Monetisation of Sands China's apartment-hotel gets go-ahead
Capitalisation rate of 5% has been penciled in.
According to Maybank Kim Eng, the Chief Executive of Macau has approved the transfer of rights arising from the land concession for the apartment-hotel. This allows Sands to monetise its assets at the property by means of a share sale in a co-operative arrangement with investors.
Maybank noted that using average transacted prices at One Central as a reference, luxury residential units on the seafront of the Macau peninsula were transacted at an average price of HKD8,800psf in 1Q13.
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Thus there is potential upside to our forecasts, even as we raise our share accretion estimate by 47% to HKD1.09/Sands share.
The monetisation of these non-core retail assets could possibly be next on the cards, though it could still be a long and arduous process. We assume a
capitalisation rate of 5% for Sands’ retail assets, thereby deriving a valuation of HKD25k psf for these assets.
Our estimates are conservative; first-floor prime retail space in Causeway Bay could easily be transacted at around 50k-100k psf.