To maintain 'conservative leverage', Citi thinks UOL could divest assets to fund Marina Square redevelopment

Jovi Ho

Sep 01

UOL's 50.4%-owned Singapore Land Group has announced it will add three new buildings to Marina Square complex, with its gross floor area set to uplift to approximately 362,493 sqm.Singapore Land Group...

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SingLand will introduce three new buildings to the site: a 19-storey mixed-use block comprising a 304-key hotel and 13,000 sqm of lettable office space, a 49-storey residential tower with 204 units of three- to five-bedroom apartments and penthouses, and a 260-key serviced apartment block.\nAccording to SingLand's Sept 1 announcement, the three new towers will be integrated with the site's three existing hotels: the 790-key Pan Pacific Singapore, 583-key Parkroyal Collection Marina Bay and 510-room Mandarin Oriental Singapore. \nTogether, the five hospitality assets \"will serve a wider range of guest profiles, stay patterns and lifestyle needs\", says SingLand on Sept 1. \nThe existing four-storey Marina Square shopping mall will close for redevelopment from March 31, 2027, refreshing its more than 76,000 sqm of gross floor area (GFA). The repositioned mall will become the common platform linking the precinct's hotels, offices, residences, serviced apartments and public spaces.\nA continuous sheltered walkway on the ground floor and an elevated botanical loop will strengthen pedestrian links to nearby One Raffles Link, Millennia Walk, Suntec City and upcoming NS Square, which will be completed in 2027.\nDesigned by UK-based PLP Architecture and local firm DP Architects, the project is expected to be completed by 2031 and further details will be announced at key milestones, says SingLand, which is 50.4%-owned by parent United Overseas Land (UOL) Group. \nSingLand received a grant of written permission under the Urban Redevelopment Authority's Strategic Development Incentive (SDI) scheme on Aug 31. \nUnder the scheme, the site will realise an increase in GFA to approximately 362,493 sqm, excluding bonus GFA for balconies and indoor recreation spaces, says SingLand. The site currently spans about 92,197.3 sqm in total.\nWhile SingLand did not reveal how the total GFA will be split among the components, the new GFA of 362,493 sqm (or some 3.9 million sq ft) implies a 15% uplift from the existing GFA of some 3.4 million sq ft and plot ratio expansion to 3.9 times, compared to the current 3.4 times. \n\nThe Marina Square complex currently only has 53 years of its land tenure remaining. Assuming only the new residential component will incur land betterment charges, Citi Research analyst Brandon Lee estimates total gross development value (GDV) of some $3.7 billion and revalued net asset value (RNAV) accretion of around 7%, which is \"better than [Citi's] initial 5% forecast\".\nThat said, Lee adds that investors he spoke with recently were \"expecting 5%-10% accretion\".\nThe Citi analyst believes earnings impact is \"minimal\" as the three existing hotels will remain operational and Marina Square shopping mall only contributes 3% to 4% of UOL's earnings before interest and taxes.\nIn a Sept 1 note, Lee says he estimates a development cost of some $1.5 billion. \"Low 1HFY2026 net gearing of UOL (26%) and SingLand (8%), as well as progressive construction schedule of the project, suggest funding... should be manageable.\"\nSingLand expects no material impact on its FY2026 operating results as the shopping mall will continue to operate until March 31, 2027. Lee says capex will be funded through a mix of new and existing loan facilities, internal cash resources and shareholding funding.\nUOL's \"traditionally conservative leverage\" implies it may consider monetising some assets over the next few years, says Lee. \nUOL has underperformed the Straits Times Index year to date, but Lee maintains his \"buy\" call with a $12.90 target price, which represents a 45% total return inclusive of dividend yield. \nLee's target price is set at a 27% discount to RNAV of $17.67, \"with the discount in-line with the mean level during three historical residential upcycles\". \nThree factors could result in UOL's RNAV discount to narrow, says Lee. \"[A] better-than-expected take-up for the upcoming residential launch on the former Thomson View site in 4Q2026, more details on Marina Square's redevelopment, and asset divestments.\"\nIn Singapore, UOL has stakes in Novena Square (valued at around $1.51 billion as at June 30), United Square ($1.15 billion), Odeon 331 and 333 ($688.6 million), One Upper Pickering ($237.7 million), Pan Pacific Serviced Suites Orchard ($163 million) and Pan Pacific Serviced Suites Beach Road ($128 million), among others. \nUOL also owns stakes in properties in the UK and hotels in Kuala Lumpur, Malaysia. \nAs at 11.09am, shares in UOL are trading 9 cents higher, or 1% up, at $9.16.\nRead more about the Marina Square complex partial redevelopment:\nSingLand announces redevelopment of Marina Square; uplift in valuation to impact FY2026 NTA and EPS (September)\nWake me up when September ends (August)\nUOL to update on proposed Marina Square redevelopment by 3QFY2026 (August)\nJustCo 'prepared' to exit Marina Square when mall begins redevelopment (August)\nPaying for Marina Square (February)\nUpcoming residential tower in SingLand's redeveloped Marina Square complex said to yield 702 units (February)\nWho stands to gain from SingLand's Marina Square redevelopment? (December 2025)","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}