There have been 2 interesting developments for Perennial Real Estate Holdings Limited ("PREHL") in 2018.
1. In January 2018, the deadlock with co-owner Pontiac Land over the Capitol integrated development was finally broken. PREHL paid S$528 Mil to buy out Pontiac Land to become the sole owner. This bode well for the generation of recurring income from the hotel operations of Capitol which has remained close due to dispute over the future direction with Pontiac Land. There will also be synergy for the retail component of Capitol from the resulting higher traffic.
It is expected to bring in S$40Mil to S$50Mil per annum in recurring income if the execution goes on smoothly as planned.
2. On 4 April 2018, PREHL and China based Qingjian Group entered into a 40-60 joint venture to jointly develop the former Goodluck Garden freehold residential site in Singapore. Goodluck Garden was previously en-bloc and acquired by Qingjian for S$610Mil. The site area has an land area about 360,130 sqft and is located at Toh Tuck Road. This bodes well for its Singapore property development profitability over the next few years.
Analysts targeted price for PREHL is around S$1.05 to S$1.18. Its current share price is at S$0.86. PREHL represents a unique business that is fast growing with many projects in its development pipeline. The future recurring income from medical services and properties rental income will also increase the dividend pay-out.
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