First REIT Acquires Korean Hospital For US$13m
First Real Estate Investment Trust (First REIT) has purchased South Korea’s Sarang Hospital, one of the largest rehabilitative and nursing facilities in Yeosu, for US$13m. Located at the city that will host the 2012 World Expo, Sarang hospital boasts a gross floor area of nearly 5k square metres on a total freehold land area of 2,142 sq m. On 9 Jul, First REIT also saw the opening of its Mochtar Riady Comprehensive Cancer Centre (MRCCC) in Indonesia. Located in the heart of Central Jakarta, the 29-storey MRCCC is said to be the first of such facilities in Indonesia that specialises in cancer diagnostics and treatment. Moving forward, the healthcare real REIT plans to expand its portfolio size to $1b in the next 2-3 years as it seeks out yield-accretive assets throughout the Asia Pacific region.
Significance: The aforesaid purchase is expected to be yield-accretive as Sarang Hospital has an initial net property yield in excess of 9% and its annual rental income is expected to climb 2% annually. Post acquisition, First REIT’s total asset size is expected to increase to $602.6m.
Ryobi Kiso Secures $11.3m Contract In Vietnam
Ryobi Kiso Holdings’ subsidiary, Raffles Piling Vietnam Co, together with its joint venture partner, Phu Cuong Co, have been awarded a Vietnamese dong 191b ($11.3m) contract by SSG Van Thanh Joint Stock Company in Vietnam. This is also Ryobi Kiso’s biggest contract secured to date in Vietnam. The contract is for foundation works for the SSG Tower at Binh Thanh District in Ho Chi Minh City. SSG Tower is a mixed-use development comprising commercial, office and apartments. Work on the project begins this month and is expected to take six months. Ryobi Kiso will undertake the bored piling, diaphragm walling and deep cement mixing for SSG Tower. Since 1 Apr-11, the group has secured total contracts worth $35.2m, inclusive of this contract in Vietnam. As at 31 Mar-11, the group’s order book stood at approximately $75.1m.
Significance: This project is expected to contribute positively to the group’s FY12 earnings. Moving forward, Ryobi Kiso is positive about the opportunities and prospects in Vietnam, as the economy attracts increasing foreign investments, population affluence and urbanisation will accelerate to sustain the construction sector.
City Developments Makes Inroad Into Japan With Tokyo Hotel Buy
City Developments’ London-listed hotel arm of property group, Millennium & Copthorne Hotels plc (M&C), said it will buy a property site in Tokyo’s posh Ginza district for 9.5b yen ($144m). It intends to pump in a further 5.06b yen to redevelop the site into a hotel project, bringing the total investment cost to about 14.56b yen. ‘We have been trying to secure a hotel presence for the M&C group in Tokyo since the mid-1990s,’ M&C chairman Kwek Leng Beng said, noting that securing a hotel presence in Tokyo’s Ginza has been virtually impossible unless a buyer is willing to pay a high premium.
Significance: This will be M&C’s first investment in the Japanese hotel market after waiting some 15 years for the right opportunity. M&C plans to redevelop the site into a deluxe hotel with about 325 rooms and separate dining and carpark facilities. The construction of the new building is expected to be completed no later than 4Q14.
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