Construction is due to begin next week on the Singapore Flyer, which at 170 meters tall will be the world's biggest observation wheel. The project, located within the Marina South precinct, hopes to attract 2.5 million visitors per year. Developed by Melchers Project Management the project was commissioned by the state-run Singapore Tourism Board.
HVB Asia has completed an S$140 million ($83.4 million) structured finance facility for the developers, which will part finance construction of the wheel and retail complex located on site. Following the 30-month construction period, a five-year ticket receivables securitization will be issued to international investors. HVB, however, says the deal could happen earlier if it decides to use the progress payment structure employed on previous residential property projects in Singapore.
Also, Parkway Group Healthcare is rumored to be considering a securitization of hospital assets. The company is one of Asia's biggest private healthcare providers, with interests in Singapore, Malaysia, India and Brunei. Although Parkway's share price has jumped more than 40% this year, the company is exploring the best way of extracting value from its fixed assets. The two favored options are believed to be securitizing hospitals and leasing them back or selling assets into a real estate investment trust. Company sources say it will decide what course of action it will take within the next three months.
Meanwhile in Japan, property developers are already using securitization to realize money from their assets. Zephyr Co., which specializes in condominium development, but also has interests in hotels and commercial buildings, wants to raise 37 billion ($331.3 million) through securitization in the fiscal year ending March 2006, a 15 million year-on-year increase.
The company uses proceeds from its securitizations to finance property developments and acquisitions, which it then transfers into special purpose vehicles. Like many other developers, Zephyr has actively used this method to reduce dependency on bank loans and bolster its balance sheet, while retaining ownership in the assets by investing in the equity portion of the ABS deals. Zephyr says it expects yields to be around 10% in the next year.
Among the company's latest purchases are a commercial building in Atsugi, Kanagawa Prefecture, and hotels in Osaka and Fukuoka, all of which will be sold into SPVs shortly.
One of Zephyr's competitors, Yoko Toshikaihatsu, is now getting in on the act. The company, which specializes in providing affordable condo housing, says it will use some of the proceeds from its recent equity offering to set up an investment fund. The vehicle will sell securities yielding around 5% to 6% to institutions backed by rental and sales income. Yoko has already purchased land worth 2 billion in Tokyo for a new project and is looking at other potential acquisitions throughout Japan.
Meanwhile, the word from Seoul last week was that Korean consumer finance company Hyundai Capital has picked ING to arrange a $300 to $400 million auto loan-backed deal. A source familiar with the transaction reported that bidding to secure the mandate was frenzied. No details were disclosed on which banks missed out, although Calyon Securities, HSBC Securities, The Royal Bank of Scotland and Standard Chartered are the leading candidates.
Hyundai, 38% owned by General Electric Co., last tapped the market in June with a 300 million ($366.3 million) via Calyon (see ASR 6/13/05). The three-year deal, rated Aa3' by Moody's, priced at 29 basis points over Euribor.
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