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Fair value losses on London properties tips Ho Bee into red ink for FY2023

By The Edge Singapore

/ EdgeProp Singapore |

February 26, 2024 10:02 PM SGT

Ho Bee booked fair value gains on its Singapore properties, which includes The Metropolis (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Ho Bee Land has recorded higher revenue for FY2023, but no thanks to unrealised fair value losses, it has reported a net loss of $259.8 million for the year ended Dec 2023 versus earnings of $165.9 million in FY2022.

Specifically, Ho Bee booked a hit of $472.2 million on its investment properties in London due to the "sharp expansion of capitalisation rates."

The company has a portfolio of eight investment properties in London, including The Scalpel, Ropemaker Place and 1 St Martin’s Le Grand.

According to valuations done by Savills, The Scalpel, valued at $680 million as at Dec 31 2022, is now valued at $554 million; Ropemaker Place's valuation in the same period was lowered from $703 million to $635 million, while 1 St Martin's Le Grand is now valued at $170 million, down from $198 million.

On the other hand, The Metropolis is valued at $2.213 billion, up from $2.155 billion.

The company first flagged the fair value losses and overall net loss on Jan 11.

Despite the losses, Ho Bee plans to pay a first and final dividend of 3 cents per share, down from 8 cents paid for FY2022.

CEO Nicholas Chua calls 2023 a "challenging year" because of the rapid rate hikes.

"Despite economic uncertainties and market volatility, our property portfolio has remained resilient, delivering healthy occupancy rates and stable rental income,” he adds.

For example, Elementum has achieved a pre-committed occupancy of around 90% and is seen contributing to Ho Bee's revenue in FY2024.

Ho Bee says its investment portfolio in London and Singapore has maintained strong occupancy rates, which, along with its Australian development pipeline, positions the company well to navigate the headwinds and weather potential challenges.

Ho Bee "will continue to be disciplined and exercise financial prudence, given ongoing geopolitical tensions and the elevated interest rate environment," the company says.

As at Dec 31 2023, Ho Bee's NTA was $5.42 per share, versus its Feb 26 closing price of $1.71, up 0.59% for the day but down 28.15% over the past 12 months.

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