F&N CEO Quits, Citing Differences Of Opinion With Board

Source : Channel NewsAsia, 05 October 2007

Diversified Fraser and Neave (F&N) said on Friday that its CEO, Han Cheng Fong, has resigned with immediate effect.

In a statement to the Singapore Exchange on Friday, F&N said that Dr Han's resignation was due to differences of opinion with the company's board of management.

But the beer-to-property conglomerate maintained that the differences had nothing to do with the financial position or performance of F&N or its subsidiaries.

When contacted, F&N's company secretary Anthony Cheong also told Channel NewsAsia that Dr Han's departure was not triggered by the impending change of F&N chairmanship, contrary to some media reports.

Former SingTel Group CEO Lee Hsien Yang is due to take over the chairmanship from Michael Fam when he retires on October 15. Mr Lee is currently a consultant with F&N.

Dr Han has been F&N's CEO since February last year.

F&N said it is looking for a successor. Meanwhile, the board's chairman will oversee the management until a successor is appointed. - CNA/ir

New Accounting Rules May Result In Property Stock Trading Volatility

Source : Channel NewsAsia, 05 October 2007

Listed property developers may experience some volatility in the trading of their shares, if a proposed change to real estate financial reporting standard is implemented.

The International Accounting Standards Board has been consulting the industry on whether developers should book profits when they sell a new property in advance or when the project is completed.

A similar consultation by the local Council on Corporate Disclosure and Governance was done last month.

Property developers in Singapore sell condominiums as they build them.

They receive progressive payments from buyers and report their revenue and profits each quarter.

But if the new real estate financial reporting standard is implemented, developers can only book their profits and revenue at the end of each project rather than progressively.

Assuming it takes 18 months to build a new property from scratch, the developer will record zero profit for this project in the first year and have a spike in revenue and profit at the end of the second quarter in the second year.

Accountants say the change was proposed because the accounting bodies believe properties should be viewed as goods and not services.

If the ownership of the goods has not been transferred to the buyer, the developer or seller cannot, theoretically, claim he has sold it.

So, even if he has received partial payment, he should not record it in his books as revenue and profit.

Channel NewsAsia understands that developers have submitted their feedback to the Council on Corporate Disclosure and Governance through the Real Estate Developers Association of Singapore (REDAS).

REDAS declined to comment on the issue.

But Dr Ernest Kan, a vice-president at the Institute of Certified Public Accountants of Singapore, said: "The feedback has been mixed. In fact most of them will feel that the current standard seems to be more reasonable, because many of these contracts straddle across the accounting period and normally it lasts more than 12 months, some 18, 24 or even 36, 48 months. So it makes the numbers very volatile, and many developers felt that it's not a logical way of accounting for something."

Some developers also argue that a property is built in parts and therefore can be sold in parts.

They also say constructing a property can also be viewed as the sale of a service rather than as a good.

Dr Ernest Kan said: "So for the retail investors, if they don't quite appreciate that, they'd be wondering: should I buy shares in this company, when every quarter when I look at the announcement, there's no revenue, no profit. Is it something that's worth buying? Whereas during the year, when they see big numbers, then they'd think, 'great, this company is doing very well', without knowing that they had just completed a contract in the quarter."

But experts say the market will eventually adjust and factor in the new accounting rules.

The changes are likely to be effected next year. - CNA/ir

Top Grade Contractors Earning Premiums Amid Property Boom

Source : Channel NewsAsia, 05 October 2007

It's not just property developers who are riding the current industry boom.

Established construction companies that struggled through the stormy late 90s are now experiencing a robust turnaround, and are commanding price tags which are up to 20 percent higher than their smaller peers.

That's because there are not enough of them to go around in a market awash with developers who want only the best for their projects.

The larger number of projects is an obvious factor, but there is another key reason for the squeeze. A number of contractors had gone bust, and for those still around, most have been down-sized.

Kunalan Sivapuniam, managing partner at Emirates Tarian, said: "Developers are very cautious about quality. We are also faced with discerning buyers who want to pay for quality. So you have to look for quality contractors. If you look at category A or grade one contractors, there are not that many now."

Industry watchers said that going forward, top grade construction firms may command premiums higher than now.

Song Seng Wun, regional economist at CIMB-GK Research, said: "At this juncture, we are at the beginning of the upturn of the construction cycle. I suspect in the coming few years, the construction firms will do quite well."

Developers say higher costs could be passed down to home buyers.

Emirates Tarian's Kunalan Sivapuniam said: "It's hard to say how much of that is going to be passed on. It's a question of whether they are in a hurry to launch the projects, in which case they have to bite the bullet.

"If you have developers that are able to hold on to their projects and launch them over a longer period of time, then they would be able to pass on a lot of this, because the market is rising."

As this demand bulge moves further down the pipe, industry players say related services like interior design and electrical fittings can also look to rosy days ahead.

According to some estimates, the value of construction contracts awarded this year will hit more than S$20 billion. - CNA/ir

New S$1b Fund Set Up To Invest In Prime Properties In Asia

Source : Channel NewsAsia, 05 October 2007

A new fund has been jointly set up by Pacific Star Group and HSH Real Estate – which is the real estate unit of HSH Nordbank – to invest in prime properties in Asia.

It has a target fund size of 500 million euros (S$1 billion).

The fund will initially target established markets, which include Singapore, Japan and South Korea. It may also tap emerging markets like China and India eventually.

HSH Real Estate will raise capital from German institutional and private investors, while Pacific Star will be responsible for acquiring and managing suitable real estate projects.

HSH Real Estate said European investors are increasingly focusing on the Asia-Pacific region.

As such, the region is expected to benefit from a larger share of global real estate investments.

Pacific Star Group is better known for launching the Macquarie MEAG Prime REIT worth US$845 million.

It is also behind three other funds – the US$580 million Eureka Office Fund, the US$1.6 billion Asia Real Estate Income Fund, and the US$600 million Baitak Asian Real Estate Fund. - CNA/so

Allco REIT Acquires 25-Storey Beach Road Building For S$370m

Source : Channel NewsAsia, 05 October 2007

Allco Commercial REIT has acquired a 25-storey commercial building located on the corner of Beach Road and Jalan Sultan for S$370 million.

KeyPoint comprises a three-storey retail podium, a 22-storey office tower and a four-storey car park block.

It was built in 1978 on a 99-year leasehold site and underwent an extensive upgrading seven years ago.

It stands on a 78,000 square feet site.

The building has a gross floor area of over 440,000 square feet. - CNA/so