Singapore - OUE To Double Its Assets To SGD 10 billion In Three Years
August 10, 2012
The Lippo Group unit is targeting to acquire at least one commercial property a year, said Chairman Stephen Riady.
Over the next three to five years, Overseas Union Enterprises Ltd (OUE) will be focussed on almost-doubling its assets from SGD 5.5 billion to SGD 10 billion. OUE, which is owned by Indonesian Conglomerate Lippo Group, said that it would be seeking a variety of commercial properties including office towers, retail malls and luxury apartments.
Currently, hotel properties account for over 65% of the company's earnings.
Stephen Riady, chairman of OUE, said that the acquisitions over the next three to five years would help form a base for property trusts and other investment vehicles. "We are finding more assets, improving it, creating a more sizable portfolio," Riady added, "It's too early for us to do a REIT now, we are not big enough, we must grow before we do it."
Last year, OUE bought the Crowne Plaza Singapore and completed the rebuilding of its OUE Bayfront office development, which fronts the Marina Bay. It also added to its portfolio DBS Towers One and Two in the CBD.
For Q2, OUE reported a 13% rise in profit to SGD 22.8 million on the back of increased earnings from its hotels and OUE Bayfront. The stock climbed 21% this year, outpacing the 16% gain in the Straits Times Index.
Currently, OUE has SGD 5.5 billion in assets, which Riady estimates are worth SGD 8 billion, especially with the company's plans to add retail space to DBS Towers One and Two. Riady added that the proposed upcoming acquisitions will be funded by bank loans, stock and bond sales.
OUE's deals have contributed to Singapore's rise to the world's most attractive market for mergers and acquisitions after the US, according to a ranking by the M&A Research Centre at Cass Business School and Ernst & Young.
Lau Wei Chong, an analyst at AMFraser Securities Pte Ltd said that OUE may come up against competition as they embark on their expansion plans. "There are still opportunities, though it's always whether they can find the right assets at the right price," Lau said, adding that OUE needs assets offering yields of at least 7% to 8%. "It's quite tough to find suitable assets in Singapore because every big developer is doing that."
Riady notes that Singapore is coming increasingly into the spotlight. "Worldwide, all the wealthy money is looking at Singapore," he said. "It's coming and you are going to see a lot more. Singapore is going in that direction."
"We are ready," he said. "There are more and more opportunities. The next one year will be a very interesting time."
Tags: Business space, Commercial units, Office rental