11th Apr 2007 10:22
Macau Property Opportunities Fund11 April 2007 11 April 2007 Macau Property Opportunities Fund Limited ("MPOF" or the "Company") Investor Update First Quarter 2007 Highlights •Maiden interim results announced €13.8% uplift in first-half Adjusted NAV •Eight sites under negotiation worth US$280 million •Strong performance and increased turnover in Company's shares Fund Overview In February, the Company announced its maiden interim results for the period to31 December 2006. The valuations of the portfolio properties, undertaken bySavills, increased by 21%, translating into a 13.8% uplift in the Fund'sAdjusted NAV. The properties were acquired towards the end of the first half,therefore giving less time for the valuations to benefit from the ongoing growthin land prices. This rapid uplift reflects the attractive prices paid for theproperties and the redevelopment potential of Properties 1 & 3. Portfolio Valuation Summary Property Sector Type Acquisition Open Market Increase Cost Valuation* 1 Residential Redevelopment US$8.60m US$13.21m US$53.6% 2 Residential Development US$86.58m US$101.28m US$17.0% 3 Residential Redevelopment US$20.57m US$25.64m US$25.0% *Interim valuations are unaudited and were conducted by Savills Macau The current status of the three portfolio properties is as follows: Property 1remains in the early stages of the planning and design process. It is theInvestment Manager's intention to redevelop this site into an eight storeyapartment block aimed towards upper-middle class local residents. Property 2 isa 32-storey residential tower in a premium luxury mixed-use development. Theproject is well underway, with foundation work almost complete andsuperstructure construction expected to commence soon for the parking and retailpodium areas. Property 3 is to be redeveloped into affordable apartments forlocal residents. The Investment Manager is currently seeking to consolidate itsholdings in the surrounding area before proceeding to the planning approvalstage. The completion dates for all three properties are currently targeted forthe end of 2009. The Investment Manager continues to adhere to its stringent and disciplinedinvestment process of acquiring well-positioned assets within clearly definedniche market segments. Despite seeing an ongoing and well-diversified stream ofpotential sites, the vast majority of these continue to be rejected due tounattractive prices, poor location, inappropriate market segments or failedlegal due diligence. No further acquisitions were announced during the quarter,but the current pipeline remains strong with 36 sites worth a combined US$900million spread across a mix of market segments. Of these, eight sites with acombined acquisition value of US$280 million, or twice the Fund's availableequity, are at various stages of negotiation. The Company's profile has grown significantly following the recent launch of itspublic and investor relations strategy coupled with increasing internationalcoverage of Macau as a gaming centre to rival Las Vegas. In the UK inparticular, Macau coverage has escalated since Sir Richard Branson's VirginGroup said it was looking to invest in a casino resort in the territory.Consequently, MPOF was one of the best performing Overseas Property Funds("OPFs") during the first quarter, with its shares rising by 24% in absoluteterms and outperforming the OPF sector by 17%. This was accompanied by a healthyturnover in the stock, with average volume reaching almost 400,000 shares perday during the period. The number of individual transactions also rose sharply,reflecting the continued diversification in the Company's shareholder base. Market Overview The residential property market remained the centre of attention in the firstquarter. Buying momentum continued following the successful launch of OneCentral in Q4 2006, with market analysts predicting a 15-20% growth inresidential prices for 2007. Price performance of newer stock is likely tocontinue to outstrip older properties. Recent strong sales performance at theShun Tak/Hopewell Nova City project on Taipa (Phase II currently being 95% sold)plus the launch of Shun Tak's Harbour Mile on Macau Peninsula and ChineseEstate's 24 block project close to the Cotai strip later this year, shouldensure that transaction volumes continue to increase. Foreign investors remainkey participants, particularly at the top end of the market, accounting for 35%of all residential transactions in 2006 (58% by value). Sustained investorappetite, however, will only be achieved through the development of stronggrowth in rental demand going forward to ensure adequate investment yields. Theearly signs of this are already starting to appear, with JLL stating thatstronger occupier demand is becoming evident and expected to grow throughout therest of the year. Macau's growing international profile as a destination citywill continue to drive demand for residential properties from occupiers,investors and increasingly wealthy locals. The retail sector has also been attracting widespread attention. Focus has beenon the mega-brands rapidly filling the six million square feet of retail spaceestimated to be opening over the next three years. The 1.2 million square feetin the Venetian is believed to be over 80% committed. Once open, these outletsare reported to be collaborating with each other and the Macau government for awidespread campaign promoting Macau to the rapidly growing Chinese consumermarket. This is likely to continue to drive retail spending at or beyond the 21%growth rate seen in 2006 and catalyse the long predicted growth in Macau'snon-gaming revenues. On the gaming front, the first quarter was marked by the successful opening ofStanley Ho's visually controversial Grand Lisboa casino, encompassing 240tables, 484 slot machines and 30 VIP tables. The casino played host to 10,000visitors on its first day. Chinese New Year was another record for Macau, withtourist arrivals up approximately 20% YoY to over 500,000. Gaming revenuesreached almost US$1.5 billion in the first two months of the year, an increaseof almost 50% YoY. The continued high quality supply of new casino productcombined with announcements of yet further new resorts should continue to driveinterest and demand through 2007 and beyond. The five year expansion plan for the Macau Airport has finally been announced,with an estimated investment of HK$4 billion and a completion date during 2011.With 19 additional aprons and an enlarged and improved passenger terminal, theairport's capacity will increase to 32 flights per hour and eight millionpassengers per year, up from six million currently. Construction of the newadjacent ferry terminal is continuing and is expected to be completed andoperational in 2008. Summary Macau continues to transform at an increasingly rapid pace. 2007 will be themost significant year so far culminating with the opening of the firstintegrated casino-resort, the 3,000 room Venetian Macau, in the third quarter.With less than 15% of the estimated US$30-35 billion foreign investmentcommitted spent to-date and property prices remaining attractively valued, theInvestment Manager continues to believe that Macau is at an early stage in itsre-rating cycle. The Company's key focus remains on acquiring attractivelyvalued and well-positioned assets, which exhibit clear differentiation andsustainability of future demand. With a strong negotiation pipeline, some ofwhich are at advanced stages, the Fund is on track to be fully invested byyear-end. --Ends-- About the Macau Property Opportunities Fund MPOF, which raised £105 million in a placing and commenced trading on theAlternative Investment Market of the London Stock Exchange on 5 June 2006, is aclosed-end investment company incorporated in Guernsey. The Company's investmentpolicy is to provide shareholders with an attractive total return, which isexpected to comprise primarily capital growth, but with the potential fordividends over the medium to long term. MPOF focuses on investing in propertyopportunities primarily in Macau, but also potentially in the Western PearlRiver Delta region and in exceptional circumstances, greater China. The Investment Manager of MPOF is Sniper Capital Limited and the InvestmentAdviser is Sniper Capital Management Limited. About Sniper Capital Limited Sniper Capital is an independent investment manager specialising in propertyinvestment in niche, undervalued and developing markets. The Company'sinvestment strategy is to identify, acquire and develop properties clearlydifferentiated by location, value and sustainability of demand. Sniper Capitalcurrently manages two funds with combined assets of US$200 million. For further information: Website: www.mpofund.com Public Relations Hogarth Partnership Limited No. 1 London Bridge London SE1 9BG Andrew Jaques / James Longfield / Sarah Richardson Tel: +44 20 7357 9477 Nominated Adviser and Broker Collins Stewart Europe Limited Hugh Field Tel: +44 20 7523 8325 Company Secretary & Administrator Heritage International Fund Managers Limited Mark Huntley / Laurence McNairn Tel: +44 1481 716000 Investment Manager Sniper Capital Limited Investor Contact Tel: +852 2292 6700 Email: [email protected] www.snipercapital.com Stock Codes: Bloomberg: MPO LN Reuters: MPO.L This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Macau Property