AFTER a record performance last year, JTC – Singapore’s biggest industrial landlord – expects demand for industrial space to weaken in line with slowing economic growth this year.

Operating income in fiscal year 2007 rose 5 per cent to $1.1 billion for the state-owned developer, due mainly to higher allocation of ready-built facilities and prepared industrial land.

Take-up of its net industrial land reached 360 hectares, the highest level in 10 years.

Total surplus grew 50 per cent from a year earlier to reach $1.2 billion.

“Last year’s performance was supported by a buoyant market, but industrial space demand rides on the economic cycle and we cannot expect to have a repeat for the records reached this year,” JTC chief executive Ow Foong Pheng said during a media briefing yesterday.

“Already commercial rents are softening, we’ll see how it goes,” said Mrs Ow.

Singapore’s economic growth is expected to slow this year, which could mean slower growth for industrial rentals.

JTC plans to sell “a handful” of ready-made facilities through a trade sale, after its $1.7-billion divestment of similar assets in June to a real estate joint venture between Mapletree Investments and Arcapita Bank.

While Mrs Ow declined to reveal their value, she said the remaining assets sold would be a “much smaller” proportion of what has been divested.

After the divestments, JTC will hold land as its primary asset. But it will retain some ready-made facilities for integration with surrounding estate as “longer term plans”, said Mrs Ow.

Recently, Prime Minister Lee Hsien Loong highlighted JTC’s evolving role as an innovative industrial developer. Some upcoming projects include building factories with higher plot ratios and the use of large floating structures out at sea for the storage of oil.

Source : Today – 30 Jul 2008

INDUSTRIAL landlord JTC Corp aims to sell more of its small factories and other industrial space this financial year as it shifts its focus to bigger industrial developments.

In late April, JTC sold $1.71 billion of properties to Mapletree Investments after ditching a plan to roll these assets into a real estate investment trust (Reit).

The upcoming sales will be on a smaller scale than the April sale, said JTC chief executive Ow Foong Pheng. She told reporters yesterday that it is considering the sale of ‘a handful’ of properties via tender this financial year.

The properties involved were deemed unsuitable for the proposed Reit. JTC scrapped that plan to list its high-rise, ready-built assets due to volatile market conditions. Instead, it sold 62 of these properties to Mapletree.

JTC is selling its ready- built assets in order to focus on strategic industrial developments that are too big and risky for the private sector.

These include Jurong Island and Tuas Biomedical Park, which attracted about US$8.8 billion (S$12 billion) worth of investments from players such as ExxonMobil, Lonza and Novartis in the last financial year.

At a press conference yesterday, Mrs Ow said JTC will still look at the possibility of privatising its subsidiaries Ascendas and Jurong International Holdings.

She said JTC’s performance this financial year is expected to be slower in line with the softening economic outlook. ‘For the financial years 2008 and 2009, we will not repeat the sterling performance in the 2007 financial year,’ said Mrs Ow.

JTC has already reaped the results of Singapore’s strong economic growth and a buoyant industrial space market in the past two years.

Releasing its latest financial results, JTC yesterday said its total surplus reached $1.18 billion for the year ended March 31, up a hefty 50 per cent from the previous year.

Its building and land income rose by 5 per cent to $1.1 billion.

Net take-up for its ready-built space reached a new record of 246,300 sq m while the industrial land segment registered a new record net take-up of 360 ha, the highest level in a decade.

Source : Straits Times – 30 Jul 2008

Performance fuelled by strong results across all segments, write-back of losses

DRIVEN by the strong economy and buoyant industrial property market, JTC Corporation yesterday reported a group net surplus of $1.17 billion for the financial year ended March 31, 2008 – a 51 per cent jump from the previous year.

The big improvement was fuelled by strong results across all segments. A write-back of impairment losses in a rising industrial space market also contributed to performance. Excluding the write-back and other exceptional items, the group net surplus is about 30 per cent higher than the previous year.

The FY2007 results do not take into account JTC’s divestment of $1.7 billion of flatted factories, stack-up buildings and ready-built assets to Mapletree Investments in July.

JTC still has similar properties in smaller parcels to sell. ‘There will be some that we are going to sell by trade sale,’ said CEO Ow Foong Pheng. ‘We will work through the programme and assess the best timing.’

The divestment plans are part of JTC’s strategy to gradually withdraw from industrial market segments with active private sector participation. But as the agency sells its portfolio of ready-built properties, it will continue to ensure the market stays competitive.

‘We will keep a close watch on the market and share information on projected demand with private developers and industry associations,’ Mrs Ow says in JTC’s annual report.

‘We will enhance supply mechanisms such as concept price tenders and Government Land Sales to include technical and user specifications where necessary, to plug any specific demand gaps that may arise.’

JTC saw record take-up rates for industrial land and space in FY2007. Net take-up for ready-built space was 2.65 million sq ft, while that for industrial land was 360 hectares – the highest level in 10 years.

Mrs Ow said demand for industrial space could slow as economic growth moderates. But JTC will continue to prepare industrial land ahead of time so it can meet higher demand once it comes.

Looking ahead, JTC will focus more on strategic projects to support Singapore’s industrial needs. ‘Innovation will be key to ensuring JTC’s sustained success,’ said Mrs Ow. The agency is working on projects that include a shared waterfront facility, small footprint high plot ratio factories and a ‘Very Large Floating Structure’ for oil storage.

JTC is also rejuvenating old industrial estates to optimise land use. For instance, it is redeveloping Tanjong Kling in the Jurong Industrial Estate into a focal point for high value-added manufacturing activity in food, electronics, environmental technology and oil and gas.

The JTC group has three subsidiaries – Ascendas, Jurong International and Jurong Port. Asked if there are plans to privatise any of them, Mrs Ow said: ‘We are still looking at it.’

Source : Business Times – 30 Jul 2008