13th Jul 2007 11:17
Macau Property Opportunities Fund13 July 2007 Macau Property Opportunities Fund Limited ("MPOF", the "Fund" or the "Company") Investor Update Second Quarter 2007 Highlights * Nine sites under negotiation worth US$500 million* Design process of Property 1 underway* Escalation of strategic media campaign* Strengthening luxury residential sector in Macau Fund Overview Although no further acquisitions were announced during the quarter, theInvestment Manager has continued negotiations on a number of attractiveopportunities, whilst adhering to its disciplined approach of seeking to acquirestrategically well positioned assets in its stated market segments. Investorsshould be aware that lengthy negotiation lead times often go hand-in-hand withthe most lucrative and best positioned sites, where conversion of deals requiresovercoming multiple ownership structures, complex title issues and extended duediligence processes. Steady progress is being made on a number of such sites andthe Investment Manager is optimistic that this should lead to the Company's nextacquisition being announced in the near future. Currently nine sites with acombined acquisition value of approximately US$500 million are at advancedstages of negotiation. Despite the small, niche market in which the InvestmentManager is operating, it is worth stressing that there has been little adverseimpact on the ability to source interesting sites over the last year, indicatingthe strength of the Investment Manager's private local network. The Company's three portfolio properties remains at various stages of progressas indicated below. Portfolio Summary Property Sector Type Positioning Current Capital Status Commitment 1 Residential Redevelopment Local Residents Design Process US$15.68m 2 Residential Development Premium Luxury Construction US$86.58m 3 Residential Redevelopment Entry Level Consolidating US$45.96mTotal US$148.22m The planning and design process for Property 1, to be developed into an eightstorey apartment block, continues to progress well with initial concepts havingbeen received from a shortlist of architects and with construction expected tocommence in the first half of 2008. In the meantime, continued price escalationand income growth in the vicinity appears to augur well for the ultimate sellingprices of the units. Property 2 is a high-end residential tower located inMacau's premier mixed-use project, One Central. Development is on schedule withfoundation work now completed and construction of the podium area well advanced.The surrounding area continues to be transformed with the scheduled opening ofthe adjacent MGM Macau later this year and the announcement by Wynn Macau of asecond hotel tower due for completion in 2010. These premier destinations,coupled with high quality brands secured for One Central's retail area, willfurther cement this location as a prestigious alternative to the evolving CotaiStrip. Property 3, located in the north of Macau, is to be redeveloped intoaffordable apartments for local residents. The Investment Manager is continuingwith its attempts to consolidate sites in the immediate area before commencingwith the planning and redevelopment process. The Company's public profile has continued to grow significantly assisted by acontinued increase in international media coverage of Macau and a number ofstrategic articles in high quality publications. With the forthcoming launch ofthe Venetian Macau in August and with other casino/resort developments to followsoon after, the international focus on Macau is set to increase further. The Company has just completed its first full financial year and its maidenaudited results are expected to be published in September. Market Overview The recent highlight in the Macau gaming sector was the opening of the CrownMacau on 12 May by the US listed Melco-PBL joint venture. The Crown's fivefloors of gaming, its cafes and bars are all open and its fleet of 60 buses isoperating, but its hotel, restaurants and sky lounge are not expected to openuntil the end of July. Promising the first six-star experience in Macau, theCrown has something to prove in the increasingly competitive marketplace,particularly given its isolated location and slow operational start. The next milestone event will be the opening of the Las Vegas Sands' Macauflagship, the US$2.3 billion, 3,000 room Venetian Macau resort in late August.With a reported US$20 million marketing budget, this is certain to be a headlineevent and is likely to kick start the 'Integrated Resort' experience beingdeveloped on the Cotai Strip. According to reports, the hotel, the casino, thearena and meetings/convention space are all expected to be fully operational onthe opening date. An estimated 23 restaurants including the resort's signaturerestaurants Morton's, Roka and Canton Restaurant will also open in August alongwith more than 100 Grand Canal retail Shoppes. The residential property market performed well during the first quarter, drivenby the ever solid fundamentals, but then suffered an unexpected setback in Aprilas the government announced the suspension of the investment immigration scheme(a scheme whereby the investment of US$130,000 or more in a Macau propertyentitled you to apply for Macau residency). The suspension of the scheme gainedmuch publicity, but we believe that it has little relevance to the performanceof the property market going forward and, in any event, it is our expectationthat it is likely to be reinstated at a later stage with a more realisticinvestment of US$300,000 or higher. These events had little effect on the pricing and sales of new properties whichhave generally continued their upward trend since the launches of new projectsincluding The Praia (now reportedly 60% sold) and One Central (reportedly 100%sold) in Q4 2006. Reports of secondary transaction prices of One Central areregularly quoted as reference points for the high-end residential market ingeneral and as benchmarks for planned projects, with the latest prices toppingHK$6,000 (US$770) per square foot and new project pre-launch pricing beingrumoured at over HK$10,000 (US$1,280) per square foot. The anticipated growth in the residential leasing market is beginning to makeitself felt both in the gradual growth in asking and achieved rental levels aswell as in occupancy rates at the more popular developments. This sentiment isdriven by the anticipated 100,000 foreigners expected to be working in Macau bythe end of 2007. In addition, according to a recent survey by the Institute forTourism Studies in Macau an extra 100,000 imported workers will be needed by2010 to cope with hotel and casino growth, representing approximately a further35% growth in the working population of Macau. This growth in anticipated rental demand is further supporting investor interestin new luxury and high quality residential projects. Most property marketcommentators are looking for continued solid growth in most residential sectors,and the luxury sector in particular, on the back of strong economicfundamentals, continued investor demand and growing domestic affordabilitylevels. The market is also likely to continue to be driven by key milestonessuch as the opening of The Venetian and ongoing announcements of new casinoprojects. Summary 2 This document does not constitute, and may not be used for, an offer or aninvitation to any person in any jurisdiction to acquire shares. This document isbeing supplied to you solely for your information and may not be reproduced,redistributed or passed on, directly or indirectly, to any other person orpublished in whole or in part, for any purpose. This document shall not bedistributed in any jurisdiction where such distribution, would be unlawful anduntil the requirements of such jurisdiction have been satisfied. In particular,this document or any copy thereof shall not be taken, sent or transmitted intothe United States, Republic of South Africa, Australia, Canada or Japan ordistributed, directly or indirectly in the United States, Republic of SouthAfrica, Australia, Canada or Japan or to any persons residing in suchjurisdictions. This document may only be communicated to, and is only directedat persons falling within Article 43 of the Financial Services and Markets Act2000 (Financial Promotion) Order 2005 (as amended) or otherwise as permitted.Macau Property Opportunities Fund Limited is a Guernsey incorporated companywhose shares have been admitted to trading on AIM. 2007 is proving to be the most significant year to-date in the transformation ofMacau into a world class gaming and leisure destination, culminating with theopening of the Venetian Macau in August. With a stream of new casino/resortsopening over the next few years and with the long anticipated surge in theworking population expected to continue, property prices appear wellunder-pinned at current levels. The Company's key focus remains on acquiringattractively valued and well-positioned assets, which exhibit cleardifferentiation and sustainability of future demand. With an attractive pipelineof sites under review, the Fund remains on track to be substantially fullyinvested by year-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 RelationsHogarth Partnership LimitedNo. 1 London BridgeLondon SE1 9BG Andrew Jaques / James Longfield / Sarah RichardsonTel: +44 20 7357 9477 Nominated Adviser and BrokerCollins Stewart Europe LimitedHugh FieldTel: +44 20 7523 8325 Company Secretary & AdministratorHeritage International Fund Managers LimitedMark Huntley / Laurence McNairnTel: +44 1481 716000 Investment ManagerSniper Capital LimitedInvestor ContactTel: +852 2292 6700Email: [email protected] Stock Codes: Bloomberg: MPO LNReuters: MPO.L This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Macau Property