Published August 8, 2009

SingLand, UIC turn in Q2, H1 losses

In terms of operations, both achieve year-on-year increases in profits


OFFICE landlord Singapore Land (SingLand) and its parent United Industrial Corp (UIC) yesterday reported net losses for the second quarter as well as the first six months of this year due to fair-value losses from revaluations of investment properties.

UIC posted a $251.8 million net loss for Q2 ended June 30, 2009 after it booked a fair-value loss of $526.1 million on investment properties held by subsidiary companies.

SingLand's $344.7 million net loss for Q2 was on the back of a $492 million revaluation loss on investment properties held by subsidiaries. Operations-wise, however, both companies achieved year-on-year increases in net profit for both Q2 and the first half.

Singapore Land Tower at Raffles Place was valued at $1.14 billion as at June 30, 2009, which works out to $1,842 per square foot (psf) of net floor area (NFA).

Clifford Centre's valuation of $437 million reflects $1,594 psf of NFA, while the $891 million valuation for The Gateway at Beach Road translates to $1,186 psf of NFA. The NFA figures were based on information in SingLand's 2008 annual report.

UIC Building at Shenton Way - which UIC now fully owns following a collective sale inked in 2007 that valued the asset at $600 million - was appraised at $428 million as at end-June 2009. Based on the building's NFA of 397,425 sq ft indicated in UIC's 2008 annual report, the latest valuation works out to $1,077 psf.

UIC Building is on a site with a balance lease term of about 59 years. In January this year, UIC received provisional permission from the authorities to redevelop the Shenton Way property into apartments, shops and offices.

SingLand posted a net loss of $271.6 million in H1 2009, against net earnings of $101.6 million in H1 2008. It said that Q2 earnings attributable to equity-holders included net profit from operations of $51 million, a year-on-year rise of 16 per cent. For the first half, net profit from operations increased 27 per cent year on year to $98.6 million.

Revenue dipped 4 per cent in Q2 to $85.7 million due to lower takings at Pan Pacific Singapore hotel, partly offset by higher rental income. Gross rental income from investment properties rose 12 per cent to $63.6 million, attributable to higher rental rates. First-half revenue dipped 0.3 per cent to $171.9 million.

Arising from the fair-value loss on investment properties, $82.9 million of deferred income tax liability provided on prior years' fair-value gain was written back, resulting in an overall income tax credit of $73.9 million in Q2.

UIC's net profit from operations improved 33 per cent to $63.1 million in Q2 and 44 per cent in the first-half to $114.9 million. The group achieved 23 per cent revenue growth to $271.5 million for Q2, largely due to higher sale of trading properties (from progressive recognition of sales of One Amber and Northwood projects) as well as higher rental income. First-half revenue rose 26 per cent to $467.3 million. UIC wrote back a deferred income tax liability of $88.7 million provided on prior years' fair-value gain. As a result, it had an overall income tax credit of $71.3 million in Q2.

UIC's net asset value per share slipped from $2.34 as at Dec 31, 2008 to $2.18 at end-June 2009. The counter ended two cents higher at $1.87 yesterday.

SingLand closed 11 cents lower at $5.16 yesterday. Its NAV per share declined from $9.44 at end-2008 to $8.59 at end-June 2009.

Looking ahead, SingLand said the office and retail leasing environment is expected to be soft, given the substantial new supply in the pipeline. On a brighter note, it observed that sentiment for the housing market has improved with a pick-up in transaction volumes in recent months.