OXLEY Holdings' executive chairman and chief executive officer Ching Chiat Kwong is confident that the property developer can pay off its S$1.6 billion in debt due in the next three years through the sale of its completed projects, local and overseas, as well as a steady stream of asset disposals.
As at end-2018, the property group's net gearing stood at 2.55 times, a significant rise from 2.17 times just six months earlier - as the company borrowed more from banks to fund its acquisition of Singapore development projects as well as advances to joint ventures.
In an interview with The Business Times, Mr Ching, dressed casually in a white Adidas tracksuit, said: "Oxley never had any issues with bondholders. Over the past two years, we repaid around S$1 billion to bondholders. Upon the completion of the one-time sale of the hotels and overseas assets, Oxley would have approximately S$1.4 billion in our kitty by end 2019."
Already this year, Oxley has accepted a non-binding letter of intent to purchase its Mercure and Novotel Hotels on the former Pines Club site for S$950 million, and sold four office towers and two residential blocks of Dublin Landings for about S$1 billion.
In its recent corporate presentation to investors, it said that a completion of the sale of its two hotels along Stevens Road would lower its gearing to about 2 times.
The most pressing debt repayment for Oxley at the moment would be its S$450 million retail bonds maturing in November 2019 and May 2020. The company has even received calls from concerned bond investors in past months, seeking assurance that they will be paid.
An unrated report by DBS Group Research in January also flagged debt repayment risks at Oxley, especially its S$300 million retail bonds expiring on November 5, 2019 and S$150 million expiring on May 18 next year. The analysts are also keeping an eye on the sale performance of some 3,700 residential units in its launch pipeline in Singapore - the market that accounts for the most of its land bank - as well as proceeds from its overseas projects.
Mr Ching said Oxley ultimately aims to reduce its gearing to 1 time debt-to-equity by the end of the year. According to a recent report by OCBC Investment Research, Singapore property developers have an average gearing ratio of 0.6 to 0.7 times. Oxley led the companies covered by the firm.
From time to time, Oxley receives unsolicited offers - like the one for the Stevens Road hotels - and the company will study every interested bid carefully, and seriously consider selling if there is a gain to be made and if it helps the company's de-gearing exercise.
In London, it still has 200 unsold units in Royal Wharf; in Cambodia, The Peak, a mixed-use development comprising residential, SOHO and retail units, is about two-thirds sold.
In Singapore, of its 10 development sites, nine have been launched, with construction in progress. They will yield about 3,800 units in all, of which about half has been sold. Oxley aims to rake in about S$2 billion from its Singapore residential projects, and S$500 million from projects in Cyprus, Cambodia, Malaysia and London.
Amid some scepticism on this, Mr Ching said the group bought most of its residential land in Singapore at the early stage of the en bloc fever in 2017 before prices surged to unreasonable levels.
"When the rest of the projects get launched, the market will see the difference, because we are probably the cheapest in terms of per square foot (psf) prices... We started to take the bus first; we were not the last person to board the bus," he said.
Oxley's executive director and deputy CEO Eric Low added that the company's residential projects - located mostly in heartland areas such as Pasir Panjang, Serangoon, Hougang, Geylang, Yio Chu Kang, Kent Ridge and Potong Pasir - focus more on the mass market, with prices in the range of S$1,300 to S$1,700 psf.
Its highest-priced property would probably be Mayfair Gardens and Mayfair Modern along Dunearn Road, averaging S$1,900 psf. "Mass market projects are easier to move because they are a natural option for HDB dwellers who want to upgrade," he said.
Defending the group's gearing, Mr Low also said the multiple appears high only because the company is still "young and growing" and building up its equity. Once its equity base is beefed up, and revenue and profits from completed projects stream in, gearing will also naturally fall.
Meanwhile, the group also has a strategy to build up a portfolio of recurring income assets, including industrial buildings, offices, shopping centres and hotels overseas. Some of these assets include Space @ Tampines, Shangri-La Hotel in Cambodia, SO Sofitel Kuala Lumpur Hotel and Jumeirah Kuala Lumpur Hotel.
But over the long term, Oxley is not expecting to pare its gearing to a low level, Mr Ching said. As soon as there are investment opportunities at hand, the developer will not hesitate to gear back up to re-enter the market.
To put right "misplaced talk" about the company's aggressive expansion, Oxley has been striving to be more transparent about its projects by publishing detailed updates every quarter to show retail and institutional investors that the management is orderly in its business and "not haphazard".
"We are trying to build credibility to show people that this is not a freak result over the eight years. It will just become better and better. In the next three years, I think we are sitting on very comfortable revenue, especially when projects start completing overseas," Mr Ching said.
Oxley was founded by Mr Ching in 2010. From a Catalist-listed company with a market cap of S$565 million, it is now a mainboard-listed developer worth S$1.4 billion. At one point, it had even surpassed the S$2 billion mark, but its share price has nearly halved from a high of 60 Singapore cents a year ago to 33 cents.
Mr Ching said he has found it difficult to appease investors, who grumble when the company is selling assets to raise money, and complain about its high gearing when it doesn't.
"Actually I get very emotional," he said. "I just cannot wait for the next three years to come, to dispel all rumours about Oxley. But when the opportunity (for growth) comes, we will go for it and start to build up debt again."