Metro Holdings has reported earnings of $3.6 million for the 1HFY2025 ended Sept 30, 56.4% lower y-o-y from the same period last year. 

 

Similarly, the group&rsquo s profit before taxation dropped by 36% y-o-y to $7 million in the same period. This came on the back of China&rsquo s protracted property market downturn, which negatively impacted the group&rsquo s property division, with higher fair value losses from China investment properties by $11.1 million. 

 

Additionally, the group saw lower profit from its retail division due to lower gross margins and increased cost. However, these were partially offset by higher other net incomes and higher share of fair value gain from the group&rsquo s 30%-owned portfolio of purpose-built student accommodation (PBSA) properties in the UK. 

 

Meanwhile, the group&rsquo s revenue saw a 3.6% y-o-y decline to $48.4 million. Revenue from the property division for 1HFY2025 fell to $3.4 million from $4.6 million in 1HFY2024, due to lower contributions from sale of property rights of the residential development properties in Bekasi and Bintaro, Jakarta. 

 

The group&rsquo s retail division reported lower revenue at $44.9 million in 1HFY2025 from $45.6 million in 1HFY2024, mainly due to lower sales from Metro Paragon and Metro Causeway Point, the two department stores in Singapore.

 

Correspondingly, overall gross profit decreased to $2.5 million in 1HFY2025 from $5.1 million, driven by lower revenue. 

 

As at Sept 30, the group&rsquo s net assets and total assets stood at $1.4 billion and $2.3 billion, respectively. 

 

Yip Hoong Mun, group CEO, says: &ldquo We continue to make progress in our measured, ongoing efforts to enhance shareholder value under an operating environment marked by heightened uncertainties. In Singapore, strata sales of retail and office units at our VisionCrest Orchard freehold office property have commenced. In the UK, we recently increased our stake in the award-winning Middlewood Locks mixed-use development from 25% to 50%, and Phase 3 of this development is expected to be completed by end-2024. In Australia, we acquired our 18th property which is a freehold prime office building located in the financial core of Sydney&rsquo s CBD. However, we expect that the multiple headwinds persisting in China&rsquo s property market and our retail business will continue to weigh on our performance in the near-term.&rdquo

 

Mainboard-listed Metro Holdings M01 has increased its stake in Fairbriar Real Estate Limited to 50% from 25% previously.

 

On Nov 1, Metro announced that its direct wholly owned subsidiary, Sun Capital Assets Pte. Ltd., entered into a sale and purchase agreement (SPA) with an existing joint venture (JV) partner to acquire the additional 25% stake for GBP18 million ($31 million). The consideration comprises the purchase of shares for GBP10.9 million and the assignment of shareholders&rsquo loan and its accrued interest of around GBP7.1 million as at Sept 30.

 

The acquisition of the additional stake comes after Metro acquired a 25% stake in Scarborough Real Estate Limited, which was subsequently renamed as Fairbriar Real Estate Limited. According to Metro, the acquisition is in the ordinary course of its business and is in line with the group&rsquo s intention to enhance its presence in the UK.

 

Fairbriar, through its wholly-owned subsidiary, Fairbriar Real Estate Developments Limited, owns and develops the freehold Middlewood Locks mixed-use development and Milliners Wharf Phase 2 in Manchester, the UK. Middlewood Locks is an award-winning project that is located next to the River Irwell and is within walking distance to St.Johns, Spinningfields business district and the city centre. It will provide 2,215 new homes and an additional 1,000 new homes or 1 million sq ft of commercial space. The commercial space will include offices, a hotel, shops and restaurants. The entire development has an estimated gross floor area (GFA) of 3 million sq ft and a gross development value of GBP1 billion.

 

Middlewood Locks is being delivered in phases. Phases 1 and 2 of the development comprises 1,117 homes and commercial space occupied by Seven Bro7hers Beer house, 92 Degrees coffee shop and Co-op groceries store. Phase 3 is a residential development comprising 189 residential units named The Railings and is expected to be completed by the end of 2024.

 

According to UK property firm Bidwells and Deloitte, Manchester is said to be the UK&rsquo s second economic powerhouse and continues to see strong demand for build-to-rent (BTR) and new homes. Manchester is also said to be one of the most wealthy areas in the UK with the largest BTR market outside of London.

 

Metro&rsquo s CEO and executive director, Yip Hoong Mun, says the transaction &ldquo strengthens and extends [the group&rsquo s] successful decade-long partnership with the Scarborough Group&rdquo . The transaction will also enable the group to &ldquo further leverage on [Scarborough Group&rsquo s] expertise in UK real estate,&rdquo Yip adds.

 

Scarborough Group International chairman Kevin McCabe said he was &ldquo delighted&rdquo that Metro increased its share ownership at Middlewood Locks.

 

&ldquo The move represents great confidence in Manchester, and indeed the UK, as a high performing investment opportunity for international operators. We are delighted to continue our close partnership with Metro, securing the future of this important regeneration project,&rdquo he adds.

Full-year net profit is down 42.1% amid market headwinds

 

METRO Holdings&rsquo net profit for the half-year ended March was down 23 per cent to S$6.4 million, from S$8.3 million the year before.

 

This was despite a 3.8 per cent rise in revenue of S$65.7 million for the period, reported the mainboard-listed property investment and development group on Friday (May 24).

 

Earnings per share stood at S$0.008 for the half-year, down from S$0.01 in the corresponding year-ago period.

 

Share of profits from joint ventures registered a loss of S$3.9 million in the second half-year, compared to a gain of S$20.4 million in H2 FY2023. This was mainly due to the group&rsquo s share of higher revaluation losses from the investment properties and lower operating profit.

 

Revenue from the property division for the period decreased to S$5.9 million from S$6.7 million year ago, led by lower revenue from GIE Tower in Guangzhou, said the company.

 

For the full year, net profit was down 42.1 per cent to S$14.6 million from S$25.2 million in FY2023, on the back of a 1.1 per cent decline in revenue to S$115.9 million.

 

This was due to higher finance cost, share of the loss from associate Top Spring International Holdings, lower profits generated by its China properties, and by the retail division.

 

&ldquo During FY2024, the group&rsquo s property division was negatively impacted by the high interest rate environment where it recorded higher finance cost by S$4.1 million and higher net fair value losses from the revaluation of investment properties by S$23 million, as well as lower operating profits by S$8.7 million from the properties in the United Kingdom and Australia,&rdquo Metro said.

 

Headwinds in China&rsquo s property market resulted in a higher loss from its associate Top Spring by S$30.8 million, as well as lower profits generated by the group&rsquo s China properties.

 

This was on top of a lower profit by the group&rsquo s retail division, attributable to lower gross margins and increased costs amid a highly competitive trading environment.

 

Metro chairman Winston Choo noted that while Metro&rsquo s profit has been hit by prevailing market headwinds, the company is resilient because of its diversified portfolio across asset classes and geographical regions.

 

&ldquo Our balance sheet remains healthy, and we will proactively manage our existing investment portfolio for optimal returns,&rdquo he added. 

 

Metro&rsquo s net assets stood at S$1.5 billion and total assets was S$2.3 billion as at Mar 31, 2024.

 

&ldquo In the face of macro uncertainties, it is crucial for us to maintain a diversified portfolio of high-quality assets in resilient sectors and markets we are familiar with and where we have strong networks, alongside experienced and reputable partners,&rdquo said Choo, adding that Metro will continue to actively uphold robust capital management practices and diligently manage its investment portfolio.

 

Metro noted that its associate Top Spring, co-investments with BentallGreenOak and other China investment properties will continue to be buffeted by persistent market headwinds in China and Hong Kong.

 

A final dividend of S$0.02 per share was proposed for the year, down from the S$0.0225 the year before. This represents a payout ratio of 113.8 per cent. The date payable will be announced later.

 

METRO : M01 +6% reported a net profit of S$8.2 million for the first half ended Sep 30, 2023, down 51.5 per cent year on year from S$16.9 million.

 

This was mainly due to a lower gross profit from its retail division, as well as a share of associate&rsquo s fair value loss adjustment on its UK investment properties, said the property player on Tuesday (Nov 14).

 

Earnings per share stood at S$0.01, down from S$0.02 in the same period last year.

 

No dividend was declared for the period, as Metro usually declares dividends at its financial year end.

 

Revenue for the half year declined 6.9 per cent to S$50.2 million from S$53.9 million previously, as the group reported lower revenue contributions across all business segments.

 

Retail division revenue fell 3.6 per cent to S$45.6 million from S$47.3 million due to lower sales from the group&rsquo s two department stores in Singapore, Metro Paragon and Metro Causeway Point.

 

Revenue contributions from the property division decreased as well, on lower income from sale of property rights of Metro&rsquo s residential developments in Bekasi and Bintaro, Jakarta.

 

The group&rsquo s share of profit of associates for the half year fell 62.4 per cent to S$3.2 million from S$8.6 million a year prior. This was mainly due to a share of fair value loss on investment properties in the UK versus a fair value gain in the previous year, along with lower share of an associate&rsquo s operating profit mainly from its Australia and UK properties, due to rising interest costs.

 

Overall finance costs for H1 rose 39.1 per cent to S$15.4 million versus S$11 million in the year-ago period amid rising interest rates from bank borrowings. This was mitigated in part by lower bank borrowings from the partial repayment of short-term borrowings and higher interest income.

 

Metro said it expects the markets in which it operates to remain &ldquo subject to the heightened economic volatility and currencies&rsquo fluctuations against the Singapore dollar&rdquo .

 

The group&rsquo s chairman Winston Choo said: &ldquo Amidst macro headwinds, it is imperative that Metro maintains a diversified, quality portfolio in resilient sectors and in markets where we have strong familiarity and networks with experienced and reputable partners.&rdquo

 

On the same day, the group also announced it was acquiring VisionCrest Commercial &ndash an 11-storey Grade A office building in the Orchard Road area &ndash through its joint venture with an affiliate of real estate investment management company TE Capital Partners.

 

The deal will result in Metro owning an effective 20 per cent stake in the property, which is understood to be changing hands for close to S$460 million.

 

The group&rsquo s estimated capital commitment amounts to S$40 million after accounting for its share of the property&rsquo s acquisition price of S$33 million, inclusive of stamp duty and other expenses, and a further S$7 million for working capital requirements.

 

Metro intends to fund the transaction from internal cash sources and external borrowings.

 

The group said its investment would provide &ldquo an exceptional opportunity to own a unique en bloc freehold strata-titled commercial asset&rdquo as it noted that &ldquo good quality, freehold strata-titled offices with full floorplates are limited&rdquo in the area.

 

&ldquo The property is also nearly fully let, thus providing an immediate rental income,&rdquo it added.

 

Metro does not expect its investment to have any significant effect on the group&rsquo s consolidated net tangible assets per share, nor earnings per share, for the current financial year.

 

Located at 103 Penang Road, VisionCrest Commercial is part of a mixed-used development that also includes VisionCrest Residence and the House of Tan Yeok Nee.

 

Earlier this year in July, German asset manager Union Investment reportedly put the property on the market at a guide price of more than S$470 million. CBRE and JLL were appointed exclusive joint advisers to market VisionCrest Commercial for sale via an expression of interest exercise.

 

VisionCrest Commercial comprises 148,854 square feet of net lettable area with 99.7 per cent occupancy, and a weighted average lease expiry of 2.2 years as at end-September 2023.

 

Its key tenants include Manulife Financial Advisers, Puma Sports Sea Trading and The Coffee Bean & Tea Leaf.

 

Other features of the building include a commercial retail podium on the ground floor, and 114 car parking spaces across two basement levels.

 

Metro said its investment in VisionCrest Commercial is in line with the group&rsquo s intention to &ldquo build its presence and investment in the region through selective positioning, new investments in quality properties, and strategic alliances with a view to broadening the revenue stream of the Metro group and facilitating sustained profitability for the Metro group moving forward&rdquo .