18th Oct 2007 11:55
Macau Property Opportunities Fund18 October 2007 Macau Property Opportunities Fund Limited ("MPOF", the "Fund" or the "Company") Investor Update Third Quarter 2007 Highlights * Maiden final results announced* 25.2% uplift in adjusted NAV since admission* Nine sites under negotiation worth US$500 million* Residential property prices escalate following Venetian opening Fund Overview In September, the Company announced its maiden set of annual results for theperiod ended 30 June 2007. These reported that the Adjusted NAV per share* hadincreased by 25.2% to US$2.2534 (112.6p) since admission, driven by a 38% upliftin the valuation of the Company's portfolio properties, following a reviewundertaken by Savills. These returns clearly reflect the quality and superiorpositioning of the properties acquired during the period and reinforce theCompany's investment strategy of maintaining a high degree of selectivity whenacquiring sites. *NAV per share & Adjusted NAV per share as at 30 June 2007. Adjusted NAV pershare is calculated by taking the NAV per share calculated under IFRS andadjusting inter alia to include the properties owned by the Company at netrealisable value rather than at the lower of cost or net realisable value. The Company continues to negotiate on a further nine sites totallingapproximately US$500 million in aggregate acquisition value. Several of theseare now at advanced stages of review and negotiation and have progressed to theformal due diligence stage. It is our belief that numerous projects in Macau arebeing driven by speculators seeking to generate short-term profits in a rapidlygrowing market. We continue to reject a considerable number of opportunitieswhich do not meet our standards of positioning and location and which aretherefore unlikely to attract the strength of end-user demand necessary tocommand a premium rating over the longer term. The Company's portfolio properties continue to progress on schedule. The architectural assessment and selection process for Property 1, to bedeveloped into a low-rise apartment block geared towards local residents, hasbeen completed and the conceptual design phase has commenced. Demolition of theexisting structure is anticipated in the first quarter of 2008 with constructionexpected to commence by mid-year. Residential prices continue to escalate inthe vicinity, aided by the neighbourhood's sought after location and severalgovernment initiatives to renovate adjacent heritage sites. The development of "One Central", Hongkong Land and Shun Tak Holdings' premiermixed-use project in which the Company has purchased a super-luxury residentialtower (Property 2), continues to advance. The retail podium and car park levelshave been completed and construction of the seven residential towers andMandarin Oriental hotel is now underway. Secondary market activity for units inthe project remains brisk with prices in excess of HK$7,000 (US$900) per squarefoot being achieved for well-located units. We expect demand to continue tostrengthen when the adjacent 600 room MGM Grand Macau casino resort opens laterthis year, further cementing One Central's status as Macau's top luxuryresidential development. Property 3 is scheduled to be redeveloped into affordable apartments for localresidents. We are continuing in our attempts to consolidate adjacent sitesbefore commencing with the planning process and redevelopment of the property. Market Overview We continue to believe that we are at a relatively early stage in the long-termregeneration cycle of Macau. The Territory's ongoing growth and transformationwill be marked by key milestone events which will have the continuing effect ofheightening international awareness and attracting an increasing number ofvisitors drawn by a broader range of product offerings. The opening of thewestern-backed casino, the Sands Macao in May 2004, was the first such majorevent followed by the launch of the Wynn Macau in late 2006. The instantaneoussuccess of these and similar operations has confirmed the demand forwestern-style offerings as well as the significant growth potential of the massgaming market (gaming revenues in Macau have historically been dominated by highroller VIP rooms). In August, the most significant milestone to-date took place with the longawaited opening of the US$2.4 billion Venetian Macao-Resort-Hotel. Publicresponse has been overwhelming with 2.5 million people visiting the complex inthe first six weeks. The Venetian Macao is the first destination to open on theCotai Strip, the five square kilometres of reclaimed land earmarked for casinoresort development, and marks the beginning of the Cotai Strip's emergence as a"mega" resort destination. Confidence in Macau's future was further boosted in September, with theannouncement that Harrah's Entertainment, Inc., the world's largest provider ofbranded casino entertainment, had acquired a golf course situated in a primeCotai Strip location. Harrah's is yet to reveal its intentions for the site, butmarket speculation suggests that the company may ultimately develop this into anintegrated casino/hotel resort. Property Market The residential property market advanced strongly during the quarter driven bythe Venetian opening and the high profile public launch of "One Grantai", aresidential complex by a local developer overlooking the Cotai Strip. Severalprime units reportedly achieved prices of over HK$8,000 (US$1,000) per squarefoot. The residential leasing market also continued to firm, driven by thecontinued influx of foreign workers. This demand has been particularly evidenton Taipa Island, due to its location near to the Venetian which currentlyemploys 15,000 staff and is in the process of hiring many more. Infrastructure The Macau government has announced the first phase of the Light Rail Transitsystem. Construction is scheduled to start next year and is expected to takefour years, with the system starting operation in 2011. With 23 stations and alength of 20 kilometres, the system will be capable of carrying up to 8,000passengers per hour. This project will be critical in helping to tackle Macau'sgrowing congestion problems. Economy Macau's economy continues to benefit from the fast-growing gaming and tourismindustries. According to government statistics, gross gaming receipts in thesecond quarter surged by 48.9% in nominal terms. The number of visitor arrivalsreached 17 million in the first 8 months of 2007, up by 21.8% over the sameperiod last year, while total non-gaming visitor spending in the second quartergrew by 14.2%. The Chinese "National Day Golden Week" holiday in early Octoberattracted an even larger flow of tourists from China, providing both casinos/hotels and retail shops with a significant boost to business. Summary The successful opening of the Venetian Macao is the most significant milestoneto-date in the transformation of Macau into a world class gaming and leisuredestination. The next three years will see the emergence of the Cotai Strip ashome to 14 casino hotels offering truly integrated tourist and businessdestinations and employing tens of thousands of people. With at least US$25billion of unspent foreign investment capital committed to long term projects,Macau's continued economic prosperity appears assured. The Company's focusremains on acquiring assets that are attractively valued, well-positioned andclearly differentiated in order to ensure strong end-user demand. --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$250 million. For further information: Website: www.mpofund.com Public RelationsHogarth Partnership LimitedAndrew Jaques / James Longfield / Sarah RichardsonTel: +44 20 7357 9477 Nominated Adviser and Joint BrokerCollins Stewart Europe LimitedHugh FieldTel: +44 20 7523 8325 Joint BrokerShore Capital Stockbrokers LimitedDru DanfordTel: +44 20 7408 4090 Company Secretary & AdministratorHeritage International Fund Managers LimitedMark Huntley / Laurence McNairnTel: +44 1481 716000 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