presentation on bid proposal (1)

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Presentation on bid proposalDec 1998Compiled by: Chen Yongjie, Hua Xuechen, Li Lam Mui, Pang Tze Wei, Joel Tay K

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




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 = 1.2milsqftOf which 40% must be commercial

Bus interchange of 76,000 sqft ( must be

completed by Apr 2002 and handed to




V a st p o p u la tio n ca tch m e n t :S tra te g ica lly lo ca te d

E fficie n t p e d e stria n circu la tio n a n d

access

- W e ll p la n n e d ro a d n e tw ork




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 declinedby average of 4.3% to $450psf. Overalldecline 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 rice a 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 andvalue-for-money products and services

However Average rental and capital values in the

Suburban Shopping Area remainedrelatively resilient.

1Q declined 8%, 2Q declined 3%, 3Q declined4%

Current retail capital values in theSecondary Shopping area are at the lowest

since end 1998



Overall: Weak across all real estate

sectors Both rental and capital values continued

downward trends

Forecast: Further softening for the propertymarket over the next 6 months




Reasons to participate in the Tender

Credentials1.CPL is experienced developer. Northpoint,Robertson Walk, Anchorpoint, CausewayPoint.

2.Diversified portfolio – SGD $1.51 Billion asof 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.




In Sync with CPL’s objective

1. Leading operator of serviced residents. In line with company’s objectives to strengthenbusiness links in other parts of Asia and to further solidify her future prominenceas 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 Yishun’s Northpoint beside Yishun MRT and bus interchange, Towncentre for Sengkang.

Expected Trend Analysis: (+) in future

1. Market may be currently weak, but deemed to recover and construction period leewayof 8 years r l st t l

2. Downturn phase of 24 to 48 months started from 1997 after Thai Baht Devaluationevent, 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 consumerspending in future to increase as buying power and confidence heightens.




As of 1998, interest rate volatile, high inearly 1998 at 9.5%, up to 2001 in recycle between 2 – 9.5 %,

After 2001, interest rate anticipated willbecome more lower and stabilized(Upturn Phase) – debt refinancingpreferable and also in time to

construction completion phase. Expected future benefits may ultimately

outweigh the short term negativities




Can use tender brief simulation asreference

Can use henry’s doc as ref point

Holding strategy: tied to market trendgraphs launch in batches?

Commercial (launch asap to link withtransport network / according to mkt

demand ( possibility of openingunderground link 1st) vs residentialcomponent ( launch in batches)

Suggestions on what developer CAN do

AFTER development of site ( usage of



Proposed development scheme (retail)




An integrated project of the businterchange, the MRT, the LRT and theshopping 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




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. Therewill be 42,000 dwelling units in Sengkang by

2002. Rental income from the lease of sho s could



Residential component To be let out in phases in tandem with the

demand of the market



Capital Budgeting

Based on analyst report…. Expected S$149.6million… but we think….

DR= rf + rp (?) Lower dr= lower risk premium = less returns (?)

Assuming returns same: if Bid higher price = earnless 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




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?




Propose Joint Venture with anothercompany

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 justifywhich one to adopt.



Preliminary Financial Analysis

How long to breakeven etc



Summary

Now it is compass point + compassheights



THANK YOUQ&a?

presentation on bid proposal (1)

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