September 14, 2018 / 9:41 AM / 3 months ago

Oxley keeps lenders busy

* Loans: Developer’s fourth financing of 2018 comes ahead of looming sector slowdown

By Chien Mi Wong

HONG KONG, Sept 14 (LPC) - Singaporean developer Oxley Holdings is raising S$317m (US$230m) in its fourth loan market outing this year, at a time when measures aimed at curbing skyrocketing property prices in the Lion City are expected to result in fewer real estate financings.

HSBC and Maybank are arranging the 4.5-year loan, which will fund the redevelopment of private residential estate Mayfair Gardens, joining a slew of other so-called “en bloc” sales and related financings in Singapore in recent months.

However, en bloc sales – a feature of Singapore’s property market in which a group of owners band together to sell entire apartment buildings for redevelopment – are expected to slow following tightening measures announced in early July. That in turn will affect real estate financings in Singapore, loan bankers said.

“We have to be a bit more cautious towards lending to the real estate borrowers given that the measures take into account potential reduction in buyers’ appetite because of tightening borrowing limits,” said a loan syndication banker in the city.

Under the new rules, individuals face stricter borrowing limits on their first housing loan, while foreigners buying property are slapped with higher stamp duty fees of 20%, an increase from 15%. Singapore citizens buying their second or subsequent homes also have to pay the extra stamp duty charges.

With expectations of a drop in private home sales, the flow of loans related to en bloc sales is also heading for a decline.

“The year was off to a very good start with many en bloc sales, but the en bloc real estate story is going to take a hit for the rest of the year,” said a property sector coverage banker in Singapore. “After the government’s cooling measures, some sponsors have actually been reassessing their positions and have even pulled en bloc deals.”

In late July developer TEE Land decided against exercising its option to purchase Teck Guan Ville, a freehold plot located at Upper East Coast Road, in what could have been a S$60m collective sale. REFINANCINGS CONTINUE The anticipated slower deal flow for the next few months means that any current real estate financings are likely to attract more attention from lenders.

Oxley itself is also in the market with two other loans – a Deutsche Bank-led US$250m loan for its Royal Wharf project in London, and a loan for the Vista Park redevelopment in Singapore arranged by OCBC Bank.

Besides Oxley, Avery Strategic Investments, the third-largest operator of permanent workers’ dormitories in Singapore, is also marketing a S$400m refinancing, offering a top-level all-in pricing of 241.67bp.

The real estate sector has kept the till ringing for lenders and helped prop up loan volumes so far this year. Oxley completed a couple of en bloc financings, including a S$744.6m five-year loan in March for the S$499m purchase of Serangoon Ville, a former Housing and Urban Development Co estate.

In January, a consortium comprising Oxley, KSH Development, Lian Beng Group and Apricot Capital raised a S$879m five-year deal that financed the purchase of Rio Casa, a privatised HUDC estate.

In March Oxley also closed a S$483m three-year loan backing its acquisition of a commercial building.

Singapore’s more significant deals so far this year include integrated resort Marina Bay Sands’ S$5.1bn multi-tranche loan, which was extended by four years, in March.

Malaysian developer IOI Properties closed a S$1.8bn five-year facility to refinance a bridge loan funding its purchase of a plot in Marina Bay area, while OUE Hospitality Real Estate Investment Trust signed a S$980m senior secured refinancing in January.

“Refinancings will always provide a consistent flow of deals depending on the timing of maturing loans, but don’t generate much returns,” said another Singapore-based loans banker. ( Reporting By Chien Mi Wong; editing by Prakash Chakravarti and Chris Mangham.)

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