CDL was part of a consortium that put in the top bid (S$388.1m or S$495 psf) for a 99-year residential GLS site at Mt. Vernon Rd yesterday. We estimate the breakeven ASP at ~S$880 psf. Assuming a 33% stake and ASP of S$1,050 psf, we expect an accretion of four S-cents to CDL’s RNAV and three S-cents to fair value. Recall that the consortium had acquired a nearby GLS residential site at Bartley Rd in Mar 11 at S$621 psf (25% higher). The starkly lower top bid, in our view, reflects clearly increased cautiousness among developers. Maintain HOLD on CDL with a higher fair value estimate of S$8.38 versus S$8.35 previously (35% discount RNAV).
Won tender for GLS residential site at Mt. Vernon Rd. A CDL subsidiary, Sunmaster Holdings Pte. Ltd., was part of a consortium that put in the top bid (S$388.1m or S$495 psf) for a 99-year residential GLS site at Mt. Vernon Rd yesterday. This bid was 7.6% above the 2nd bidder in a tender exercise that attracted five bidders. For this development, we estimate the breakeven ASP at ~S$880 psf. Assuming a 33% effective stake and average selling prices of S$1,050 psf, we expect an accretion of four S-cents to CDL’s RNAV and three S-cents to its fair value estimate. Note that transactions over the last year at nearby 8@Woodleigh, a 99-year condominium, are at S$1,100 psf on average. Hence we believe that the price paid for this site is fairly reasonable, despite uncertainty in the domestic residential space, and expect the share price to have a neutral/slightly positive reaction on this acquisition.
Top bid is 20% lower than that at nearby site in Mar 11. Recall that the consortium had acquired a nearby GLS residential site at Bartley Rd/Lorong How Sun in Mar 11 at a price which was 25% higher (S$621 psf). Though the Mt. Vernon site is further out from the MRT station, the starkly lower top bid and reduced bidder interest (there were eight at the Mar 11 tender) clearly reflects heightened cautiousness among developers, in our view. Moreover, we think the bid could also have reflected, to an extent, additional strategic value the site holds for the consortium; a stronger bid would prevent otherwise even softer land prices in that vicinity and also provide the flexibility to control the launch schedules of both sites.
Maintain HOLD at S$8.38. While the domestic residential outlook remains murky, we think the downside for this acquisition is limited given the price paid. Maintain HOLD on CDL with a higher fair value estimate of S$8.38 versus S$8.35 previously (35% discount RNAV).
Top bid is 20% lower than that at nearby site in Mar 11. Recall that the consortium had acquired a nearby GLS residential site at Bartley Rd/Lorong How Sun in Mar 11 at a price which was 25% higher (S$621 psf). Though the Mt. Vernon site is further out from the MRT station, the starkly lower top bid and reduced bidder interest (there were eight at the Mar 11 tender) clearly reflects heightened cautiousness among developers, in our view. Moreover, we think the bid could also have reflected, to an extent, additional strategic value the site holds for the consortium; a stronger bid would prevent otherwise even softer land prices in that vicinity and also provide the flexibility to control the launch schedules of both sites.
Maintain HOLD at S$8.38. While the domestic residential outlook remains murky, we think the downside for this acquisition is limited given the price paid. Maintain HOLD on CDL with a higher fair value estimate of S$8.38 versus S$8.35 previously (35% discount RNAV).
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