8th Jan 2008 07:00
Macau Property Opportunities Fund08 January 2008 Macau Property Opportunities Fund Limited ("MPOF", the "Fund" or the "Company") Investor Update Fourth Quarter 2007 Quarterly Highlights * US$43.1 million in new acquisitions announced * 101% of Company's equity now committed * Continued price appreciation in Macau residential property * Positive Macau Government Policy Address * Opening of prestigious MGM Grand Macau Fund Overview In October, the Company announced the successful acquisition of its fourth majorproperty (Property 4) bringing to a close almost two years of negotiations andsuccessfully converting a key pipeline site which was referred to in itsadmission document. The total expected investment value amounts to US$26.6million, comprising an acquisition price of US$15.85 million and an estimatedredevelopment cost of US$10.75 million. The 10,500 sq ft freehold site is located adjacent to Senado Square, one of themost popular tourist destinations on Macau Peninsula, which forms part ofMacau's World Heritage district due to its rich architecture. The area'sincreasing local and tourist pedestrian traffic has resulted in strong demandfor retail outlets in the vicinity, driving retail property prices and rents toamongst the highest in Macau. To capitalise on the location of Property 4, theCompany is planning a mixed-use redevelopment project incorporating prime retailand entertainment space. During the quarter, the Company also acquired a number of smaller properties invarious strategic locations across Macau in a series of separate purchases foran aggregate consideration of US$16.5 million. This is part of an ongoingstrategy of acquiring well-located and attractively priced smaller propertyassets in key areas across the Territory. Portfolio Summary Property Sector Type Positioning Current Capital Status Commitment 1 Residential Redevelopment Local Residents Design Process US15.68m* 2 Residential Development Premium Luxury Construction US$86.58m 3 Residential Redevelopment Entry-level Consolidating US$45.96m* 4 Mixed-use Redevelopment Retail/Tourism Planning US$26.6m*Others# Various Various Various Various US$16.5mTotal US$191.32m *Includes acquisition & projected redevelopment costs #Various smaller individual properties purchased by the Company Development of "One Central", the premium mixed-use development in which theCompany has purchased a residential tower (Property 2) remains on schedule forcompletion in 2009, with construction now reaching the 15th floor out of theplanned circ. 40 floors. The attractive location of this project was furthercemented by the recent opening of the prestigious 600-room MGM Grand Macaucasino-resort which will be connected to One Central's retail podium. Secondarymarket demand for One Central units has remained robust since the Venetian Macaoopened in August and in the run up to the MGM opening, with transacted prices ofmore than US$1,000 per sq ft being achieved for well-positioned units. Property 1's conceptual design and site investigations are now well underway andthe demolition of the existing structure is scheduled to commence in 2008. Thisis a very well located site in a popular neighbourhood on Macau Peninsula, whichthe Company intends to develop into residential flats targeted at localresidents. Property 3, located in the rapidly regenerating northern area of MacauPeninsula, will be redeveloped into affordable apartments catering to increasingdemand from entry-level local residents. The Company is continuing negotiationsto consolidate adjacent sites in this area. Following these latest acquisitions, the Company has now committed US$191million or approximately 101% of the total equity raised at AIM Admission andcontinues to negotiate on a further eight sites totalling approximately US$450million in combined acquisition value. Market Overview Economy Macau's rapid economic growth continues to be accompanied by a flood of foreigninvestment. Government statistics indicate that gross fixed capital formationgrew by 38.3% YoY, helping to drive GDP growth to 30.9% YoY in Q3 2007. This hasplaced the local labour market under significant pressure with unemploymenthitting a ten-year low of 2.9%, pushing wage inflation to over 20%. Gamingreceipts, one of the principal drivers of Macau's GDP, continue to growexponentially exceeding US$8.5 billion in the first ten months of 2007, a riseof 47.1% YoY. Visitor numbers also set new records, hitting 24.3 million fromJanuary to November 2007, up 22.9% YoY. Property Market Residential property prices continued to rise in Q4 as limited supply failed tomeet the growing demand for quality properties across Macau. The strongfundamental demand from both investors and end-users has been further boosted bybooming regional stock markets and negative real mortgages rates, while thesub-prime mortgages crisis in the US has so far had limited impact on lending ormarket sentiment. High-profile marketing and sales campaigns were launchedduring the quarter for a number of new residential projects. These included themid-tier 80-unit Ginza Plaza on Macau Peninsula where prices reached over US$600per sq ft and Windsor Arch, a large-scale project comprising 1,600 units onTaipa, where the asking price for better units will reportedly be set at up toUS$960 per sq ft. In December, the Government announced that two plots of land in North West MacauPeninsula will be auctioned via a public tender process in January 2008. Thesites are zoned for residential development which will be positive for theongoing regeneration of this area where the Company's Property 3 is situated.The auction is part of the Government's move towards greater transparency in theland disposal process and is a significant event as only one plot of land hasbeen sold via a public tender since the handover in 1999. The Government alsorecently announced it will be reducing estate tax and waiving stamp duty forfirst-time buyers of domestic properties valued at up to US$385,000. This ispart of a move to assist lower income earners and is positive for the Fund's "entry-level" positioning since it is likely to catalyse increased demand foraffordable housing in Macau. Government's new initiatives In his eighth policy address delivered in November, Chief Executive Edmund Horeiterated the Government's continued commitment to developing the gaming andtourism industries, whilst maintaining the fight against corruption and crime.He also outlined several new policies designed to improve the city's politicaland socio-economic status. These include the construction of subsidisedapartments in the North of Macau Peninsula for low income residents which is inresponse to rising criticism of the Government's lack of efforts to assist thepoorer segments of the population. New Casinos / Hotels In December, Macau witnessed the high-profile launch of MGM Grand Macau,US-listed MGM Mirage's first project in Asia. The opening signifies that all sixgaming concessions in Macau are finally in operation. SJM, owned by local casinomogul Stanley Ho, has announced it will be building a new hotel on the site ofits original flagship and Macau's oldest casino, the Lisboa Hotel. Redevelopmentis expected to begin following the full opening of the neighbouring Grand LisboaHotel in 2008. Looking ahead, attention is likely to focus on the emergence of the Cotai Stripas the Territory's integrated business, leisure and gaming destination, as astream of upscale casino-resort-hotels increasingly dominate the landscape. TheFour Seasons and Shangri-La hotels are due to open in 2008 followed thereafterby Galaxy's "Mega Resort", Melco/PBL's "City of Dreams" and "Macau Studio City"backed by eSun Holdings. Summary 2007 proved to be an unprecedented year for Macau. With a significant amount offoreign investment capital committed to long term projects, more transparentgovernment and an increasingly favourable business environment, we continue tobelieve that we are at an early stage in the Territory's economic re-rating. TheCompany's portfolio of niche, strategically placed properties in key marketsegments, leaves it well-positioned and the immediate focus remains on acquiringfurther assets which are both attractively valued and clearly differentiated. The Company's first half results for the period to end December 2007 will bereleased in February 2008. --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 / Sarah RichardsonTel: +44 20 7357 9477 Nominated Adviser and Joint Broker Collins Stewart Europe Limited Hugh Field Tel: +44 20 7523 8325 Joint Broker Shore Capital Stockbrokers Limited Dru Danford Tel: +44 20 7408 4090 Company Secretary & Administrator Heritage International Fund Managers Limited Mark Huntley / Laurence McNairn Tel: +44 1481 716000 Manager Sniper Capital Limited Corporate & Investor Communications Daisy Tang 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