The CEOs of a couple of developers, Hongkong Land and City Developments (CDL), have articulated capital recycling strategies. The result is a narrowing of the discounts between their share price and their net asset values (NAV).
The large and mid-cap Singapore Exchange-listed developers are trading at discounts to their book value (see Table 1). There are a couple of ways to narrow the discount: divest assets and receive cash, or securitise the assets and receive some cash and a valuation. Some of the large-cap developers have started monetising and recycling capital for higher returns.
DBS Group Holdings’ report on property developers dated Dec 9 says it anticipates “meaningful room for re-rating, underpinned by the various initiatives they can execute to unlock value.” DBS says developers are increasingly signalling “a more proactive stance towards returning capital and rewarding shareholders, which, in our view, marks the stages of a structural re-rating cycle.”
