OUE warns of FY2009 material loss

Grangeford Apts, OUB Centre probably took revaluation hit at end-2009

OVERSEAS Union Enterprise (OUE) has warned that it expects to report a ‘material loss’ for the year ended Dec 31, 2009, as a result of a fair value writedown on an investment property of an associated company and an impairment charge on the group’s development properties, arising from a revaluation of the properties at end-2009.

‘The fair value writedown and impairment charge are non-cash items,’ OUE said in a statutory filing with Singapore Exchange.

‘Notwithstanding the above, the board wishes to inform that the group’s business and operations continue to have a positive contribution to the group,’ it added.

OUE in its statement did not identify the properties involved in the writedown and impairment charge. BT understands the development property that suffered an impairment charge was Grangeford Apartments at Leonie Hill Road while the investment property written down would probably be OUB Centre at Raffles Place.

It had slipped into the red for Q2 2009 due mainly to recognition of impairment losses for two residential development properties, The Parisian and The Grangeford. For the first nine months of last year, OUE posted a net loss of $27.4 million, against a net profit of $45.8 million for the previous corresponding period.

In October last year, the group sold the former Parisian site at Angullia Park for $283 million to China Sonangol Land.

According to some analysts, many of OUE’s other assets are also on the market – including 50 Collyer Quay, an 18-storey office development on the former Overseas Union House site; Mandarin Orchard hotel and Mandarin Gallery along Orchard Road; and Grangeford Apartments.

When contacted, OUE’s chief executive Thio Gim Hock said: ‘We are not actively looking for buyers; it’s more a case of us receiving unsolicited offers, mostly initiated by property brokers.’

‘However, if we receive offers too good to refuse for any of our assets, we’ll consider selling. We’re not sentimental about our properties,’ he added.

For 50 Collyer Quay, the group’s priority for now is to actively look for tenants. The office block is expected to receive Temporary Occupation Permit in Q4 this year, according to Mr Thio.

‘We’re in the process of signing up a few tenants,’ Mr Thio said, declining to elaborate further. BT reported in October last year that law firm Drew & Napier was in discussions to lease space at 50 Collyer Quay. It is currently at Ocean Towers.

50 Collyer Quay, which will have about 400,000 sq ft net lettable area, could be worth about $900 million, some property consultants suggest. The lease on the site has been topped up to a fresh 99-year term.

OUE is controlled by the Riady family’s Lippo group and Malaysian tycoon Ananda Krishan Tatparamandan.

On the stock market yesterday, the counter ended nine cents lower at $9.

Source : Business Times – 10 Feb 2010