The showflat at ground level of El Centro looks ready.
If the average selling price of the residential units were a conservative $2,500 and the retail component were to go for $4,500 based on the floorplans available, the project's GDV seems to be around $140m?
I wonder how much profit that will mean for Heeton...
Residential GFA: about 46,000 sq ft
Restaurants and shops GFA: 5,586 sq ft
Total GFA = 51,586 sq ft
Assumed selling price of $2,400 psf for residential (probably achievable cos most units are small in size), GDV of residential = $110.4m
Assumed selling price of $5,000 psf for shops, GDV = $27.93m.
Total GDV = about $138.33m (close to your estimate)
Book value of El Centro = $76m.
Construction and other cost of Onze = $420 psf X 51,586 = about $22m.
Gross profit from redeveloping El Centro = $138.33m - $76m - $22m = about $40m.
Net profit - about $32.8m or 12.2ct per share.
What is also interesting is that if all units are sold, it will also unlock the asset value of El Centro ($76m), meaning that together with after tax profit of about $31m, the total cash inflow from the redevelopment will be $76m + $32.8m = $108.8m, or 40.5ct cash per share, post the bonus issue!
I suspect KSH is a target of shorting, as observed by its selling pattern. Fundamentally, things remain intact although macro-wise, the physical property market has definitely gotten softer. However, KSH has locked in a substantial amount of sales, and I am therefore not worried. However, even good stocks get carried along in the strong wave of across-the-board selling; nothing is sacred.
Meanwhile, I understand Hiap Hoe is just left with 1 unit of 4 room apt and perhaps 2 penthouses at Skyline. Good that its $150k renovation promotion had managed to move many units.
Heeton's Onze is due to be launched after Ghost month, but sales could be slow, in line with weaker market sentiment. Shop spaces are apparently asking for close to $6,000 psf and above.
Heeton seeking single buyer for iLiv@Grange
But if it cannot secure a good price, it may turn to individual buyers
BY KALPANA RASHIWALA KALPANA@SPH.COM.SG
Heeton Holdings is said to be looking for a buyer to pick up all 30 units in its iLiv@Grange project, which is expected to receive Temporary Occupation Permit (TOP) in October.
Talk in the market is that it is seeking $2,200-$2,300 psf for an en bloc sale of the 16-storey tower, which would work out to $129 million to $135 million based on the freehold District 10 development's total saleable area of about 58,500 sq ft.
However, if Heeton does not secure attractive price offers for an en bloc sale, it plans to sell the units individually. Heeton has two years after TOP to finish selling the whole project, under Qualifying Certificate conditions.
Analysts believe Heeton's breakeven cost for the project could be around $2,000-2,200 psf. Heeton bought the 20,325 sq ft site, which formerly housed Grange Court, for $72.8 million or $1,700-plus per square foot per plot ratio in 2007.
++++ Sumer, is this a sign of desperation on the part of Heeton? I have not heard of a new development project being sold like this.
I don’t think it’s a sign of desperation; I think it’s more like they are being realistic about the high-end non-Mickey Mouse market, which is essentially dead. In fact, I read the move as mildly positive, with a 100% sale releasing about $130m cash for debt repayment or other purpose.
Heeton has 2 high-end projects which just can’t sell: Lumos and iLiv. I think they are restricted from doing the same price-slashing at Lumos because it is jointly owned.
Based on my own estimate, if they can sell off iLiv at about $2,300 psf, they could still make perhaps $10m gross profit. My own earlier projection was that they sell at $2,750psf (and based on a smaller 48,000sf NSA), grossing $30m profit. The dent on RNAV is not significant; perhaps 6ct lower per share than my earlier estimate. RNAV based on ex-bonus number of shares remains safely above $1.80, vs share price now of 62ct.
I like companies which are willing to swiftly sell its projects (like Roxy), or if not, swiftly dispose of its non-moving units (like CES). While Heeton was not able to sell its projects quickly perhaps due to wrongly reading the market (building big size units like those in iLiv), its latest move to dispose of iLiv and move on, is likeable. (Hiap Hoe has recently done a smart move of giving $150k furnishing vouchers, leading to rapid sales at Skyline, where I believe only a couple of units are left unsold. This has made me like HH a bit more too.)
In any case, iLiv was not a main reason to own Heeton; the company’s stakes in JV projects like Boutiq, Sky Green, Newest, KAP and Seletar Garden as well as the redevelopment of El Centro into Onze are the bigger attractions.
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