Ho Bee's The Metropolis looks to a 50% occupancy in early 2013

4 big names are already negotiating.

According to UOB, Ho Bee Investment's management noted that the preleasing activity for the upcoming The Metropolis (NLA > 1msf) has been strong with leasing negotiations in advanced stages for major tenants like Shell, NOL, P&G and SGX.

It expects about 50% of the space to be leased by the beginning of this year. The rental guidance for anchor tenants is in the S$5.50-7psf pm range. Construction of the two towers is expected to be completed by 2H13.

When fully operational in 2014, the project will contribute to a stable annual recurring income of S$50m-70m. Strong share buybacks signal deep value and privatisation potential.

Here's more from UOB:

Management has been actively doing share buybacks in the last two years (bought back 6% of outstanding shares) with recent buybacks done at S1.935/share, signalling deep value despite a share price run-up.

The strong buybacks fuel the possibility of a potential privatisation in the current low interest rate environment, although management has denied any such possibilities.

Management intends to launch the Tangshan site in which it has a 40% stake in 1H13 with expected ASP of Rmb10,000psm. The other two China projects will be launched in 2014.

Management will also launch its two recent acquisitions in Australia and The Pinnacle site in Singapore in 2013, depending on market conditions.

Healthy debt headroom to tap acquisition opportunities. Ho Bee’s net gearing as of 3Q12 remained low at 0.23x, providing healthy headroom of ~S$0.5b (assuming comfortable gearing of 0.5x) for acquisitions.

Gearing is expected to come down further with the cash proceeds from the sale of Hotel Windsor in 1Q13. Management is looking actively for acquisition
opportunities in Australia, Singapore, the UK and China.