JAKARTA (TheInsiderStories) – Most of major property player are seeking funding from capital market for business expansion financing in 2016 amid uncertainty market condition. Several companies are considering to issue real estate investment trust, or REITs, from domestic market.
PT Summarecon Agung Tbk (IDX: SMRA) it is mulling to raise $200 million from REITs or sell part of its unit PT Summarecon Investment Property shares through initial public offering (IPO).
Summarecon’s President Director Adrianto P. Adhi, said the unit planned to sell 20 percent of its paid up capital by the end of this year.
Beside Summarecon, PT Agung Podomoro Land Tbk (IDX: APLN) and PT Bumi Serpong Damai Tbk (IDX: BSDE) also considers issuing REITs to finance their property projects, in addition to bank loans and bonds issuance.
Finance Director of Agung Podomoro Cesar De La Cruz and BSDE’s director Hermawan Wijaya are echoing Adhi’s statement that both companies are now studying the possibility of issuing REITS as part of project financing option, to take advantage of tax incentives to be issued by the government for REITs issued in domestic market.
Previously, conglomerate company Lippo Group revealed its plan to move two REITs with Rp35 trillion ($2.57 billion) in assets from Singapore Stock Exchange to Indonesian market.
Another property player, PT Surya Semesta Internusa Tbk (IDX: SSIA), has unveiled its plan to raise up to S$300 million ($211 million) from medium term notes (MTNs) issuance by its Singapore-affiliate SSIA International after calling off a $200 million bond issuance in August, due to bearish market sentiment.
Johannes Suriadjaja, president director at the company, said that the company is eyeing a May issuance of rupiah-denominated bonds up to Rp700 billion.
Meanwhile, PT Sentul City Tbk (IDX: BKSL) intends to raise Rp235 billion from selling portion of its shares to a private investors in order to expand its existing 13,500-hectares of land banks. The company will sell 3.4 billion shares, representing 10 percent of its paid-up capital, at a price of Rp 75 per share.
Slash Marketing Sales amid slowing demand
Meanwhile, several property players recorded a decline in marketing sales, prompting them to postpone part of the projects amid amid weakening consumer demand for property in the country.
Hermawan said, BSDE could face a Rp800 billion ($58.82 million) shortfall from targeted marketing sales this year after the company decided to postpone the launch of three residential projects, two-tower Aeroium apartments in Jakarta areas and a residential project in Samarinda, East Kalimantan.
The unit of Singapore-listed Sinar Mas Land initially targeted to book as much as Rp 7.5 trillion in marketing sales this year. It now revised down its marketing sales projection to Rp6.7 trillion, partly supported by the sales of its BSD city projects.
The property developer estimated to close the year with around Rp6 trillion in revenues, up by 12 percent from Rp5.6 trillion in 2014.
Keep expansion in 2016
The property players expect property business in 2016 to be still undermined by market uncertainty, however, they are confident that are opportunities that they can explore. State own construction and property company PT PP Properti Tbk (IDX: PPRO), plans to add to its land bank to develop more residential complexes.
The firm said it had allocated Rp 1.25 trillion for capital expenditure in 2016 and. Of this, around Rp1 trillion would come from bonds issue. Company Director Indaryanto said the company would use part of its capital expenditure to acquire 15 hectares of land, mostly in Greater Jakarta, and the remaining proceeds would be used as capital injection in several joint ventures (JVs), that would acquire 70 percent of the land.
Other player PT Alam Sutera Realty Tbk (IDX: ASRI) see its recurring income to double by 2018 following the expansion of the landmark Garuda Wisnu Kencana cultural park in Bali, set to be completed in late 2017. Its corporate secretary Vincent Sjahbana said that the park would contribute up to Rp500 billion to the revenues.
“Once the statue is completed, we will be able to increase the number of visitors to 3 million per year and raise the fee to $10 per entry,” he stated.
The company expects its recurring income to hit Rp364 billion this year, an around 18 percent increase from the Rp 308 billion it generated last year. (*)