global financial system 'has to affect, in my opinion, the real economy', Mr Soros, 77, said in a question-and- answer session in Washington on Wednesday. 'The effect of that is only beginning to be felt. There is a certain time lag.' Just as housing prices 'overshot on the upside', they will overshoot on the way down, Mr Soros said.

The US is in the 'very beginning of an uptrend' in foreclosures, he said at an event hosted by the Council on Foreign Relations. With home prices declining, 'to expect that by the end of the year you will have passed through that' is unrealistic, he said.

The US dollar 'would certainly come under renewed pressure' if the Federal Reserve were to further reduce interest rates, Mr Soros said. The Fed cut its benchmark interest rate by a quarter- percentage point to 2 per cent on April 30.

'The fact that they stopped at 2 per cent is now giving the dollar a breathing space,' Mr Soros said. 'So the dollar has stabilised as a result.'

Sovereign wealth funds have been a 'positive factor' in stabilising US financial companies, Mr Soros said. Certain standards need to be set for the funds because they could come under political influence, he said.

The funds, owned and controlled by foreign governments, have bought stakes in financial institutions including Citigroup, Merrill Lynch & Co, UBS AG and Morgan Stanley, after the banks suffered losses on securities linked to sub-prime mortgages. The funds' assets may increase four-fold to US$12 trillion by 2015, according to Morgan Stanley estimates. -- Bloomberg

FRHI Confirms In-Principle Sale Of Raffles Hotel

Source : The Business Times, May 9, 2008

Buyer is consortium led by former Credit Suisse banker

Raffles Hotel is being sold - as readers of BT were told yesterday. Under an in-principle agreement announced yesterday, Fairmont Raffles Hotels International (FRHI) will sell the iconic hotel to a consortium led by former Credit Suisse investment banker Mark Pawley.

'Completion is expected to take place at the end of May 2008,' FRHI added in its statement.

Raffles Hotels & Resorts, owned by FRHI, will continue to manage the hotel under a long-term management contract.

The pricing for the transaction and details of consortium members were not disclosed.

While he was head of Asian Real Estate, Gaming and Lodging business at Credit Suisse Investment Banking in Asia, Mr Pawley was involved with the $1.7 billion sale of the entire Raffles Holdings' hotel portfolio - including Raffles Hotel in Singapore - to US-based private equity firm Colony Capital in 2005.

Colony later merged that portfolio with Fairmont Hotels & Resorts' assets to create FRHI.

Colony is today understood to hold about 40 per cent in FRHI while Saudi Prince Alwaleed bin Talal's Kingdom Hotels International owns the rest.

BT reported yesterday that a preliminary agreement had been inked on the sale of Raffles Hotel and the adjoining shopping arcade and that the price is believed to be in the 'mid-$600 million range'. The report had also said that the buyer was believed to be a family trust, most likely linked to a European family.

Market watchers yesterday suggested the trust is likely to be a member of the consortium.

Raffles Hotel, Singapore, is just the latest asset FRHI/Colony have sold from the former Raffles Holdings portfolio acquired in 2005.

Last year, FRHI sold 100 per cent equity interest in its two Cambodian hotels, Raffles Hotel Le Royal in Phnom Penh and Raffles Grand Hotel d'Angkor in Siem Reap, to Kingdom Hotels Investments for US$36.4 million and at the same implied enterprise value. It also sold Swissotel Sydney last year.

In late 2006, FRHI sold Swissotel Merchant Court in Singapore to a fund managed by LaSalle Investment Management at a price reported to be in the $300-400 million range.

In its statement yesterday, FRHI said: 'As part of FRHI's ongoing business strategy to build a brand-focused global hotel company, FRHI continues to pursue opportunities to monetise its hotel real estate investments.

'These asset sales are purely real estate transactions that provide an opportunity to realise the value of our very successful investments and provide us access to significant capital for future growth of our management companies.'

'Similar to FRHI's past real estate transactions, any hotels that are sold will continue to be part of the company's hotel collection and will be managed under long-term management contracts.'

HPL In Deal To Rebuild, Refurbish Hotels In Libya

Source : The Business Times, May 9, 2008

Creation of JV with that country's state pension fund manager is on cards

HOTEL Properties Ltd (HPL) has forged an agreement with Libya's state pension fund manager to rebuild and refurbish hotels in the country, a deal achieved partly thanks to 'middleman' Philip Yeo.

Stephen Yeo, executive vice-president of HPL, said on Wednesday evening at a press conference here that many details have yet to be firmed up. But on the cards is the creation of a 50-50 joint venture company with Libya's Social Security Fund Investments Company (SSFI), which manages three to four billion Libyan dinars (S$3.5 to 4.7 billion) in assets, to refurbish Tripoli's Al Kadir hotel to five-star standard for US$30 million.

Boosting ties: SM Goh (left) with Col Gaddafi in Tripoli yesterday. He met the Libyan leader for what Mr Goh called an 'illuminating discussion' lasting almost an hour

Other projects include the building of a 50-storey mixed-use tower in Tripoli for around 150 million euros (S$317.5 million), and the redevelopment of a hotel in Benghazi city, according to SSFI chairman Issa Tuwegiar. SSFI manages 23 hotels, resorts and tourism villages in Libya on behalf of Libya's pension fund.

Hexagon Development Advisors - a consultancy headed by the former EDB and A*Star chief Philip Yeo - helped Ong Beng Seng's HPL clinch the deal. Mr Yeo is now chairman of Spring Singapore.

The main shareholders of Hexagon - a company set up in February 2007 - are Reef Enterprises, believed to be an HPL outfit, and Ellington Investments, which focuses on energy and power industries. Through his own firm P*Yeo Investments, Mr Yeo has shares in Hexagon. The consulting firm's senior people include other former EDB officers.

Mr Yeo and Mr Ong are understood to have visited Libya more than once in the past year and have built up a relationship with the Libyan Economic Development Board, a government body inspired in part by its Singapore counterpart.

A joint HPL-Hexagon delegation visited Libya last September to discuss business deals, according to David Ban, Mr Ong's associate and a consultant at Hexagon who was present at the signing of a memorandum of understanding on Wednesday night.

SSFI's Mr Tuwegiar said HPL's expertise in tourism and hospitality is particularly welcome and the agreement was secured quickly, within a few months. HPL has interests in 23 hotels worldwide and has developed numerous luxury residential properties. It also owns shopping and commercial properties plus the Hard Rock cafe franchise in the Asia-Pacific region.

Yesterday morning, Senior Minister Goh Chok Tong met Libyan leader Colonel Muammar Gaddafi for what Mr Goh called an 'illuminating discussion' lasting almost an hour.

Mr Goh told reporters that he was interested in finding out the future direction of the Libyan economy. 'Unless you are sure of the clarity of the direction of the Libya economy it will be a bit difficult for us to consider investing in the economy in the big way,' he said.

Afterwards, Mr Goh met Libyan Prime Minister Al Bugdady Ali Al-Mahmoudi and witnessed the signing of a memorandum of understanding to further economic cooperation between the two countries. Singapore businessmen remain worried that shifting rules and regulations in Libya could hurt their investments and Mr Goh said he had transmitted these concerns to the Libyan leaders.

Libya has only recently come out of international isolation after United Nations and US sanctions were lifted.

The country has large reserves of oil and gas, as well as 1,800km of coastline and many heritage sites, including Leptis Magna, an impressive Roman ruin that is largely unexcavated.

This has led to a rapid influx of foreign businessmen and tourists, which the country's infrastructure is struggling to cope with. Libyan government officials say they may need as many as 40,000 more hotel rooms to meet the surge in demand, as there are only about 12,000 rooms at present. Only one hotel is said to be of five-star standard and even then its facilities - for example, Internet access - are still patchy.

Greenspan Upbeat On Credit Crisis: Sources

Source : The Business Times, May 9, 2008

NEW YORK - Former Federal Reserve Chairman Alan Greenspan said on Thursday that the worst of the credit crisis is over, according to sources who attended a speech he delivered in New York.

Former Federal Reserve Chairman Alan Greenspan also said US house prices still had a long way to fall

Mr Greenspan said while the current credit crisis was the worst he had ever seen, the worst was over as low interest rates meant companies could borrow more cheaply long-term, the sources who attended his speech at the Alternative Public Strategies Conference told Reuters.

Conference organisers said Mr Greenspan had requested that members of the media intending to cover his speech could only do so in their personal capacity and would not be allowed to report on whatever he said.

He also said US house prices still had a long way to fall and that it was unlikely they would stabilise by year-end, the sources said.

As chairman of the Federal Reserve, Greenspan oversaw the reduction of the federal funds rate 1.0 per cent in 2003 which some critics charge provided fuel for the US real estate bubble that followed.

Mr Greenspan has vehemently rejected assertions that his monetary policy was the cause of the problem. Low interest rates and lending practises that saw loans being advanced to home owners with poor credit histories have been blamed for the US housing market meltdown.

The US economy is reeling from a housing-led slowdown, with some analysts convinced it is already in a recession despite a 0.6 per cent growth rate in the first quarter of 2008.

The Fed has cut it's key overnight lending rate by 3.25 percentage points to 2.0 per cent since mid-September in a bid to prevent the housing downturn from spilling over to the broader economy. The aggressive rate cuts were also directed at healing the fractured credit markets.

According the sources, Mr Greenspan mentioned that United States growth was likely to be sluggish for an extended period of time but that a so-called doomsday scenario was unlikely to materialise. -- REUTERS

GIC Warns Global Economic Risks May Rise

Source : The Business Times, May 9, 2008

Singapore's sovereign fund GIC, one of the world's biggest state-owned investors, warned on Friday that risks to the global economy could rise in the next 12 months due to falling house prices and a spike in energy costs.

The comments by Government of Singapore Investment Corp (GIC) deputy chairman Tony Tan come after he cautioned last month that financial markets would remain fickle and the world could face its worst recession in 30 years - a scenario that was widely perceived as being too gloomy.

'Steep falls in house prices in the US could deepen mortgage-related losses and dampen consumer spending,' Dr Tan said, according to the text of a speech delivered in Shanghai.

'Higher energy costs could potentially offset the positive impact of tax rebates US households receive from the fiscal stimulus package,' he said.

Dr Tan acknowledged that market uncertainty and volatility had made it harder for investors to achieve strong returns, while taking acceptable risks.

GIC, estimated to have more than US$300 billion in assets, is heavily exposed to the financial industry through its multi-billion dollar investments in beleaguered banks UBS and Citigroup made in the wake of the credit crisis.

GIC said last month it was confident that the bank investment would give good long-term returns. Its sister fund, Temasek Holdings, has invested in Merrill Lynch and Barclays. -- REUTERS

InterContinental Q1 Profit Falls 34% To £31m

Source : The Business Times, May 8, 2008

(DUBLIN) InterContinental Hotels Group plc, the owner of the Holiday Inn chain, said first-quarter profit fell 34 per cent following the sale of hotels to focus on managing and franchising sites.

Net income declined to £31 million (S$82.8 million), or 10.5 pence a share, from £47 million, or 12.9 pence, a year earlier, InterContinental said yesterday in a statement.

That beat the £25 million average estimate of three analysts surveyed by Bloomberg.

InterContinental, whose chains include Crowne Plaza and Indigo, increased the number of rooms in its network by 5,267 in the first quarter.

The Windsor, south England-based company added management and franchise contracts after selling property worth £3 billion in 2003 to 2006.

'Our broad market coverage, record pipeline, strong brands and resilient fee-based business model position us well for continued growth,' chief executive Andrew Cosslett said in the statement.

InterContinental's stock has declined 6.7 per cent this year.

Revenue from continuing operations increased 15 per cent to £226 million during the first quarter.

Mr Cosslett said in February that the company had added more than 47,000 net hotel rooms since 2005, and was on course to beat its goal of raising that number to between 50,000 and 60,000 by the end of 2008.

The hotelier is also spending US$1 billion to renovate the Holiday Inn chain.

InterContinental, founded as a unit of Pan American World Airways to accommodate aircrew, said yesterday that it added more than twice the number of rooms in the first quarter compared with the same period a year earlier.

Revenue per available room, an industry gauge of profitability, gained 3.5 per cent at constant exchange rates in the first quarter, held back by the earlier timing of Easter this year, InterContinental said.

Pretax profit declined 25 per cent to £42 million, beating the £34.5 million average estimate.

Mr Cosslett, a former Cadbury Schweppes plc executive, said in February that London and southern England were experiencing 'a bit of downward pressure' on visits from the United States as the US dollar's drop made trips more expensive.

He added, however, that that was offset by growth in the number of visitors from the Middle East and China.

The company owns, manages or franchises almost 4,000 hotels in about 100 countries.

InterContinental still owns 18 properties and said last year that it would sell the rest in 'years' rather than months. -- Bloomberg

S'pore's Inflation May Ease: Tharman

Source : The Straits Times, May 9, 2008

SINGAPORE'S inflation may slow in the second half from the preceding period, Finance Minister Tharman Shanmugaratnam said in Jakarta on Friday.
Speaking to reporters, he said the Government does not need to adjust its inflation forecast of 4.5 per cent to 5.5 per cent, reported Bloomberg news.

Singapore's policies focus on the long-term trend, said Mr Shanmugaratnam. -- ST PHOTO: THOMAS WHITE

Singapore's policies focus on the long-term trend, said Mr Shanmugaratnam.

The Monetary Authority of Singapore expects 2008 inflation to average at the 'upper half' of its forecast range of between 4.5 per cent and 5.5 per cent, after prices gained 2.1 per cent last year. Inflation has accelerated in the past year partly because of rising raw material prices and after the Government raised the goods and services tax (GST) on July 1.

Global food prices surged 57 per cent in March from a year earlier, according to the United Nations. Rice prices gained today to US$23.45 per 100 pounds in Chicago, more than doubling from a year earlier. Crude oil futures yesterday climbed to a record US$124.53 a barrel in New York, also double the level a year ago.

'In medium term, I think inflation is rather stable,' said Mr Shanmugaratnam. 'We have to devise strategies that aren't just short-term mitigation but ensuring that regionally and globally, we have a holistic approach to food price inflation and fuel price.'

Singapore's central bank, in its twice-yearly review of the exchange rate, on April 10 unexpectedly targeted a stronger trading range for the currency to help ease rising costs of staples such as food and energy.

The Singapore dollar has gained 4.8 per cent this year, the second-best performer among 10 Asian currencies tracked by Bloomberg. The consumer price index jumped 6.7 per cent in March from a year earlier, the fastest pace in 26 years, according to the Department of Statistics.

Factors behind rising rice prices

* March 2008 - India bans exports of non-basmati rice again as inflation hits a 14-month high, alarming policymakers.

* March 2008 - Egypt bans rice exports from April 1 to October to hold down local prices. The country normally produces about 4.6 million tonnes a year of white rice, leaving a domestic surplus of about 1.4 million tonnes for export.

* April 2008 - Vietnam extends a ban on rice sales until June to help stabilise domestic food prices as it tries to tame double-digit inflation. Prior to that, it had curtailed exports for March and April.

* April 2008 - Brazil temporarily suspends rice exports to safeguard domestic supply and keep prices of the basic foodstuff stable. Brazil, which is not a major global rice supplier, exported 313,000 tonnes of rice last year.

* April 2008 - Indonesia, South-east Asia's largest rice consumer, says it would curb medium-grade rice exports to combat inflation. Under Indonesia's new rice export rules, state procurement agency Bulog is allowed to sell medium-grade rice overseas only when national stocks are above 3 million tonnes and domestic prices are below a government's target price.

* April 2008 - India slaps export taxes on basmati rice, on top of an existing ban on non-basmati rice exports.

* May 2008 - Bangladesh bans non-aromatic rice exports.


A cyclone sweeps through Myanmar's Irawaddy delta, inundating rice crops and raising the prospect that the country may need to import from its neighbours. The UN's Food and Agriculture Organisation said it had been looking for 600,000 tonnes of rice exports from Myanmar this year.


March 2008 - The Philippines says it aims to import up to 2.2 million tonnes of rice this year to meet a domestic shortfall, in what could be the biggest overseas purchase of the staple in a decade. Local harvests have failed to keep up with expanding population, lifting inflation to a 16-month high.

* March 2008 - Bangladesh says it would import 400,000 tonnes of rice from India to cushion the country's dwindling stocks. The imports, allowed under a government-to-government deal, would not be subjected to the rise in rice export prices.

* April 2008 - Singapore says it would allow rice importers to bring in more stock to meet increased demand amid consumer fears of a rice supply crunch and higher prices.

* May 2008 - Mexico says it will allow 250,000 tonnes of rice to be imported without the usual 20 percent tariff in an effort to protect Mexicans from soaring food prices.

FALLING WORLD INVENTORIES World inventories have fallen by nearly 50 percent from a record high of 147.1 million tonnes in 2000/01, although they have already recovered slightly from a low in 2004/05. They are expected to rise marginally by the end of this crop year.

SPECULATIVE BUYING On the Chicago Board of Trade, financial speculators looking for the next big commodity play, have helped lift prices by about 80 per cent this year to successive record highs. To a degree, hoarding by consumers has also fed the rise by spurring importers to seek supplies sooner.

DIVERSIFICATION OF LAND USE In some countries such as the Philippines, production is failing to keep up with demand because paddy land is being overtaken for industrial development, or because farmers are seeking other trades. This is a longer-term issue that should contribute to supply tightness in the future, and governments in Vietnam and the Philippines have both moved to curb conversion of farmland to other uses.

GROWING DEMAND In poor nations facing a doubling in wheat and corn prices, rice consumption is rising, but this is partly offset by falling per-capita consumption in big countries such as China.

Data from the US Department of Agriculture shows that consumption in China - which accounts for 30 per cent of world consumption - has fallen by 3.9 per cent over the past five years. But global consumption has risen by 2.7 per cent over the same period, in places such as Nigeria, the Philippines and Bangladesh. - REUTERS

Yanlord Land Says Q1 Net Profit Jumped To S$9.3m

Source : Channel NewsAsia, 09 May 2008

Property developer Yanlord Land on Friday said its first quarter net profit more than tripled on year to S$9.3 million.

This was due mainly to a sustained growth in demand and higher average selling prices for its high-end residential units in the quarter.

Revenue rose 30 per cent on year to S$116.2 million.

China-based Yanlord said the mainland's real estate sector continues to show strong growth potential.

Official Chinese government data showed that prices for new apartment units in 70 large- and medium-sized cities rose nearly 12 per cent in the first quarter this year.

Yanlord has been launching new units for sale in the Chinese cities of Nanjing and Suzhou.

It will also be developing properties in Tianjin. - CNA/ac

DBS Gets Go-Ahead To Buy "Good Assets" Of Taiwan's Bowa Bank

Source : Channel NewsAsia, 09 May 2008

DBS Bank has received the green light from Taiwan regulators for its purchase of certain assets in Bowa Commercial Bank.

The deal is due to be completed on May 24.

Back in February, DBS announced that it had won a government auction for the good assets of Bowa Commercial Bank, which include net loans worth US$2 billion and deposits of US$2.9 billion.

Bowa has 39 outlets and almost 1,200 employees.

The purchase marks DBS' foray into Taiwan's banking market. It will give the lender significant inroads into the fourth largest economy and banking sector in Asia, excluding Japan.

The troubled Bowa Bank came under the control of the Taiwan government's Central Deposit Insurance Corporation last August. - CNA/ac

She's Been Sold – Again

Source : TODAY, Friday, May 9, 2008

Fairmont Raffles Hotel Int'l sells its stake in Raffles Hotel to ex-Credit Suisse banker

THE Grand Dame of Singapore will be getting a new master — yet again.

Fairmont Raffles Hotel International — controlled by Saudi Arabian billionaire Prince Alwaleed bin Talal and United States-based private-equity company Colony Capital — is selling its stake in the 120-year-old Raffles Hotel.

The buyer is a group led by a former investment banker of Credit Suisse Group, Mr Mark Pawley, Fairmont said in a statement yesterday.

While it did not disclose the price or name the other buyers, The Business Times reported yesterday that the group would pay about $650 million for the acquisition.

The transaction is part of the company's strategy to "monetise" its investments in hotels and real estate and will provide the company with "significant capital for future growth", it said.

The 103-room Raffles Hotel will continue to be part of the Fairmont Raffles' collection of hotels and the company will continue to run the property through a management contract, the statement said.

This is the second time in less than three years that the iconic hotel — which is gazetted as a national monument — has changed hands. In 2005, Colony bought the hotel and the adjacent shopping arcade as part of the entire hotel business of the then-listed Raffles Holdings for a total of $1.7 billion.

According to BT, Colony later merged these assets with Fairmont Hotels and Resorts after Fairmont was acquired by Colony and Prince Alwaleed's Kingdom Hotels International to create a single hotel enterprise, Fairmont Raffles Hotel International.

S'pore Banks Falter On Market Volatility

Source : The Business Times, May 08, 2008

The combined earnings of the three Singapore-listed banks fell in the first quarter as trading losses and lower investment income offset gains from continued strong lending growth.

But the banks said their loan books are still seeing healthy growth and long-term earnings prospects remain positive, especially for their main lending business.

At the same time, they said there are unlikely to be further write-downs on investments in collateralised debt obligations (CDOs), as most of the value of these investments has already been provided for.

Analysts, however, expect the pace of loans growth to slow by about half this year compared with last year, though it should remain above 10 per cent, they say.

DBS Group, the biggest of the three lenders, saw the fastest loans growth, with net customer loans expanding 21 per cent from a year earlier and 5 per cent over the quarter to $114.2 billion at end-March.

United Overseas Bank (UOB), the second-largest lender, reported the slowest loans growth. Its net customer loans rose 19 per cent over the year and 2 per cent from end-December to $94.4 billion at end-March.

DBS chief financial officer Jeanette Wong said yesterday the bank expects loans growth to moderate from last year's 'exceptional' pace of 25 per cent, but that falling below 10 per cent expansion 'would be a stretch, given the strong growth in the first quarter and our pipeline'.

Leng Seng Choon, an analyst at DMG & Partners Securities, said in a note yesterday that he expects UOB's loans growth to slow to 11 per cent this year from 20.5 per cent in 2007, but believes loans expansion 'will still drive net interest income'.

The banks were keen to put to rest any lingering doubts over their remaining investments in CDOs.

'We do not expect any further provisions for CDOs to be significant in the coming quarters,' said Ms Wong at the DBS results briefing yesterday.

'The CDO problem is behind us,' said OCBC Bank chief executive David Conner at its results briefing yesterday.

As analysts expected, DBS's net interest margin - the difference between what the bank earns on loans and pays on deposits - suffered more than that at the other two banks from falling interest rates here.

As the largest of the three lenders, DBS is the most vulnerable to falling interbank rates due to its large base of low-interest rate savings deposits. The bank can do little to lower the rates it pays on these deposits, even as falling interbank rates mean it collects less from the loans it makes.

Trevor Kalcic, an analyst at ABN Amro, said in a note on DBS yesterday that he remains 'cautious' on net interest margin pressure from low interbank rates and an expected slowdown in lending growth.

But he said DBS's move to raise its general allowances for loans as it expands its loans book is 'a good prudent measure'.

He added that all three Singapore banks 'should be insulated from the second-round effects of the sub-prime crisis, slowing economies and tighter lending standards, as exposure to CDOs for the banks has always been relatively low'.

Total net profit at the three banks for the first quarter slipped 2 per cent from a year earlier to $1.75 billion.

DBS and OCBC reported a dip in net profit, while UOB's net profit grew 2 per cent. Non-interest income at all three banks fell from a year earlier, dragging down overall income growth.

Raffles Hotel Sold

Source : AsiaOne, Fri, May 09, 2008

The iconic Raffles Hotel is being sold.

Fairmont Raffles Hotel International (FRHI) announced yesterday that an in-principle agreement has been inked which will sell the hotel to a consortium led by former Credit Suisse investment banker Mark Pawley.

FRHI added: 'Completion is expected to take place at the end of May 2008.'

The hotel will continue to be managed by Raffles Resorts and Hotels, owned by FRHI, under a long-term management contract.

The transaction price as well as details on the members of the consortium were not disclosed.

The head of the consortium, Mr. Pawley, was involved with the $1.7 billion sale of the entire Raffles Holdings' hotel portfolio, including Raffles Hotel in Singapore, to US-based private equity firm Colony Capital in 2005 while he was head of Asian Real Estate, Gaming and Lodging business at Credit Suisse Investment Banking in Asia.

The Raffles hotel portfolio was later merged with Fairmont Hotels & Resorts to create FRHI.

Saudi Prince Alwaleed bin Talal's Kingdom Hotels International now holds majority of FRHI, with Colony holding the remaining 40%.

A report in The Business Times yesterday said that a preliminary agreement had been reached on the sale of Raffles Hotel and the adjoining shopping centre, with a price tag somewhere in the 'mid-$600 million range'. It was said that the buyer was most likely a family trust, linked to a European family. It was suggested yesterday that the trust might likely be a member of the consortium.

Raffles Hotel, Singapore is the latest among the assets sold by FRHI/Colony from the Raffles Hotels' portfolio.

Raffles Hotel Le Royal in Phnom Penh, Raffles Grand Hotel d'Angkor in Siem Reap and Swissotel Sydney were sold last year, while Swissotel Merchant Court in Singapore was sold in late 2006 to a fund managed by LaSalle Investment Management.

In its statement yesterday, FRHI also said: 'As part of FRHI's ongoing business strategy to build a brand-focused global hotel company, FRHI continues to pursue opportunities to monetise its hotel real estate investments.

'These asset sales are purely real estate transactions that provide an opportunity to realise the value of our very successful investments and provide us access to significant capital for future growth of our management companies.'

'Similar to FRHI's past real estate transactions, any hotels that are sold will continue to be part of the company's hotel collection and will be managed under long-term management contracts.'

Raffles Hotel Looks Set To Be Sold At Hefty Price Tag

Source : The Straits Times, May 9, 2008

Consortium led by banker may buy hotel and adjoining arcade for $650m

MYSTERY buyers are set to acquire the historic Raffles Hotel for more than treble the $200 million it sold for just three years ago.

The 121-year-old hotel and the adjoining shopping arcade are changing hands again after a consortium led by a Singapore-based banker agreed to buy the property, the American and Middle Eastern owners announced yesterday.

RICH LEGACY: Raffles Hotel is a part of Singapore's history and heritage. Staff and guests are unlikely to be directly affected by the sale. -- ST PHOTO: JOYCE FANG

The eye-popping price tag is about $650 million, The Business Times (BT) reported yesterday.

The dramatic jump in value of the heritage property is the result of Singapore's booming hotel industry, market watchers say. Average room rates are now about $240, way up from $136 in 2005.

The identities of the buyers are not yet clear, though the consortium is being led by prominent former Credit Suisse banker Mark Pawley, who declined to comment yesterday.

The BT cited unnamed sources as saying the consortium might be linked to a European family.

As a Credit Suisse banker, Mr Pawley helped arrange the $1.7 billion sale of the hotels of Raffles Holdings to US-

based Colony Capital in 2005. The hotel portfolio included Raffles Hotel and the adjacent shopping arcade - valued at $200 million then.

Mr Pawley is chief executive of Singapore-based Oxley Capital Group, a private investment house focusing on real estate and private equity. Oxley told Reuters yesterday that it was not the buyer.

After Colony bought Raffles Holdings, it combined the hotels, including Raffles Hotel, into Fairmont Hotels & Resorts, which it had also acquired.

Yesterday, Fairmont Raffles Hotels International (FRHI) announced that it had reached an in-principle agreement with the consortium led by Mr Pawley to sell its stake in Raffles Hotel.

The deal is expected to be completed by the end of the month, the firm - controlled by Saudi Arabian billionaire, Prince Alwaleed bin Talal - and Colony said in a statement.

FRHI said it continues to look for ways to 'monetise its hotel real estate investments'.

These asset sales, it said, are 'purely real estate transactions that provide an opportunity to realise the value of our very successful investments'.

Staff and guests at Raffles Hotel are unlikely to be directly affected by the change.

'Similar to FRHI's past estate transactions, any hotels that are sold will continue to be part of the company's hotel collection and will be managed under long-term management contracts,' it said.

The BT reported that the sale would come with a 40-year management contract for Raffles Hotels and Resorts, citing unnamed sources.

It also reported a sale price 'in the mid-$600 million range'. The 999-year leasehold Raffles Hotel has 104 suites. The shopping arcade has a 99-year lease.

Mr Donald Han, Cushman & Wakefield's managing director, said the hotel sale price would exceed $1 million per room, after taking out the retail component. Generally, a five-star hotel sells for about $700,000 to $800,000 a room.

Back in 2005, concerns were raised about securing the legacy of the hotel, which is a part of Singapore's history and heritage. But the parties involved have said the hotel's legacy remains intact.


Colony Capital bought Raffles Hotel and the shopping arcade in 2005 as part of the entire hotel business of Raffles Holdings.


Former Credit Suisse banker Mark Pawley leads the consortium, but the identities of the buyers are not yet known.

Ho Bee's Q1 Net Profit Drops 62% To S$26m

Source : Channel NewsAsia, 08 May 2008

Property developer Ho Bee has reported a 62 percent drop in first quarter net profit to S$26 million. Its revenue also fell 62 percent to S$94 million.

Ho Bee said this was mainly due to the lower recognition of revenue from a property development project, The Coast at Sentosa Cove.

The company also noted that the global economic and financial uncertainties caused by the US sub-prime crisis will continue to affect the sentiment of both the stock and property markets.

Property transactions are expected to remain weak in the short term.

However, Ho Bee said its revenue and earnings for the next two to three years will be underpinned by the progressive recognition of income from the successful sales of its residential projects. - CNA/ir

Ascott Acquires Prime London Property For S$116m

Source : Channel NewsAsia, 08 May 2008

CapitaLand's Ascott unit has bought an existing serviced residence in London for S$116.4 million.

The property is located within London's 'Midtown' region at High Holborn.

Ascott is currently leasing the property from Land Securities, the UK's largest real estate investment trust.

The property is being operated under the brand name Citadines London Holborn-Covent Garden.

The 192-unit serviced residence is located within a major shopping and office district.

Ascott says Europe is an important region for the company's global expansion.

The company has a global portfolio of 21,000 serviced residence units, of which 5,600 are in Europe. - CNA/ir

More Land Leased Out To Hostel Tenants To Meet Demand From Int'l Students

Source : Channel NewsAsia, 08 May 2008

International students in Singapore will soon have more housing options.

With more students from overseas studying here, demand for hostels has increased. So the Singapore Land Authority (SLA) doubled the tenders awarded to hostel tenants between 2006 and 2007.

The camp site at Jalan Bahar in Jurong used to belong to the Singapore Civil Defence Force. It now has a new lease of life - as apartments for students, particularly those from the nearby Nanyang Technological University (NTU).

Those unable to get a room on campus can rent one for between S$250 and S$400 a month. This is slightly more than the cost of a room at NTU, which ranges from S$160 to S$280. The apartments come with attached toilets and kitchens.

The SLA awarded the site to a local company last year for a monthly fee of S$77,000. The lease is for three years.

Apartments at Jalan Bahar in Jurong

The latest land leased out for hostel use is in Ulu Pandan. It was awarded in February this year to EM Services, fetching a bid of S$122,725, about 60 percent more than the guide rental.

"The students we are targeting at are from NTU and NUS... We managed to hit 90 percent of the occupancy rates in six months. There are also many private schools that have approached us," said Yang Tse Pin, Managing Director of Jian Yu Construction. - CNA /ls

Inflation To Hit Singapore Harder Than US Economic Slowdown

Source : Channel NewsAsia, 08 May 2008

Inflation is a more serious problem for Singapore and other Asian economies than an economic slowdown in the United States, according to HSBC's senior Asian economist, Robert Prior-Wandesforde.

He said if inflation continues to push upwards, Asia could find itself facing an economic slowdown next year. His comment came at a seminar organised by the Singapore International Chamber of Commerce.

Inflation in Asian economies has been on a relentless move upwards, with Singapore seeing inflation rising at its fastest pace in more than 26 years.

HSBC said the Singapore government appears to be tackling inflation well, but external factors are key when assessing the overall outlook.

Mr Prior-Wandesforde said: "Singapore isn't too badly placed; I think we can manage this reasonably well. The countries that I'm more worried about would be some of the lesser developed countries, where inflation is starting to get a bit out of hand.

"The governments and central banks are going to need to do something about that. That means pressure on growth eventually, and that could be the bigger danger for Singapore as we go into 2009 and 2010."

He said inflation is a bigger worry than the anticipated slowdown in the US because as a whole, Asia is still expected to show robust growth, led by economies such as China and India.

He added: "Asia has survived what has already been a reasonably big US downturn surprisingly well. In fact, some Asian countries have picked up at exactly the same time as the US has been slowing down.

"I do think there's a possibility that the reverse could happen with these various commodity price shocks having a bigger impact on Asia than the Western world. Asia is slowing down more aggressively in 2009 (and) 2010, at exactly the same time as the US picks up."

Prices of commodities such as oil and rice have been surging, leading to protests in Thailand, Vietnam and the Philippines. - CNA /ls

Ho Bee Q1 Net Earnings Dive 62% To $26.1m

Source : The Business Times, May 9, 2008

Sharp drop in property development revenue

HO BEE Investment yesterday reported a 62 per cent plunge in net earnings for the first quarter ended March 31, 2008, to $26.1 million, from $69.1 million in Q1 2007. Earnings per share were 3.54 cents, down from 9.37 cents the year before. Revenue was $94.2 million, a 62 per cent fall from $245.8 million a year earlier.

The Coast at Sentosa Cove: The project recognised revenue of $26.5m in the first quarter of 2008, down from $209m in Q1 2007

The drop in group turnover was largely due to lower recognition of revenue from property development project The Coast at Sentosa Cove.

The Coast project recognised revenue of $26.5 million in Q1 2008, down from $209 million in Q1 2007. This was the main reason for property development revenue falling 64 per cent to $88 million.

Turnover on property investment fared better, driven by higher rental income from office units at Samsung Hub and industrial buildings at HB Centre II and One Tannery Road. At $4.1 million, it was almost 2.6 times that of the $1.6 million recorded last year.

Ho Bee saw strong overall occupancy rates and increasing rents for its investment properties in Q1.

Room and cafe revenue from its hotel operation also did well, rising 71 per cent to $2.1 million.

Sounding a note of caution, Ho Bee said: 'The global economic and financial uncertainties caused by the US sub-prime crisis will continue to affect the sentiment of both the stock and property markets. With property transactions expected to remain weak in the short term, the group will monitor the market closely.'

Nevertheless, Ho Bee said that revenue and earnings for the next two to three years will be supported by substantial progressive recognition of income from the sale of residential projects such as Vertis at Amber Gardens and Quinterra in Holland Road.

Ho Bee's share price closed at $1.03 yesterday, two cents down.

Test Of Singapore's Economic Resilience

Source : The Business Times, May 9, 2008

MUCH has been written about the nature of the beast, about whether it's shaped like a U, V, L or even W. We're talking of course about the impending - or, as oracles like former US Federal Reserve chief Alan Greenspan and Berkshire Hathaway's Warren Buffett contend, the ongoing - US recession. What's clear is that the world's largest economy, hammered by a massive financial crisis that has reverberated across the globe and further weakened by ever-rising oil prices, is on the ropes. And the impact of a US economy brought to its knees by a recession, whatever the shape, is bound to shake national economies everywhere.

Singapore awaits with concern, but also a measure of quiet assurance. It's a beast we've faced before, this spectre of global slowdown, and the painful lessons have been well learnt. The first hard lesson is that a small and open economy like Singapore's can never be fully shielded or buffered from external tremors. The corollary, though, is that the right preparation can make all the difference between holding firm in the storm and being blown away.

Thus Prime Minister Lee Hsien Loong's assurance in his May Day message that 'however the US financial problems play out, I am confident of our ability to cope'. Earlier this week, in a dialogue with over 100 business and financial leaders, PM Lee expanded on that premise. If things do get significantly worse - and at this point that's a big 'if' - the government has several possible options, he noted. Fiscal policy measures would be one such option. There could be directed assistance to help lower-income workers. Or the government could resuscitate construction projects that had been put on hold. 'We have the resources, we have the wherewithal,' Mr Lee noted.

Significantly, the savvy audience would have noted that the options he mentioned were not being pulled out of a vacuum. The global situation is being closely tracked by the country's planners, and Singapore's own economic performance is comprehensively monitored. Scenarios have been drawn up to cover the spectrum of possibilities. Any urgent or emergency measures would thus be as apt for the situation as is humanly possible.

However, true economic resilience is not just holding firm in the short term, but growing in strength through adversity over the long term. That is why the longer-term initiatives to keep this island-nation globally competitive and relevant must continue apace.

The hardware is being upgraded on schedule, from airports to highways and the MRT system, to a national ultra high-speed infocomm infrastructure that will spark a whole new panoply of high-tech products and services. As important will be developing the 'software', a new generation of world-class, world-conscious Singaporeans. Get the formula right and the world will beat a path to Singapore's door, recession or no recession.

Developers Test Waters With Condo Launches

Source : The Business Times, May 9, 2008

Sale of Floridian, Quartet on Vanda and Parc Seabreeze have begun

DEVELOPERS are gingerly testing the water for residential launches this week. Far East Organization's listed unit Orchard Parade Holdings and Wing Tai have begun the official launch of their Floridian condo in Bukit Timah, marked by the start of an advertising campaign.

Resort living: The Floridian is inspired by the Miami coast and will be surrounded by water features

Prices start at $1,615 psf. BT understands the average net price is in the range of $1,600 to $1,700 psf after discounts.

The freehold project has 336 units in 11 towers on a site of 230,000 sq ft. The preview for the development began a few months ago, with six units sold at $1,640 to $1,770 psf.

This week's official launch sees the release of 75 units in Towers 2 and 9. Units range from two-bedders of 840 sq ft to apartments with four bedrooms (plus study) of 2,373 sq ft. Floridian, designed by DP Architects, is inspired by the Miami coast and will be surrounded by water features. Ground-floor units will have the water's edge outside their living and dining spaces. The project is near Hwa Chong Institution, Methodist Girls' School, Nanyang Girls' High School, Raffles Girls' Primary School and the Canadian International School.

Another freehold project being previewed this week is Quartet on Vanda, a cluster development of four bungalows in Vanda Crescent off Dunearn Road (near Eng Neo Avenue). Each two-storey unit has an attic, a basement and a swimming pool.

Built-up areas range from 4,844 sq ft to 4,919 sq ft. The units are understood to be priced around $6 million each. Quartet on Vanda is being developed by Stanley Quek's Region Development.

Over in the eastern part of Singapore, Tiong Aik is understood to have begun the preview of Parc Seabreeze in the Marine Parade/Joo Chiat area last week. The average price for the freehold project is understood to be in the $1,600-1,700 psf range.