Presentation on bid proposal Dec 1998

Compiled by: Chen Yongjie, Hua Xuechen, Li Lam Mui, Pang Tze Wei, Joel Tay Ka Guan

Agenda
Background of Subject Site Current Market Sentiments (JLW report) Reasons to participate in the Tender

Alignment with corporate objectives

Proposed

Development Scheme Capital Budgeting Project Development Structure Preliminary Financial Analysis

Proposed Subject Site

Proposed Subject Site

Proposed Subject Site

99-year

tenure First proposed integrated development: Residential + Commercial + bus interchange 2 plots of land of 122,000 sqft & 154,000 sqft Max GPR of 4.2, potential GFA = 1.2mil sqft
Of

which 40% must be commercial Bus interchange of 76,000 sqft ( must be completed by Apr 2002 and handed to

Proposed Subject Site

V a st p o p u l ti n ca tch m e n t a o S tra te g i l y l ca te d : ca l o E ffi e n t p e d e stri n ci ci a rcu l ti n a n d a o a cce ss W e l - p l n n e d ro a d n e tw o rk l a

Current Market Sentiments (JLW report)

Private

Residential:

Average capital values of prime residential declined by 10% overall

Delayed correction to better match prices of non-prime residential capital values

Non prime residential capital values declined by average of 4.3% to $450psf. Overall decline of 13.5% for this year.

But:
Take-up

rate of new units maintained at rate of 1400 units. Buying mood selective. Continuing sales in mid-range condominiums targeted at HDB upgraders Public Private price gap has narrowed

Current Market Sentiments (JLW report)

Retail:

Hard hit by regional economic financial turmoil

Fall in tourist arrivals and shrinking expatriate community

Local spending is more focused on mid range and value-for-money products and services

However
Average

rental and capital values in the Suburban Shopping Area remained relatively resilient.
1Q

declined 8%, 2Q declined 3%, 3Q declined 4%

Current

retail capital values in the Secondary Shopping area are at the lowest since end 1998

Current Market Sentiments (JLW report)

Overall:

Weak across all real estate sectors

Both rental and capital values continued downward trends Forecast: Further softening for the property market over the next 6 months

Reasons to participate in the Tender

Credentials 1.CPL is experienced developer. Northpoint, Robertson Walk, Anchorpoint, Causeway Point. 2.Diversified portfolio SGD $1.51 Billion as of Dec 1998. 3 residential project under construction 1 residential and commercial Anchorage Office Tower Alexandra Point Tender bid will invariably add to portfolio upon residential and commercial project completion in tender site.

Reasons to participate in the Tender

In Sync with CPL objective s 1. Leading operator of serviced residents. In line with companys objectives to strengthen business links in other parts of Asia and to further solidify her future prominence as an established developer with a sizeable portfolio. 2. Crisis times are also times of opportunity. Favourable Characteristic 1. Attractive location: No existing mall in tender site vicinity Sengkang New Town No operational MRT/Bus interchange soon to be completed in 2002 Central location of site. Location of (u/c) MRT/Bus interchange in subject site. Reminiscent of Yishuns Northpoint beside Yishun MRT and bus interchange, Town centre for Sengkang. Expected Trend Analysis: (+) in future 1. Market may be currently weak, but deemed to recover and construction period leeway of 8 years real estate ccle 2. Downturn phase of 24 to 48 months started from 1997 after Thai Baht Devaluation event, foreseeable end est 2001. 3. Afterwhich, upturn phase housing boom at mature phase est 5 years after 2001. 4. Given suburban shopping areas resistance in downturn, we expect consumer spending in future to increase as buying power and confidence heightens.

Reasons to participate in the Tender As of 1998, interest rate volatile, high in early 1998 at 9.5%, up to 2001 in re cycle between 2 9.5 %, After 2001, interest rate anticipated will become more lower and stabilized (Upturn Phase) debt refinancing preferable and also in time to construction completion phase. Expected future benefits may ultimately outweigh the short term negativities

Proposed Development Scheme

Can

use tender brief simulation as reference Can use henrys doc as ref point Holding strategy: tied to market trend graphs launch in batches?
Commercial (launch asap to link with transport network / according to mkt demand ( possibility of opening underground link 1st ) vs residential component ( launch in batches) Suggestions on what developer CAN do AFTER development of site ( usage of

Proposed Development Scheme

Can

use tender brief simulation as reference Can use henrys doc as ref point Holding strategy: tied to market trend graphs launch in batches?
Commercial

(launch asap to link with transport network / according to mkt demand ( possibility of opening underground link 1st ) vs residential component ( launch in batches) Suggestions on what developer CAN do AFTER development of site ( usage of

Proposed development scheme (retail)

Proposed development scheme (retail)

An

integrated project of the bus interchange, the MRT, the LRT and the shopping mall, all air-conditioned under one roof. Undergorund: MRT line & retail space Ground level: bus interchange 5 levels above ground level: retail Above level 6: residential development

Proposed development scheme (retail)

Things

to be considered: Safety fire access

Proposed development scheme (residential)

Holding strategy

Transportation facility

Bus interchange to be completed by April 2002 to tie in with the start o operation of the Sengkang MRT station

Retail

component

To

be leased out ASAP upon completion, i.e. April 2002 Reasons:

Crowd brought in by the transportation facility increases pedestrian traffic in the area. There will be 42,000 dwelling units in Sengkang by 2002. Rental income from the lease of shops could

 Residential
To

component

be let out in phases in tandem with the demand of the market

Capital Budgeting

Based on analyst report. Expected S$149.6 million but we think. DR= rf + rp (?) Lower dr= lower risk premium = less returns (?) Assuming returns same: if Bid higher price = earn less returns(?) Lower dr = high bid price (?)

Discount rate given by analyst can be LOWER. Real bid price is S$172.3 million (est) 3 Scenarios of conservative, neutral, aggressive: so that the board can make a comparison

Project Development Structure

Solo

or jv? Real: JV effort with 2 subsidiaries handling residential and retail. Insert company financial highlights and justify why solo Take loan or not?

Project Development Structure

Propose

Joint Venture with another company

Draw

on the expertise from the other company Lower financial burden during this economy downturn
Which

company and why JV structure

Loan

(necessary or not if JV?)

Low

interest rate

Loan

structure

Draft

different loan scenarios and justify which one to adopt.

Preliminary Financial Analysis

How

long to breakeven etc

Summary
Now

it is compass point + compass heights

THANK YOU Q&a?