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Singapore Daily Bulletin – 16/01/13

CapitaMalls Asia Entrenches Presence In Wuhan With Fourth Site Purchase
In a SGX filing yesterday, CapitaMalls Asia announced that it has secured a prime site for a shopping mall in Wuhan, China. The shopping mall owner which paid Rmb660 million for the site, plans to have the site developed into a six-storey shopping mall by 2015. The site has a land use tenure of 40 years expiring in 2052. Apart from meeting the retail needs in the area, the mall will also have the potential to include two office towers. On a completed basis, the total development cost is expected to be about Rmb2,800 million. With this latest acquisition, CapitaMalls Asia has four shopping malls in Wuhan. The other three malls are CapitaMall Wusheng and CapitaMall Minzhongleyuan in the Hankou area, which are already operational, as well as CapitaMall 1818 currently under development in the Wuchang area. On the whole, including this new development, CapitaMalls Asia now has 60 shopping malls in 36 cities in China, of which 49 are operational and the remaining 11 are under development.

Significance: The proposed mall will be situated at a good location with a population catchment of about 500,000 people within a five-kilometre radius. In addition to being situated at the junction of two major roads – Jiefang Avenue and Gutian Second Road, the accessibility of the mall will be further enhanced when the sixth Jianghan bridge linking Hankou and Hanyang is completed in 2015.

Ascendas REIT: New Stamp Duty Poses Little Impact
The impact of the seller’s stamp duty on industrial property which was part of the government’s latest property cooling measures introduced just last week is not expected to have a significant impact on Ascendas REIT. The statement was made by the company in a commentary accompanying its financial statements for the third quarter ended 31 December 2012. The introduction will see sellers forking out additional amounts of 5 to 15 percent, should they choose to sell industrial properties within three years of purchase. Ascendas REIT said the new measure could potentially weed out speculators and moderate industrial prices, particularly strata-titled units. For the three quarters of FY13, Ascendas REIT’s distribution per unit rose 6.2 percent year-on-year to $0.1068 from $0.1006. This came largely on the back of a 16.7 percent growth in gross revenue as new contribution from completed projects and acquisitions from the previous financial year began pouring in. The trust also announced an asset-enhancement initiative for 31 International Business Park that is expected to cost $13.2 million and be completed by the third quarter of 2013.

Significance: The stamp duty to be levied on sales of industrial property is a first of its kind in Singapore. According to Ascendas REIT, the impact would not be great as it holds its properties for investment purposes on a long term basis. Investors were also undeterred by the news as shares of the trust gained 2.1 percent over the previous two trading days.

SingTel’s Telkomsel Wins Bankruptcy Appeal
PT Telekomunikasi Selular (Telkomsel), SingTel’s 35 percent-owned associate, has won its bankruptcy appeal in the Indonesian Supreme Court. The appeal was filed on 21 September 2012 after the Indonesian cellular carrier was declared bankrupt in the same month by an Indonesian court following the filing of a bankruptcy order against it by former vendor PT Prima Jaya Informatika. According to Indonesian law, firms that are late in repaying debts to more than two companies at a time can be considered bankrupt. Prima Jaya said that Telkomsel owed it 5.3 billion rupiah, as well as 40 billion rupiah to Extent Media. Meanwhile, Telkomsel blamed the delay to settle debts on a “disagreement between the two sides”. In response to the bankruptcy order, SingTel said Telkomsel had net assets far surpassing those of its debts, with 35 trillion rupiah as at June 30 last year.

Significance: The latest development spells a credit positive implication for Telkomsel, and means the company can bid for 3G spectrum which was postponed amid the bankruptcy kerfuffle.