Saturday, September 30, 2006
[RealEdge] BT : HDB properties get individual valuations
| Published September 30, 2006  | |
| HDB properties get individual valuations Move further fuels talk it's looking at Reit-based divestment
By ARTHUR SIM
(SINGAPORE) In reviewing its financial year 2005/2006, the Housing and Development Board has for the very first time conducted valuations of individual properties in its portfolio.
The move has further fuelled persistent market speculation that the public housing board is looking at ways to divest both its commercial and industrial property through a real estate investment trust. Income from rental, which includes rental from commercial and industrial property, accounted for $758 million or 23 per cent of HDB's income for the year. Speaking at a press briefing for the release of HDB's annual report earlier this week on Thursday, CEO Tay Kim Poh said: 'We will explore all the possibilities of divesting (commercial and industrial) properties and continue to review this.' Mr Tay, however, later qualified that there are no immediate plans to divest HDB's portfolio of properties. For the latest financial year, HDB reported a deficit of $1.4 billion, against a deficit of $824 million in the previous year. Mr Tay attributed this to provisions made for industrial property and mortgage loans. HDB's investment properties comprise industrial properties and commercial complexes. Impairment losses on its investment properties amounted to $714.6 million for the year. Previously, the impairment assessment was done on an overall portfolio basis. From FY05/06, HDB said it has 'refined the review and carried out the assessment on individual property basis for the first time'. It added that in its financial statements, assets are still at cost less allowance for depreciation and any impairment loss. HDB's income comprises mainly interest income from mortgage loans, rental from commercial and industrial properties, and car park charges. For FY05/06, income from interest fell to $1.53 billion, down from a previous $1.62 billion - a drop of 5.5 per cent. Income from rental, however, increased to $758 million from $690 million previously, or about 10 per cent. HDB manages 17,883 commercial properties which have an average occupancy of 97 per cent. It also manages 12,404 industrial properties, and allocated 937 industrial units during the year. About 2,750 tenants were relocated under the Industrial Redevelopment Programme, and HDB says the next phase of the programme will involve a pilot Design-and-Build tender for a proposed motor workshop development. HDB's car parks could also be a target for divestment. Income from car park charges increased by about 12 per cent to $365 million, from $326 million. Explaining the increase, HDB, which manages 674,319 lots, said that it has an arrangement with the Urban Redevelopment Authority for sharing car park coupon revenue based on an agreed ratio, subject to periodic review. Any coupon collection above or below the agreed share is refunded or claimed from the other party. However, there was a change in the ratio with a one-time adjustment in FY04/05 for the income in the past three years based on the new ratio, which resulted in a low figure for the income of FY04/05. In FY05/06, HDB also significantly reduced the number of unsold flats to about 6,000, down from about 9,000 a year ago. The number of new flats sold dropped to 10,100 from 14,914 in the previous year. Mr Tay said this was because new supply had been 'tightened'. The number of transactions in resale flats increased marginally to 31,300 from 31,199 units. |
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