HO Bee Land said late on Friday (Mar 17) that the recent sale of its industrial assets for S$115 million is not related to its debt load. 

 

The disposal is in the group&rsquo s &ldquo ordinary course of business&rdquo , the real estate company said in a bourse filing, which set out to flag multiple inaccuracies in an article published on investment news platform Mingtiandi.com on Mar 15.

 

The article with the headline &ldquo Singapore&rsquo s Ho Bee Land Sells Industrial Assets After SGX Queries Debt Load&rdquo alleged, among other things, that the group is disposing of HB Centre I on Tannery Road and HB Centre II on Tannery Lane as it faces a debt deadline, and is &ldquo paying to play&rdquo .

 

Ho Bee Land clarified that it had made no mention of proposed sale of assets to meet those short-debt debt obligations in its response to Singapore Exchange Regulation&rsquo s (SGX Regco) queries on Mar 10. 

 

&ldquo The timing of the disposal (announced on Mar 15) is totally unrelated to the SGX queries, and the news article contains statements which are pure speculation,&rdquo it added.

 

The allegations are &ldquo concerning&rdquo and &ldquo based on speculation and conjecture, causing reputational risk to the group&rdquo , it added.

 

It went on to note that a sales option for the two properties were issued on November 2022, and the purchaser performed its due diligence and exercised the sales option on Mar 7. 

 

The disposal announcement was timed when all conditions for the disposal were satisfied on Mar 14. Market conditions are what drives the timing of acquisitions and disposals of investment properties, it stated, adding: &ldquo From time to time, the group receives unsolicited offers to purchase its properties.&rdquo

 

The response to SGX Regco was made upon receiving on Mar 8 three queries on its latest financial statement released on Feb 27.

 

The response noted that the main contributors to the group&rsquo s short-term debt of S$1.23 billion were bridging loans amounting to S$930.8 million that were used to pay for the acquisition of The Scalpel in FY2022, and S$94.5 million of a term loan that was due within 12 months from Dec 31, 2022.

 

The group was at the stage of finalising the loan documents for a S$810 million term loan, and the loan proceeds would be utilised for the repayment of the bridging loans. The response further pointed out that the refinancing of the S$94.5 million term loan was expected to be completed in the first half of this year.

 

Referencing that, Ho Bee Land said the response had stated how the group will meet its short-term debt obligations and included a &ldquo clear explanation&rdquo on the status of the refinancing of bank borrowings falling due within 12 months from Dec 31, 2022.

 

Ho Bee Land said it has contacted Mingtiandi&rsquo s journalist and managing editor requesting for the article to be corrected. 

 

REAL estate company Ho Bee Land : H13 +0.9% is selling two of its industrial properties to an unrelated third party for S$115 million.

 

The buildings sit on contiguous freehold land and have been held for long-term investment.

 

Their disposal is part of Ho Bee Land&rsquo s capital-recycling strategy and is in the ordinary course of business, said the group on Wednesday (Mar 15).

 

Proceeds from the sale will be used for general working purposes.

 

Located at 12 Tannery Road, HB Centre 1 is a 10-storey high industrial building with a gross floor area (GFA) of 9,347 square metres (sq m). The other property at 31 Tannery Lane, HB Centre 2, is an eight-storey light industrial building with a GFA spanning 3,701 sq m.

 

These assets carried a combined value of S$67.9 million, as at December 2022.

Their sale is expected to result in a gain on disposal of S$47.1 million before deducting selling expenses in the period that the deal Is completed.

 

Ho Bee Land indicated that conditions for the transaction were satisfied by the purchaser on Mar 14, such that the deal is now unconditional.

 

Ten per cent of the consideration, or S$11.5 million, was paid to Ho Bee Land as at the date of the announcement, with the balance payable upon the deal&rsquo s completion.

Ho Bee Land H13 0.00%   announced that its FY2022 ended Dec 31, 2022, earnings have dropped by 50% y-o-y to $165.9 million from $330.5 million in FY2021, mainly due to fair value loss on investment properties incurred, as well as higher costs and expenses.

 

This comes despite a 25% y-o-y increase in revenue to $435.6 million from $347.7 million a year ago, mainly bolstered by sales from the group' s development projects in Australia and rental income from The Scalpel in London.

 

During the period, the group recorded a fair value loss on investment properties of $98.7 million, compared to a fair value gain of $53.1 million a year ago. This loss is the result of a fair value loss of $201.9 million on its London portfolio which was mitigated by a gain of $103.2 million on its Singapore portfolio.

Consequently, the group&rsquo s profit from operations fell 34% y-o-y to $187.2 million. Excluding fair value changes on investment properties in both years, the group&rsquo s profit from operations would have increased 25% y-o-y to $286.0 million in FY2022 from $228.7 million in FY2021.

 

The group&rsquo s share of profits from its associates and jointly controlled entities decreased to $78.7 million from $115.5 million in FY2021. This was attributable to fewer units handed over in the Zhuhai and Tangshan projects in China.

 

As at end-December, the group&rsquo s cash and cash equivalents stood at $327.4 million.

 

Ho Be Land&rsquo s board has recommended a first and final dividend of 8 cents per share.

 

Nicholas Chua, CEO of Ho Bee Land says: &ldquo We are pleased that the group&rsquo s development projects in Australia have started to contribute to the Group&rsquo s profits. With more than 4,700 land lots in our land bank, we have a good development pipeline for the next few years.&rdquo

 

On the group&rsquo s operations in Singapore, Chua says: &ldquo We are also encouraged by the strong sales performance of Cape Royale. Together with Turquoise and Seascape, our Sentosa Cove projects achieved close to $400 million in sales during the year.

 

Construction on our new biomedical facility, Elementum, in one-north, is going full speed ahead. We are happy to announce that the development is more than 70% pre-committed to key tenants ahead of its expected completion in 4Q of 2023. This project is expected to contribute strongly to the group&rsquo s revenue in FY2024.&rdquo

Over 80% of its business was in residential development but the group decided, over a decade ago to strengthen its recurring income business from investment properties.

 

HO Bee Land : H13 0% stands out among Singapore-listed property groups for its relatively high return on equity (ROE) numbers. In nine out of the past 10 years, the group&rsquo s ROE - which measures the rate of return on the capital provided by shareholders - has been at least 7.5 per cent.

 

Chief executive officer Nicholas Chua credits this track record to greater diversification, both geographically as well as in property investment: &ldquo We have prepared ourselves by developing our twin engines of growth. Our recurring income stream is sustainable as our tenants have good covenants. We will also focus on driving good cash flows and maintaining a strong balance sheet.&rdquo

 

Ho Bee had previously been &ldquo predominantly in the development space&rdquo , said Chua, adding that more than 80 per cent of the business was in residential development at one point. But it decided, over a decade ago, to strengthen its recurring income business from investment properties.

 

&ldquo Property development is quite cyclical, which means that profits are lumpy, Chua said in an interview in late November. &ldquo To smoothen out our profits, as well as to give us more resilience, we came up with the twin-engine approach whereby we have recurring income, which is from investment assets, as well as development income,&rdquo said Chua, who took over the CEO post on Jan 1, 2022, from his father, Chua Thian Poh. The senior Chua remains as the group&rsquo s executive chairman.

 

Ho Bee&rsquo s ROE is expected to fall in FY2022. The group flagged in December that it expects a &ldquo significant decrease&rdquo , year on year, in second-half and full-year net profit.

 

This was due largely to foreign exchange volatility and rising interest rates. The latter has led to higher capitalisation rates used for valuations of its London investment properties, and higher interest expenses.

 

Revenue and operating profit, however, increased, due to higher sales of development properties in Singapore and Australia, as well as higher rental income from investment properties in Singapore and London &ndash demonstrating, once again, the resilience of the twin-engine strategy.

I think we&rsquo ve proven over the different cycles that we are nimble, we always do what&rsquo s best for the company, and sometimes we take difficult decisions to pivot.

Nicholas Chua, CEO, Ho Bee Land

Building recurring income

The first major milestone in the group&rsquo s transformation was in 2010, when it clinched a commercial site next to Buona Vista MRT Station in Singapore. The Metropolis, with 1.09 million square feet in net lettable area, mostly offices, was completed in 2013. In the following year, Ho Bee&rsquo s rental income jumped to S$99.6 million from S$14.4 million in 2012.

 

Also in 2013, Ho Bee expanded the recurring income strategy to the United Kingdom. It now has eight office assets worth £ 2.1 billion as at end-June 2022: seven in Central London and one in South London. In 2021, Ho Bee&rsquo s annual rental income was S$223.7 million.

 

The group is expanding its investment properties portfolio to the biomedical science (BMS) field. Adjacent to The Metropolis, it is developing Elementum, which will have 312,000 sq ft of business park space, 50,000 sq ft of offices and 10,000 sq ft of retail space. Elementum is slated for completion in Q4 this year.

 

&ldquo We are currently in advanced negotiations with a few key tenants. BMS is a growing sector. We think that it&rsquo s very resilient tenants are fairly sticky once they come in,&rdquo said Chua. Word on the street is that the monthly asking rent is S$7.20 per sq ft (psf) for the business park space and S$8.50 psf for the offices.

 

Ho Bee also took to leasing out unsold units in its Sentosa Cove condominium projects after the Additional Buyer&rsquo s Stamp Duty (ABSD) introduced in 2011 hit sales in the upscale waterfront residential district. The ABSD was highest for foreign buyers, who made up about half of buyers for the group&rsquo s Sentosa Cove projects at one time.

 

Revival of interest in Sentosa

The group began leasing units at its Turquoise condo in 2011, followed by the Seascape project in 2012 and Cape Royale in 2013. All three are joint-venture projects.

 

Buying interest began to improve in early 2021. Chua said: &ldquo In the midst of Covid-19, people realised they need more space, and our apartments in Sentosa are quite spacious, in a natural, low-density environment with a resort-living ambience.&rdquo

 

Ho Bee relaunched Turquoise in early 2021, followed by Cape Royale in 2022. Singapore citizens and permanent residents now make up about 80 per cent of buyers.

 

Market watchers estimate Ho Bee could have sold around 80 units across Cape Royale, Turquoise and Seascape last year for close to S$400 million.

 

Since it clinched the Cape Royale site in early 2008, Ho Bee has not managed to buy any residential development sites in Singapore.

 

New strategy Down Under

It has been more active in the Australia housing market, which it entered in 2012. Initially, Ho Bee developed apartment projects along Surfers Paradise on the Gold Coast and in Melbourne. Much of the demand then was from foreigners.

 

&ldquo In response to policy changes in Australia in 2016 and 2017 &ndash stamp duties were raised for foreign buyers and lending tightened for home buyers, especially foreigners &ndash we shifted our strategy to cater to local Australians. We found that, predominantly, they like landed housing. So we reverse-engineered and went towards this,&rdquo said Chua.

 

Ho Bee now appoints consultants to master plan the area before putting in infrastructure such as roads, bridges, sewerage, water and electricity. It then carves out land parcels for buyers to build their own houses.

 

&ldquo Since 2019, we have acquired a pipeline of close to 5,000 land lots in Queensland and Victoria. We expect these projects to contribute positively to our bottom line in the next few years,&rdquo said Chua.

 

Based on its close at S$2.36 on Feb 17, Ho Bee trades at 39.5 per cent of its S$5.97 net asset value per share as at Jun 30, 2022. Chua Thian Poh owned 75.6 per cent of the company&rsquo s shares as at Dec 31, 2022.

 

Since FY2017, the group has paid annual dividends of 10 Singapore cents per share. This would translate to a dividend yield of 4.2 per cent.

 

Asked why investors should buy Ho Bee&rsquo s stock, Chua said: &ldquo I think we&rsquo ve proven over the different cycles that we are nimble, we always do what&rsquo s best for the company, and sometimes we take difficult decisions to pivot...

 

&ldquo At a time of strong headwinds, I think we offer some stability. We want to be in a position of strength to capture the opportunities that may come over the next 12 to 18 months. We want Ho Bee to be a lasting enterprise that is continually successful, and also able to give back to society at the same time.&rdquo

 

Between March 23 and 24, Ho Bee Land executive director and COO Ong Chong Hua acquired 140,000 shares of the company for a consideration of S$342,794.

 

At an average price of S$2.45 per share, this took his total interest in the real estate developer and investor from 0.27 per cent to 0.29 per cent.

 

Mr Ong works closely with the group chairman and CEO, Chua Thian Poh, in charting the group' s investment, development and marketing strategies.

 

He is also responsible for all operational aspects of the group' s businesses in Singapore and overseas and has more than 30 years of experience in the real estate sector.

 

Also on March 23, Ho Bee Holdings acquired 15,000 shares of Ho Bee Land for a consideration of S$36,336 at an average price of S$2.42 per share.

 

Mr Chua maintains a 75.47 per cent deemed interest in Ho Bee Land. He is also the founder of the group, which began work on its first residential property development in 1987, the first property in an ambitious portfolio that will come to include many icons and landmarks.

 

On March 17, Ho Bee Land announced that its wholly-owned subsidiaries, HB QLD Pty Ltd and HBL VIC Pty Ltd had separately acquired three residential development sites in Australia.

 

On Dec 31, 2020, Ho Bee Holdings (Pte) Ltd acquired 49,300 shares of Ho Bee Land for a consideration of S$118,268, at an average price of S$2.40 per share.

 

This took the deemed interest of Chua Thian Poh, chairman and chief executive officer (CEO) of Ho Bee Land and founder of the Ho Bee Group, from 75.46 per cent to 75.47 per cent.

 

The acquisition followed Ho Bee Holdings acquiring 77,300 shares at S$2.38 per share on Dec 29, 2020, and 253,800 shares acquired at S$2.37 per share on Dec 24, 2020.

 

Prior to the December transactions, Ho Bee Holdings had made two acquisitions of Ho Bee Land shares in October and two acquisitions in August.

 

Prior to August, Ho Bee Holdings maintained a 75.20 per cent interest in Ho Bee Land.

 

Mr Chua is responsible for the strategic planning and direction of Ho Bee Land, as well as its financial and investment decisions.

 

On Aug 13, 2020, Ho Bee Land reported a net profit after tax and non-controlling interests of S$90.6 million for the first half of its FY20 (ended June 30), representing a year-on-year increase of 115 per cent.

 

Mr Chua noted at the time that in the midst of the pandemic, Ho Bee Land was fortunate to have a portfolio of prime offices in Singapore and London, as these offices had remained 100 per cent occupied.

 

He also noted that the recurring income base contributed to the resilience of the group during the challenging times.

 

Based on past filings, investors expect the company to report its FY20 results at the end of February.

 

The real estate development and investment company has a portfolio that covers many quality residential, commercial and high-tech industrial projects.

 

On Aug 19, Ho Bee Holdings Pte Ltd acquired 185,800 shares of Ho Bee Land for a consideration of S$394,338 at an average price of S$2.12 per share. This took the total interest of Chua Thian Poh, the founder of Ho Bee Group, from 75.20 per cent to 75.23 per cent.

 

Appointed the chairman and CEO of the group in 1999, Mr Chua is responsible for its strategic planning and direction, as well as its financial and investment decisions.

 

MAINBOARD-LISTED developer Ho Bee Land' s net profit for the half-year ended June 30, 2020 was up 115.4 per cent to S$90.6 million on the back of increased profits from associates and jointly-controlled entities.

 

The share of profits from associates was S$31.3 million, compared with a loss of S$407,000 a year ago. The group recorded share of profits from the Shanghai and Zhuhai associates due to units that were sold prior to the pandemic. 

 

Share of profits from jointly controlled entities was S$3 million compared with a loss of S$2.3 million a year ago, mainly due to higher profits from the Seascape and Cape Royale developments in Sentosa Cove and the residential development project in Tangshan. 

 

Ho Bee Land' s revenue for the period inched up 1.7 per cent to S$108.8 million as rental income increased 2.2 per cent to S$107.3 million. The group saw positive rental reversions when leases were renewed for the investment properties in Singapore and London.

 

A gain of S$5.7 million in foreign exchange was recorded, compared with a loss of S$3.6 million previously.

 

Staff costs and directors' remuneration increased 38.2 per cent to S$10.4 million mainly due to the hiring of a new team based in Gold Coast, Australia since Q4 2019.

 

Earnings per share was 13.62 Singapore cents, compared with 6.32 Singapore cents a year ago.

 

Net gearing was 0.65 times as at June 30, 2020.

 

Ho Bee Land said that due to the pandemic, the business outlook is grim and uncertain as countries continue to be in a lockdown or partial lockdown mode and are susceptible to waves of infection outbreaks.

 

Chua Thian Poh, chairman and CEO of the group, said: " In the midst of the Covid-19 pandemic, we are fortunate to have a portfolio of prime offices in Singapore and London, as these offices remain 100 per cent occupied. Our recurring income base has contributed to the resilience of the group during these challenging times.&rdquo

 

MAINBOARD-LISTED developer Ho Bee Land on Monday announced that two of its subsidiaries have separately acquired a residential development site in Queensland, Australia, for a total of A$23.5 million (S$22.8 million). 

 

HB Doncaster had acquired a 47.41ha site located within the Riple Valley Priority Development Area for A$14.5 million. This project is expected to yield approximately 570 residential lots, a regional sports facility, and associated community facilities, said Ho Bee in a regulatory filing. 

 

The group noted that Ripley is a major growth corridor in south-east Queensland, 42km from Brisbane' s central businessdistrict and 15 km from Springfield Town Center. 

 

Another 8.98ha site acquired by HB QLD for A$9 million is currently in the final two stages of the Parklakes 2 development located on Queensland&rsquo s Sunshine Coast. The site has received all the required development permits and will yield 95 residential lots.

 

Ho Bee said Parklakes 2 is an established community with amenities such as a private school, extensive wetlands, walking trails and convenience retail. It is located 9.7 km from Sunshine Coast Airport and 11.7 km from Maroochy City Centre. 

 

These two projects will be financed by the group' s internal funds and bank borrowings, and are not expected to have any material impact on the group' s consolidated earnings and net tangible assets per share for the financial year ending Dec 31, 2020, said Ho Bee.

https://www.businesstimes.com.sg/companies-markets/ho-bee-land-acquires-two-residential-sites-in-australia-for-a235m