In spite of boasting a portfolio of property located across Asia-Pacific countries, Asia Food & Property (AFP) has only managed to attract limited market attention. However, this could soon change after its recent restructuring, which has improved the company’s shareholders’ value, reshaped it as a regional property player and strengthened its books.
AFP’s decision to divert and carry out an in-specie distribution of the Shanghai-based Bund Centre Investment (BCI group), along with the sale of its China-based food business, makes it a pure regional property player with assets located across Singapore, Malaysia and Indonesia.
Among the assets being bundled and distributed to stockholders are the Bund Centre, which houses the five-star, 570-room Westin Hotel and the 40-storey Bund centre office tower, as well as a six-storey retail complex located in Ningbo with a lettable space of 131,000 sq ft. These properties yielded around $32 million in 2009, or one-third of the company’s income.
The demerger of the BCI group was being made for the assets to “be analysed and valued on its own merit, risks and strategies”, said AFP.
While these China-based assets – established in 2002 – are carried at around $410 million or about 27 cents per share, an independent valuation conducted in late 2009 placed BCI assets’ value at about 1.5 billion (net of debt), which translates into an RNAV of 72 cents per share.
Meanwhile, the mainboard-listed AFP is selling Florentian International – a food business based in China – to its sister company Golden Agri Resources, for $200 million (976 million yuan). This leaves the company in a net cash position with valuable regional property holdings.
In Singapore, it includes 90,000 sq ft (21 percent) of the strata area for Orchard Towers, carried in its books at only $66 million ($733 psf).
Considering that owners of Tanglin Shopping Centre are said to be asking $4,000 psf for a collective sale, the company’s valuation seems too conservative. Even in a $2,000 psf valuation, its Orchard Towers property would be valued at around $180 million.
In Malaysia, the company owns 9.5-million sq ft of resort land and a 330-room five-star hotel at Palm Resort, located close to the Iskandar new special development zone in Johor. The property has an estimated value of $100 million.
In Indonesia, AFP owns around 1.252 million sq-ft of office space stretching from central Jakarta to North Sumatra, which is valued at around $250 million, while its 977-room Grand Hyatt Plaza and adjacent properties in Jakarta are valued at about $78 million.
However, the bulk of the company’s property in Indonesia includes around 85 million sq m (917 million sq ft) of valuable township, resort and residential land spreading from Bali to greater Jakarta. While no consistent valuations are available for these properties, a report by Cushman & Wakefield cited that value of industrial land in greater Jakarta ranges from US$5.10 psf to US$13.80 psf in the January quarter. Given a conservative estimate of S$5 psf for the company’s holdings, these properties could be worth around S$4.6 billion.
When taken together, the company seems to be sitting on well over $5 billion or $1.62 per share worth of regional property assets.