Hongkong Land shares jump as much as 7.4% after report of possible Marina One bid

[SINGAPORE] Shares of Hongkong Land rose as much as 7.4 per cent on Thursday (May 7), after a Bloomberg report that it and CapitaLand were among possible bidders for the Marina One high-rise complex.

The counter rose to as high as US$8.56 as at 2.51 pm, adding US$0.59, with more than four million shares changing hands.

Marina One owner M+S, a joint venture between Temasek and Malaysian sovereign wealth fund Khazanah Nasional, has priced the asset at about S$5.7 billion, according to the Bloomberg report.

The Business Times reported in January that Khazanah and Temasek were considering a sale at S$5 billion to S$6 billion.

Marina One includes 1.88 million sq ft of office space as well as 140,000 sq ft of retail space. There are also apartments.

Deliberations around Marina One are still at an early stage and may not result in a transaction.

In March, Hongkong Land said it was ready to increase new investments after recycling US$3.6 billion of capital to boost earnings and shareholder returns. 

Speaking to BT, the property group’s chief financial officer Craig Beattie said it had ample balance-sheet headroom for new investments after recycling 90 per cent of its US$4 billion target and cutting net debt by 30 per cent.

He added that Hongkong Land was “very positive” on Singapore and was looking to expand through its private fund or by pursuing development opportunities with a particular focus on “prime Central Business District (assets) in Singapore”.

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DBS in March set a US$10.17 target price for the property group. It stated that its share buyback programme and continued capital recycling was expected to provide near-term support to the share price. Hongkong Land has increased its share buyback programme by US$300 million to a total of US$650 million.

DBS also noted that the development of a fund management platform could support a higher valuation over time.

This followed Citi in February raising its target price for the stock from US$7.15 to US$9.75, in anticipation of Hongkong Land launching an S$8.2 billion Singapore private fund.

The fund is focused on managing prime commercial property assets in the Republic.

Hongkong Land seeded the Singapore Central Private Real Estate Fund with its interests in Marina Bay Financial Centre Towers 1 and 2, One Raffles Quay, One Raffles Link and Marina Bay Link Mall.

Citi also said the fund was expected to bring in US$25 million to US$30 million in initial profit.

However, Morningstar maintained a fair value estimate of US$7.40, believing that the then share price of US$8.67 was “overvalued”. It cited the 0.64 price-to-book ratio being above the 10-year historical average of 0.37.