It’ll have more facilities for pre-clinical trials; medical tech cluster also in the works at Tukang

THE government is ramping up development of the biomedical sciences sector, with plans to release another site at Biopolis for tender and set up a new medical technology cluster at Tukang.

Phase Four at Biopolis could cost some $80-$100 million to build and will have more facilities for pre-clinical trials, JTC Corporation said yesterday.

The expansion will add another 40,000 square metres of gross floor area (GFA) to the biomedical research and development (R&D) centre in Buona Vista. JTC will award the project to a private developer this year, and the site could be ready by end-2012 or early-2013.

According to JTC, there has been an increase in demand for R&D spaces. Gross expenditure on R&D was $7.18 billion in 2008, or 2.77 per cent of GDP. Singapore’s aim is to have this reach 3 per cent of GDP, JTC said.

Biopolis currently comprises three phases, which together cost close to $700 million to develop. Phases One and Two have more facilities for basic research. Phase Three is under construction and should be completed by the end of this year.

Phase Four will house more facilities for pre-clinical trials. There will also be laboratories built around a ’shelf-plus’ concept, fitted with basic equipment and furnishings to help reduce set-up costs for smaller outfits.

Over in the Jurong area, JTC is drawing up plans for a medical technology cluster that will house sterilisation facilities, warehouses, laboratories, equipment manufacturers, suppliers and other supporting firms under one roof.

The cluster would be located next to Tukang Innovation Park and could be built in two phases, each measuring 40,000 square metres. The first phase could cost $60-80 million to develop.

According to JTC, the medical technology industry is headed for more growth. Singapore’s manufacturing output from the sector is expected to increase from $2.9 billion in 2008 to $5 billion by 2015.

Going by data from the Economic Development Board yesterday, the biomedical manufacturing sector (which includes medical technology and pharmaceutical activities) attracted $1.1 billion of fixed asset investment commitments in 2009.

JTC believes that the cluster environment would foster greater collaboration within the medical technology industry and lead to several benefits, such as faster product developments.

The agency is in talks with companies in the industry to obtain their feedback on the concept. If it takes off, the first phase of the cluster could be ready towards the middle or end of 2013.

JTC is also working on a concept for high-rise biologics plants. These plants would have plot ratios which are almost double those of traditional low-rise plants and would take up less land.

Source : Business Times – 26 Jan 2010

A VAST prime Manhattan property that has caused losses to investor, the Government of Singapore Investment Corporation (GIC), is having its ownership transferred to creditors – possibly including GIC.

The Stuyvesant Town and Peter Cooper Village apartment complexes will be given up by troubled owners Tishman Speyer Properties and BlackRock Realty after loan restructuring talks failed.

‘We make this decision as we feel a battle over the property or a contested bankruptcy proceeding is not in the long-term interest of the property, its residents, our partnership or the city,’ spokesman Bud Perrone said in an e-mailed statement yesterday, the Associated Press reported.

The timing of the transfer has not been set, nor has it been decided who the new owners will be, he added. GIC declined comment when contacted yesterday. One of the junior lenders, Gramercy Capital, is reported to have asked for Tishman Speyer to be replaced as manager of the complexes last Friday.

Tishman Speyer and BlackRock bought the properties for US$5.4 billion (S$7.6 billion) in a joint venture at the height of the United States property boom in 2006.

The owners each invested US$112.5 million out of total equity of US$1.9 billion. They also took out a US$3 billion mortgage from Wachovia Bank and US$1.4 billion of mezzanine debt from various lenders, including GIC. The mortgage was packaged with other loans and sold as securities – with the biggest holders Fannie Mae and Freddie Mac.

A controversial court ruling last October ordered the owners to pay back rents to a third of the more than 20,000 residents – after they were found to have raised rents too quickly. Then the recession depleted the property’s value to US$1.8 billion. A reserve fund of US$900 million has also been drained.

Tishman Speyer and BlackRock failed to repay a loan of US$16 million, which triggered the default last month, leading to talks to restructure the loans to avoid foreclosure.

GIC said then it already recognised losses on its investment. While it has not confirmed the total value of its investments, it is believed to have written down the value of about US$575 million in mezzanine debt. It has a further US$100 million in equity.

Mezzanine financing became a popular way of funding real estate investments during the property boom. In the event of a foreclosure, senior debt holders are paid back first before the mezzanine, or secondary, debt holders, which include the likes of GIC and Gramercy Capital. Equity holders are paid last.

A former banker familiar with debt proceedings said with ownership transferred, creditors will negotiate in court and could hold on to the property or make a fire sale to recoup losses as soon as possible.

He said the most senior creditor would most likely want to take possession quickly and sell. Secondary debt holders such as GIC and Gramercy could negotiate with the senior creditor to delay the foreclosure, hoping the property’s value rises and they can recoup some of their losses. But this could involve them pumping in more money to service interest payments, pay conveyancing fees and wages.

Source : Straits Times – 26 Jan 2010

NOMURA Singapore is joining a growing list of multinational corporations that are taking up space at the new Marina Bay Financial Centre (MBFC).

It has signed a 12-year lease for 102,000 sq ft of space in MBFC’s Tower Two, and will occupy levels 34 to 37 of the 50-storey tower. Nomura will take occupancy of the space next year.

No rental rate was disclosed but a Business Times report earlier indicated that it is slightly below $9 per sq ft a month. This appeared to be high for a space this size but could be due to Nomura planning to begin its lease late – some time after Tower Two is completed, the report said.

The latest tenant brings the total pre-commitment of Tower Two to about 66 per cent, with overall pre-leasing figures for MBFC Towers One and Two at about 79 per cent, said Raffles Quay Asset Management, which manages MBFC.

Standard Chartered Bank, DBS Group, BHP Billiton and Macquarie Group are among the big companies that have taken up leases at MBFC, which is being developed by a consortium comprising Hongkong Land, Cheung Kong/Hutchison Whampoa and Keppel Land.

Raffles Quay chief executive Wilson Kwong said in a statement that MBFC was in discussions with other firms and had received strong leasing interest for commercial space in Towers Two and Three.

The 33-storey Tower One, expected to be completed in the first half of the year, is already fully let, said Hongkong Land in a separate statement.

Phase 1, comprising two tower blocks of Grade A office space, retail space as well as high-end condominium Marina Bay Residences, is scheduled for completion this year. MBFC is expected to be fully developed in 2012.

Source : Straits Times – 26 Jan 2010

KEPPEL Land (KepLand) yesterday reported a 56 per cent jump in fourth-quarter net profit to $106.9 million, mainly the result of the rebounding property market.

Excluding an adjustment for gains in property values, profit rose by 24.6 per cent to $76.6 million.

Sales for the three months ended Dec 31 last year rose by 52 per cent to $300.5 million.

Sales at the Marina Bay Suites, Reflections and Caribbean at Keppel Bay made up the bulk of the property income gains from the Singapore market.

A total of 89 units were sold at the Marina Bay Suites while 32 units and 12 units were sold at the Caribbean and Reflections, respectively. Sales from The Botanica in Chengdu, China, also helped to boost the bottom line.

On a full-year basis, KepLand posted a 23 per cent rise in net profit to $280.4 million after adjusting for net fair value gains. Excluding the gains, profit increased by 17.3 per cent to $250.2 million.

Overall, property trading income rose by 22.8 per cent to $196.4 million – an increase largely responsible for the upswing in last year’s profit.

‘Asian countries were relatively less affected. With the rebound in property markets…. we sold a total of about 3,500 homes, mainly from our townships in China. In Singapore, almost 400 units were sold,’ said Mr Kevin Wong, KepLand’s group chief executive officer.

It sold 384 units last year, mostly from its Marina Bay Suites, Caribbean, Reflections and Madison Residences projects, at average prices of $2,200-2,500, $1,900, $1,950 and $1,700 per sq ft, respectively.

Full-year property investment income fell by 7 per cent, largely due to the impact of a write-back of costs from KepLand’s restructured ownership at One Raffles Quay in 2008.

The total net fair value gain for the year was $30.2 million, including $19.1 million in value gains from the upcoming Marina Bay Financial Centre (MBFC) Towers One and Two, which were partially offset from losses in fair values of K-Reit Asia’s properties including Prudential Tower, One Raffles Quay, Keppel and GE Towers and the Bugis Junction Towers.

K-Reit Asia is a KepLand private property fund management vehicle, focusing on commercial properties.

The rest of the $11.1 million in fair value gains resulted from KepLand’s additional stake in K-Reit Asia, which had resulted from a rights issue in October last year.

KepLand plans to launch 5,500 homes around Asia for sale this year – mainly in China and Vietnam.

At home, remaining units in Marina Bay Suites and an official launch of Reflections will be timed to coincide with the openings of the integrated resorts. Any possible price increases remain unconfirmed.

Earnings per share rose to 24.2 cents from 22.4 cents for the full year 2009.

Net asset value per share dropped to $2.36 from $3.39 as a result of an increase in shareholders’ units to 1.4 billion after a rights issue last June.

KepLand’s shares rose one cent to $3.44 yesterday prior to the release of the group’s results.

The company’s directors proposed a final dividend of eight cents a share, unchanged from the previous year.

Source : Straits Times – 26 Jan 2010

SINGAPORE’S thriving biomedical sciences sector is set to get a boost of up to $180million this year for the expansion of buildings and other related facilities.

This will cater to the growing number of companies that need more space for their cutting-edge work in creating new drugs and medical equipment.

The nation’s premier biomedical research hub, Biopolis, near Buona Vista, will be expanded at an estimated cost of about $80million to $100million, providing 40,000sqm of new space.

The plan was announced yesterday by industrial developer and landlord JTC Corporation, which said separately that it will launch a medical technology cluster in Jurong.

This cluster will bring major industry players together in a new facility that will cost $60million to $80million to build initially. It will enable firms there to collaborate and cut costs through cooperation.

Mr Heah Soon Poh, JTC’s director, biomedical and chemicals cluster, said yesterday that the Biopolis expansion would include laboratory design improvements to support the growth of clinical trials.

This new phase – the fourth for Biopolis – follows on the heels of Biopolis3, which is due for completion by year-end.

It brings the total cost of Biopolis to about $700million.

Companies setting up shop in the newly expanded facility can look forward to new facilities such as fitted out laboratories and shared facilities such as air-conditioning.

‘This helps to lower the upfront costs for small and medium enterprises. We are moving up in the value creation for companies,’ said Mr Heah.

The expansion is set to be completed by 2012 to 2013.

Biomedical sciences, though a volatile performer during the recent economic recession, is an increasingly important pillar of the local economy, said research house CIMB-GK regional economist Song Seng Wun.

‘The performance of this sector was quite good through the recession. It had a weak start, then a strong quarter, and even though it had a soft end to the year, we are still seeing companies interested to come into Singapore,’ he said, referring to last year.

The sector contributed $19billion, or 4.3per cent, of Singapore’s economic output in 2008, the latest available figures show, and provided 16,000 jobs.

Mr Song added: ‘It could become a bigger, more productive industry.’

Mr Heah said that looking ahead, the sector is expected to continue expanding, and JTC will provide the real estate to support this growth.

Within the sector, the medical technology sector (med-tech) is expected to drive the rapid growth. It manufactures equipment used in the industry, such as syringes and medical test-kits.

Singapore’s manufacturing output of med-tech products is expected to increase from $2.9billion in 2008 to $5billion by 2015, said Mr Heah.

Med-tech employs the majority – two-thirds – of those in the biomedical science sector, as it is more labour intensive than pharmaceutical production, for instance.

This is why JTC is driving the new med-tech cluster, at Jalan Tukang in Jurong, at which all the main players in the industry will be located – ‘in the same space, creating synergies and reducing costs’, said Mr Heah.

This means manufacturers, suppliers, logistics firms, sterilisation firms and support services will be located fairly close to each other, and will therefore be able to complement one another’s efforts.

The first phase of this cluster, with a built up area of 40,000sqm, is expected to be built by the end of 2013; a second phase of 40,000sqm will be built later.

JTC is also in the midst of discussions for a new biologics facility, which will take up less land because it will be built upwards, said Mr Heah.

Biologics refers to medicinal products produced through biological methods rather than chemical ones.

Irish firm PM Group, which specialises in servicing the pharmaceutical and food industries, is advising JTC on the project.

JTC says it is currently in talks with potential companies to locate to both the new med-tech and biologics facilities.

It plans to launch tenders for both the Biopolis and med-tech cluster expansions for private developers to bid sometime this year.

Source : Straits Times – 26 Jan 2010

WITH reference to the Housing and Development Board’s (HDB) reply last Thursday (‘Income ceiling helps ensure neediest get subsidised flats’), my sense is that the HDB underestimated the social ramifications of the resale policy to permanent residents (PRs), while it failed to maintain the Home Ownership Scheme for the people to balance demand of rapid population growth during the past 20 years. As a result, low- and middle-income households have suffered.

The ceiling of $3,000 and $2,000 for three- and two-room flats did not help as HDB did not build enough units to meet the market, citing low demand. This drastic reduction in the number of flats built is detrimental to the ageing population in the rental and sales market.

The policy to allow 533,000 PRs to buy resale HDB flats works against citizens. It is difficult to comprehend why HDB began to wind down the momentum to build more flats during the 1990s when the population ballooned from 3.047 million to 4.027 million by the end of 2000.

The yearly average peak of 30,900 HDB flats built during the 1980s corresponded with the population growth meeting the Home Ownership Scheme. However, during the 1990s when one more million people were added, HDB began to taper down to 25,700. What puzzles me most is that by 2008, when another 810,000 people were added to the population, HDB built only 8,260 units. Why the paradigm shift?

Take the example of a Queenstown five-room flat at $619,000. Single-income families earning $6,000 with two children cannot afford to pay 50 per cent of their income to buy such a flat. Can the $30,000 subsidy help them? Combined-income families with two children earning $8,000 may falter to commit 38 per cent for such flats. These groups are the ‘neediest’ for bigger flats, yet the Home Ownership Scheme eludes them.

Paul Chan

Source : Straits Times – 26 Jan 2010

NOMURA Singapore has joined other multinational corporations at Marina Bay Financial Centre (MBFC), Raffles Quay Asset Management (RQAM) announced yesterday.

Nomura has signed up 102,000 square feet of space in MBFC’s Tower Two, and will occupy levels 34 to 37 of the 50-storey commercial tower.

The leading financial securities company in Japan, Nomura has signed a 12-year lease and will take occupancy of the space in 2011.

The latest tenant brings the total pre-commitment of MBFC Tower Two to about 66 per cent, with overall pre-leasing figures for MBFC Towers One and Two at approximately 79 per cent.

Said RQAM chief executive Wilson Kwong: ‘With the recent levels of growth seen in the economy, more multinational corporations will be on the lookout for quality commercial space in Singapore’s Central Business District, and MBFC will play an integral part in attracting these firms.

‘MBFC is also in discussions with other companies and continues to receive strong leasing interests for commercial space in Towers Two and Three. We believe that its tenants will enjoy both state-of-the-art office space as well as the unique ‘work.live.play’ environment provided by the development.’

When fully completed in 2012, MBFC will be Singapore’s first mixed-use development that successfully integrates residential, business, retail and entertainment facilities.

Source : Business Times – 26 Jan 2010

Fourth quarter net profit jumps 56%; group on the prowl for more land

KEPPEL Land, which saw fourth-quarter earnings jump 56 per cent as property markets across Asia recovered, said it plans to launch more than 5,500 homes across the region for sale this year.

‘Keppel Land is moving into 2010 with optimism on the back of its stronger financial position, improving residential sales and office space take-up together with expectations of continued recovery of Asia and a return of capital flows from the West,’ chief executive Kevin Wong said yesterday.

In Singapore, KepLand will sell more units in two upmarket projects – Marina Bay Suites and Reflections at Keppel Bay – to capitalise on the opening of the integrated resorts, which is expected to boost the high end market.

And in China, the group will launch two projects in Shanghai as well as phase one (comprising about 1,700 units) of its 35.4 ha project in the Sino-Singapore Tianjin Eco City.

The developer yesterday reported that net profit for the quarter ended Dec 31, 2009, rose to $106.9 million from $68.5 million a year ago. Revenue rose 52 per cent to $300.5 million from $197.4 million.

‘Residential sales in Singapore and overseas have recovered, encouraged by signs of economic recovery and improved market sentiments,’ Keppel Land said. Revenue rose as the company saw progressive revenue recognition from the newly launched Madison Residences and The Promont in Singapore.

Higher revenue was also recognised for projects in Vietnam, India and China. Riviera Cove in Ho Chi Minh City has also recorded robust sales since its launch in November 2009, KepLand said.

The property group, however, recorded a net fair value loss of $12 million at the pre-tax level for fourth quarter 2009, mainly from completed investment properties owned by its listed office trust K-Reit Asia.

For the full year, Keppel Land’s profit rose 23 per cent to $280.4 million from $227.7 million in 2008. Revenue rose 10 per cent to $923.9 million compared with $842.2 million for 2008 on the back of higher sales.

Earnings per share for the full year rose to 24.2 cents from 22.4 cents in 2008.

Keppel Land is on the lookout for land to purchase. The company last year carried out a rights issue which raised gross proceeds of $708 million. ‘This ensures the group is well-positioned to capitalise on opportunities to acquire attractive assets at competitive prices in Singapore and overseas,’ it said.

The company also said the commercial segment is showing signs of bottoming out.

‘A flight to quality has been observed with Marina Bay Financial Centre (MBFC) and Ocean Financial Centre (OFC) chalking increased pre-commitment occupancy rates,’ Keppel Land said. MBFC saw a take-up of about 213,000 sq ft in 2009. Phase One of MBFC is now 79 per cent pre-committed and the overall occupancy for the entire MBFC stands at 68 per cent.

UBS Investment Research on Jan 22 issued a fresh ‘buy’ call on KepLand and upgraded the stock’s target price to $4.38 from $3.50.

‘On account of the higher office and luxury residential price assumptions, we upgrade our RNAV (revalued net asset value) estimate for Keppel Land by 25 per cent to $4.40 a share,’ said analyst Regina Lim.

Keppel Land shares gained one cent to end at $3.44 yesterday.

Source : Business Times – 26 Jan 2010