Alike most undergraduates in Business School, a career in finance is what Joseph envisioned. During his undergraduate days, he interned at Ernst & Young as a Mergers & Acquisition (M&A) Summer Analyst and the former YCP Group (now known as YCP Solidiance) in the private equity department, where he explored different aspects of deal making and operational turnaround strategies respectively.
Through discussions with friends who were passionate about the Real Estate sector and taking relevant modules in school, he became open to the prospect of a career in Real Estate investment or development. Upon graduation, Joseph took an unconventional path and started off as a Management Associate at the former Ascendas-Singbridge (which has been acquired by CapitaLand in Jul 2019), fulfilling his passion in both real estate and finance.
Q: Why did you choose to start your first career in the Management Associate programme at Ascendas-Singbridge? How did your internship experiences shape your career path?
I had always envisioned myself to be working in the banking sector and I took up internships to expose myself to the intricacies of deal making, strategy, and valuation. During my Year 2 Summer, I interned at YCP Group in the private equity department. My internship role focused mainly on the operational turnaround of the portfolio companies by recommending strategies to aid them in fixing underlying business issues – such as poor product lines, weak competitive positioning, and financial losses. Although I did have a fair bit of exposure to the operational side, this internship experience lacked the deal-making exposure and financial returns analysis that I was actually searching for.
During my Year 3 Summer, I was a M&A intern at EY and was attached to the Tech, Media and Telecommunications (TMT) sector. I was mainly involved in market research, financial modelling, and comparables and precedent transaction analysis. I enjoyed this internship very much and realized that even though financial modelling skills were important, the model is only as good as the assumptions and it was essential to be equipped with in-depth knowledge of a particular industry that I was interested in.
My real estate interest was ignited by one of my NUS friends after he completed his M&A summer internship in the real estate sector. I thought that his work was quite interesting, and I decided to do up some reading on my own. As compared to investing directly in companies, I found the value creation that can be generated in the property cycle – acquiring land, constructing buildings, refurbishing buildings, repositioning buildings to different tenants, demolishing and redeveloping buildings – to be particularly opportunistic as a career. During my final year prior to graduation, I utilized my Unrestricted Electives to take on modules in Real Estate Finance, Real Estate Valuation and Appraisal, and Urban Planning to cement my knowledge about this sector.
Upon graduation, I received several offers from the Big 4, consulting, and investment firms. However, weighing on my envisioned career path as well as the opportunity that came along at Ascendas-Singbridge, that was when I decided to take up the Management Associate programme offer.
Q: Having completed the Management Associate Programme, you decided to settle down in the Investment & Development Management department. Could you describe the projects you handled in your current role?
What we have in mind and are currently working on is redeveloping certain parts of Singapore Science Park One and Two. The current design of both science parks is largely based on the 1980s Silicon Valley design and masterplan. The buildings are low-rise, isolated, and quite aged. The objective of redevelopment is to maximize cash flows (in the form of higher rentals) of a suboptimal property, thereby increasing its value over time.
Almost every redevelopment project is undertaken with the intention of revitalising the old development and putting the land to its highest and best use. This usually means that there will be proposed changes to the existing development parameters (such as plot ratio, balance land tenure, land usage, etc.). Here is a brief overview of how a typical redevelopment project is done: Firstly, a financial feasibility study is conducted to analyse the returns across scenarios involving redeveloping, holding, or selling the property. Current capitalisation rates, market rents, occupancy, operating costs, capital expenditure commitments, etc. will usually be heavily debated in this feasibility study as they are the input assumptions to the financial model.
Secondly, if there are plans to redevelop and change the development parameters, we have to pitch the redevelopment idea to URA and seek their approval for the changes. Through the process, of course, we have to also work with other parties (e.g. architects and quantity surveyors) to get an idea of the feasibility and scale involved in changing the development parameters and constructing the new building. The current redevelopment project I am working on, which cannot be disclosed yet, involves an increase in plot ratio. In technical terms, plot ratio is defined as the permissible development intensity of a specified piece of land and it determines the maximum gross floor area of any development on that piece of land. As part of obtaining URA’s permission to increase plot ratio, we also must conduct traffic impact assessment and fulfil LTA’s requirements on traffic control. If more people can fit into the land or building, greater transportation infrastructure have to be built to cater to the increase in human capacity.
After obtaining all necessary approvals from authorities to change development parameters, we will call for a design competition to appoint our architects and consultants, and call for a construction tender to appoint on construction main contractor. Subsequently, we will manage the entire development process and engage marketing agents to secure pre-leasing commitments while the building is still being constructed. Upon achieving the Temporary Occupation Permit (TOP), the development is handed over to the asset management team. In my young career, I have only seen through the part on financial feasibility study and obtaining authorities approval. The entire development process can take several years, especially for a large project.
Prior to the merger between CapitaLand and Ascendas-Singbridge, the redevelopment projects were driven by the asset management team instead of the investment team. In my opinion, there is a thin line separating whether or not projects of such a nature should be classified as an asset management or investment function. Asset management deals with the maintenance and small-scale improvements of the building (e.g. nicer lobby, higher specification of mechanical and electrical systems, additions and alterations, etc.). The investment function deals with the bidding and acquisition of land and buildings, as well as much larger-scale improvements such as the demolition and re-construction of a building which was mentioned above. It is ultimately up to the real estate company to decide on how it wants to allocate the project.
