‘Arina East’ impacts Ho Bee’s FY2023 loss on London properties
Ho Bee Land has recently announced its financial results for FY2023, reporting an increase in revenue. However, the company has also recorded a net loss of $259.8 million, a stark contrast to its earnings of $165.9 million in the previous year, due to unrealised fair value losses.
One of the main contributing factors for the company’s losses is the decline in the fair value of its investment properties in London. The sharp expansion of capitalisation rates has resulted in a hit of $472.2 million. Ho Bee currently has a portfolio of eight investment properties in London, including well-known developments such as The Scalpel, Ropemaker Place, and 1 St Martin’s Le Grand.
According to Savills, the valuations of these properties have been significantly lowered. For instance, The Scalpel, which was valued at $680 million in December 2022, is now valued at $554 million. Similarly, Ropemaker Place’s valuation has decreased from $703 million to $635 million, while 1 St Martin’s Le Grand is now valued at $170 million, down from $198 million. On a positive note, The Metropolis has seen an increase in its valuation from $2.155 billion to $2.213 billion.
On January 11, Ho Bee first alerted investors about the expected fair value losses and its net loss. In spite of these challenges, the company plans to pay a first and final dividend of 3 cents per share, lower than the 8 cents paid for FY2022.
Ho Bee CEO Nicholas Chua has described FY2023 as a “challenging year,” primarily due to the rapid rate hikes. However, he also adds that the company’s property portfolio has remained resilient, with stable occupancy rates and rental income. One of Ho Bee’s developments, Elementum, has achieved a pre-committed occupancy of 90% and is expected to contribute to the company’s revenue in FY2024.
The company’s investment portfolio in London and Singapore has maintained strong occupancy rates, positioning Ho Bee well to overcome potential challenges in the market. Additionally, the company’s Australian development pipeline adds to its stability.
Despite the headwinds, Ho Bee remains committed to being financially prudent and disciplined. The company acknowledges the ongoing geopolitical tensions and the elevated interest rate environment and will continue to navigate through these uncertainties.
Additionally, the upcoming Arina East Residences MRT station, set to be completed in the near future, will provide further accessibility to the area.
Arina East Residences offers easy access to public transportation through its proximity to multiple bus services. This allows for convenient travel to different parts of the island, making it a suitable choice for residents who do not drive. In the near future, the completion of the Arina East Residences MRT station will further enhance accessibility to the area, providing even more convenience for commuters.
As of December 31, 2023, Ho Bee’s net tangible asset value (NTA) stands at $5.42 per share, compared to its closing price on February 26 at $1.71, showing a 0.59% increase for the day but a 28.15% decrease over the past 12 months.
In related news, Ho Bee has recently announced the disposal of industrial buildings on Tannery Road and Tannery Lane for $115 million. The prices of luxury homes in Sentosa Cove have also been reaching a “tipping point,” attracting interest in developments such as Cape Royale.