Published February 10, 2009


Keppel Land sticks to policy of annual valuation at year-end

WE refer to your 'Hock Lock Siew' column, 'Write down and start selling' (BT, Feb 9).

Keppel Land wishes to reiterate that no provisions or writedowns for its residential land bank and investment properties were necessary in FY2008.

Unlike some developers and real estate investment trusts (Reits) which booked in substantial revaluation gains in the first half of 2008, Keppel Land has stuck to its policy of annual valuation at the end of each year.

As it did not mark up the values of its investment properties when Grade A rentals continued to rise in H1 2008, the company's asset values were still stated in its books at end-2007 values.

Moreover, the carrying values for Keppel Land's office properties have been consistently within the lower end of the market range.

While home prices have softened, the breakeven prices for our residential projects are still considerably below current market prices.

For Marina Bay Financial Centre (MBFC), for instance, Phase 1 was purchased in 2005 with an option for Phase 2, which was exercised in early 2007. The purchase price of Phase 1 was $381 per square foot and the purchase price for Phase 2 was $435 psf.

Therefore, the breakeven prices for both the office developments as well as the residential towers, Marina Bay Residences and Marina Bay Suites. are much lower than current market prices.

Keppel Land remains disciplined and prudent in financial management.

We will continue to review the operating costs as well as the project costs of all our development projects to conserve cash wherever possible.

We believe that with a tighter operation and our healthy balance sheet, we will be able to ride out the current crisis and emerge stronger.

We are also able to capture good value opportunities when they come along.

Lim Kei Hin
Chief financial officer
Keppel Land Ltd