Oxley Holdings shedding its 'shoe-box' image

Business Times: Tue, Apr 03

IF THE reception for the launch of its 33-storey Oxley Tower at Robinson Road last Friday is any indication, property company Oxley Holdings has finally arrived as a serious contender in the realm of commercial property development. All the units of the three-storey podium block, comprising mainly shop and cafe units, were snapped up by the end of the first day of public launch at average prices of between $4,800 and $6,600 psf. Meanwhile, almost all the 56 office units on the first 18 floors were snapped up at between $2,800 and $3,500 psf. The company held back the units on the 19th to 32nd floor, which range from 900 sq ft to almost 3,000 sq ft for the moment. In all, the 180,000 sq ft gross floor area (GFA) has 129 retail/commercial lots and 104 office units. While company officials, including its CEO and founder Ching Chiat Kwong, expressed surprise at the overwhelming response, the fact is Oxley has been phenomenally successful in all its 16 previous project launches over the past year - be it residential, commercial, mixed development or industrial. And interestingly enough, the company, which was better known for its shoe-box units (sub-500 sq ft apartments), seems to be gradually morphing into a conventional property builder. Its latest projects, such as Promenade @ Pelikat, will include units sized up to 1,600 sq ft. But one thing has not changed: most of its properties tend to be in prime districts 9, 10 and 11 or choice residential locations in the suburbs. And they come with amenities which are the norm for more up-market properties. Many are also mixed developments which feature apartments sitting atop well appointed boutique malls. Its industrial and commercial properties have also tended to be unique, featuring amenities such as gyms, swimming pools, spas and eateries. Since listing in October 2010, Oxley has launched 16 projects valued at some $1.3 billion. Oxley Tower is its 17th. Assuming a margin of some 35 per cent on its slate of 16 projects (before Oxley Tower), the company could recognise a cumulative gross profit of some $450 million by 2014, when TOPs (temporary occupation permits) are issued. But even before that, it will already start recognising gains of many of its residential projects. Contributions from some $200 million worth of projects launched last year - such as Parc Somme, Loft @ Rangoon, Suites @ Katong, Loft @ Stevens, Loft @ Holland and RV Point - could start flowing in during the coming financial year starting July 1. Not a bad track record for a Catalist company which listed less than two years ago. Yet Oxley is scarcely covered by analysts. But in a late-February report, SIAS Research placed an intrinsic value of 53 cents per share on Oxley, based on its project pipeline. That was after taking into consideration potential increased execution difficulty if more property market cooling measures were introduced. But most of its residential projects had already been launched and sold prior to the measures, the report acknowledged. That report came before the Oxley Tower launch. OSK-DMG yesterday noted that Oxley 'stands to make a hefty profit with gross development value estimated at $500 million and break even at an estimated $300 million'. Another 200,000 sq ft GFA mixed development at Upper Serangoon Road-Hougang area called the Promenade @ Pelikat, comprising 274 shops and 164 apartments, is expected to sell for some $600 million when launched during the middle of this year. The company has several other projects in the pipeline which will hit the market in the next 12 months. Meanwhile, it has been boosting its landbank with en-bloc purchases at Yio Chu Kang Road, Hong Leong Garden at West Coast (where it owns 51 per cent) and elsewhere. An Asian private equity investment house, in its internal memo, recently calculated that Oxley's NAV (net asset value) per share could be in the region of $1 if all current projects were recognised. But on the flip side, the company's rush to build on multi-fronts has also stretched its balance sheet. In a statement on Friday evening, Oxley said it was 'exploring options to raise funds for its working capital' and was 'in preliminary discussions with potential investors'. Interestingly, this announcement comes just weeks after it made corporate presentations in Hong Kong and London where institutional investors apparently liked what they heard. Judging by its track record, the enthusiastic take-up at its launches, and the income streams coming in from its projects over the next three years, it may just be a matter of time before Oxley is regarded in the same light as more established property players, rather than just an upstart 'shoe-box king'. Local investors may already be taking notice, judging by the surge in interest in its shares in recent days following the Oxley Tower launch. Source: Business Times