Singapore Press Holdings (SPH)

[KopiKat]

A better comparison (since this is an LRT station) would be Bukit Panjang Plaza (~200m from Bukit Panjang LRT stn) or Ten-Mile Junction (Ten-Mile Junction LRT stn is within the complex).

Bukit Panjang Plaza is quite well patronised, especially more so after CMT took control and started their Asset Enhancement programmes. 10-Mile Junction was a failure and has since been re-developed into a mixed site - Junction 10 (Mall) + Tennery (condo). Not sure how they'll do as the Mall just reopened.

In CCK (Choa Chu Kang) area, the main mall is Lot1 (next to CCK MRT stn) but it does appear that as long as the cluster population is large enough, there's room for other smaller malls eg. Bukit Panjang Plaza, Junction 10, Yew Tee Point (next to Yew Tee MRT stn),.. Even for those areas like Tampines, Boon Lay, having another mall side-by-side had not diminished their appeal. In fact, more people from other parts may be attracted by the critical mass to go visit.

From CMT's latest quarterly results slides pg 18: http://info.sgx.com/webcoranncatth.nsf/V...80049AF50/$file/CMT_PresentationSlides_FY2011Results.pdf?openelement
Valuation as at 31 Dec 2011 (S$ per sq ft NLA):
Bukit Panjang Plaza 1697
Lot One 2070
Tampines Mall 2431
Junction 8: 2363

From BT 18 Jan 2012:

SPH owns Paragon along Orchard Road and 60 per cent of Clementi Mall, which opened last year and is profitable. Based on the group's top bid at yesterday's tender in Sengkang West, market watchers' estimates of the breakeven cost for a new mall project range from about $2,400 psf to $2,600 psf.

Knight Frank group managing director Danny Yeo, who estimates the breakeven cost at about $2,500 psf, said: 'Assuming an investor is looking to achieve a 5 per cent net yield based on this breakeven cost, it would need a gross monthly rental of about $14 per square foot.'

Clearly SPH in bidding at the price they did is aiming to take the Fernvale project to the performance level of or better than Tampines Mall or Junction 8.

You are looking at valuations ie. if the Mall were to be sold at valuations (in CMT's case). Knight Frank uses the estimated breakeven cost (this breakeven cost would rank it as similar to CMT's valuation for Tampines Mall / Junction 8) to calculate the gross monthly rental required to achieve a 5% Yield ie. $14 psf.

So, for a fairer comparison, you'd have to dig up the comparative figures for CMT's malls using the 5% yield as a benchmark and see whether the psf is comparable. I did a quick computation using your CMT link (pg 28/50),

Tampines Mall : $22.27 (12.7% of NLA)
Junction 8 : $18.05 (18.6%)
Bukit Panjang Plaza : $15.51 (10.4%)

The figures are for NLA facing rent reversions in 2012 and using latest Dec-11 rental as a guide. It won't be very representative of the Rental psf for the whole mall as only a certain % is having rental reversion. Further, I do not have the individual Mall Yield figures here.

As for Clementi Mall, current rental psf is $14.

It'll finally depend on their final tenant mix to get the rental psf. For eg. many large anchor tenants will reduce the rental psf while many small food kiosks will contribute to higher rental psf

Warning : I have indicated previously that I'm vested. Just in case anyone here gets infected by a perception of my "irrational exuberance" on SPH and follow in blindly to buy, I have to confess that SPH is currently ranked No.13 in my Stocks Portfolio and only comprises <2% (at cost). As mentioned in an earlier post in this thread, I sold almost all of it before it went xd and only started nibbling back after xd. At the right price, I usually build it up to 5-10% of my portfolio before their mid-yr or FY results.

[VestedInterest]

Looks like SPH has no choice but to go into property, since the newspaper industry is in its sunset years. There must be more creative ways to peddle and disseminate news and information. SPH must really reinvent itself or the P in SPH will soon stand for 'Property'. May be good but the field is a little crowded and risky.

[swakoo]

KopiKat,

OK, so

Valuation psf = (Gross monthly rental - expenses/etc) x 12 / Net annual yield.

The valuer applies a cap rate for the net annual yield to get the valuation psf. So to the extent cap rate may not equal actual net annual yield, the valuer's valuation psf may not equal actual valuation psf. But think it should be good enough for rough comparative purposes.

As you noted, the gross monthly rental you estimated for CMT's malls is based on a subset of their mall's NLA, so may not be representative.

Better gross monthly rental estimates can be found at pg 342/508 of MCT's ipo prospectus http://masnet.mas.gov.sg/opera/sdrprosp....600229D13/$File/Prospectus%20%28Clean%29.pdf :
From that source, estimated gross monthly rental income 2010:
Tampines Mall: 14.20
Junction 8: 14.40

CMT's rental reversions are about 2-3% per year for the past few years so these 2010 estimated figures are about there.

Not vested but am not suggesting that it is not possible for SPH to take the Fernvale project to or above the performance level of Tampines Mall or J8 notwithstanding the difference in transport connectivity.

[KopiKat]

Better gross monthly rental estimates can be found at pg 342/508 of MCT's ipo prospectus http://masnet.mas.gov.sg/opera/sdrprosp....600229D13/$File/Prospectus%20%28Clean%29.pdf :
From that source, estimated gross monthly rental income 2010:
Tampines Mall: 14.20
Junction 8: 14.40

CMT's rental reversions are about 2-3% per year for the past few years so these 2010 estimated figures are about there.

Not vested but am not suggesting that it is not possible for SPH to take the Fernvale project to or above the performance level of Tampines Mall or J8 notwithstanding the difference in transport connectivity.

You upped the ante and I'm forced to work harder.
My "best" figures, which I computed from CMT AR2010 using Gross Revenue / NLA / 12,

Tampines Mall : $16.37
Junction 8 : $16.38
Lot 1 : $14.65
Bukit Panjang Plaza : $12.65

I could have left out the last 2 and it'd have provided better support for the case of SPH, but since it looks interesting, I'd decided to post it. I still think Bukit Panjang Plaza is the one to watch as it's the closest comparable. Let's see if their psf will increase in the coming years (SPH have 2-3 more years to build their Fernvale Mall if they get the tender). Even if they just achieve $12-$13 psf (using BPP as a ref), that only means their yield is <5%, but still making a yield.

I look at it positively (since I'm vested), it's still better than them losing $$ on their internally managed Investments (few hundred $Mil worth) like the previous FY or the recent huge decline in Investment Income fm Exchange Derivatives (whatever that vague statement meant).

[Drizzt]

well they are not raising capital so its a good consolation

[swakoo]

My "best" figures, which I computed from CMT AR2010 using Gross Revenue / NLA / 12,

Tampines Mall : $16.37
Junction 8 : $16.38
Lot 1 : $14.65
Bukit Panjang Plaza : $12.65

The numbers in the MCT prospectus excludes turnover component, so this probably accounts for the difference with your numbers.

After drilling down the details, SPH's audacious bid looks bold but not totally outrageous if net yield expectations are kept modest...

[KopiKat]

My "best" figures, which I computed from CMT AR2010 using Gross Revenue / NLA / 12,

Tampines Mall : $16.37
Junction 8 : $16.38
Lot 1 : $14.65
Bukit Panjang Plaza : $12.65

The numbers in the MCT prospectus excludes turnover component, so this probably accounts for the difference with your numbers.

After drilling down the details, SPH's audacious bid looks bold but not totally outrageous if net yield expectations are kept modest...

I think most likely the CMT Individual Mall Gross Revenue figures include non-NLA ones like Car Park revenue and the Temporary Kiosks eg. for CNY, we can see many Temp Kiosks in the Mall's Atrium or Open Area selling CNY goodies. I heard that for a 100-200sf stand, it can cost $500-$1k/day.

[swakoo]

The piece of land that SPH just bought, I doubt that it'll end up being a Jurong Point. More like a Pioneer Mall (since we're on the analogy) if you ask me. Sengkang's already served by a larger suburban mall- Compass Point.

Since SPH's bid for the Fernvale site implied a BE cost of 2400-2600 psf, presumably they would jump to put in a bid for this better located one, that was just put on sale today?

SINGAPORE: Compass Point Shopping Centre is up for sale by public tender.
21 March 2012 1538 hrs (SST)

Sale manager CBRE says it "anticipates that the successful tender price could be in excess of $645 million". This works out to approximately $2,393 per square foot on the existing net lettable area and a net yield of about 4.5 per cent based on the estimated net operating income of almost $29 million.

The current gross rent is about $11.71 per square foot per month.

http://www.channelnewsasia.com/stories/s...52/1/.html

[Drizzt]

11 bucks is on the low side isnt it? man i hope someone good buys them and develops it well.

btw who owns seng kang mall the company?

[brattzz]

SPH has stated that developing malls and properties as long term income avenue.
Expect SPH to buy some here and there!