SINGAPORE - City Developments announced on Friday (Oct 21) that its wholly owned subsidiary, Sunmaster Holdings, has entered into an agreement to exit its entire interest in Summervale Properties, which owns Nouvel 18, a 156-unit luxury, freehold condominium on Anderson Road, for S$977.6 million.
CDL said that by the move it has unlocked value in Nouvel 18 through its third Profit Participation Securities (PPS) platform. It will not hold any interests in the ordinary shares and preference shares in Summervale after the transaction is completed.
Summervale will raise S$977.61 million via the PPS transaction through the following sources:
- S$102.0 million from Green 18, a special purpose vehicle company whose shareholders are high net worth Singaporeans and companies wholly-owned by Singapore citizens. Green 18 will enjoy a preferred 5 per cent annual internal rate of return and enjoy upside beyond that, less any incentives fees payable.
- S$579.2 million credit facility by DBS Bank and United Overseas Bank.
- S$156.4 million of notes due in 2021, for which DBS Bank will be the initial purchaser.
- S$140.0 million of notes due in 2023, for which CDL, through its wholly-owned subsidiary, Ventagrand Holdings Ltd, will be a subscriber.
CDL's wholly owned subsidiary, Trentwell Management, will be appointed as the exclusive asset manager and marketing agent (for five years with an option to extend to seven) to manage, lease, market and sell the units of Nouvel 18. Trentwell will receive an incentive fee after a performance benchmark is met.
CDL said the benchmark ensures that Summervale will have funds to first repay the senior loans and notes, and then redeem and deliver the annual 5 per cent internal rate of return on the PPS. After the benchmark is fulfilled, Summervale will pay a portion of any excess as the incentive fee for Trentwell, and the remainder will be distributed to Green 18.
Said CDL executive chairman Kwek Leng Beng: "CDL's third PPS is in line with our strategy to grow our funds management business. It is also our first funds management platform where the asset is a purely high-end residential project.
"The success of our latest PPS initiative reflects investors' confidence in the tremendous value and potential of a rare, freehold product like Nouvel 18, as prices of Singapore's luxury residential segment show signs of bottoming out. There is a return of interest in Singapore's high-end properties due to their competitive pricing compared to other global cities and pent-up demand. Moreover, high-end residential supply remains limited in the medium and long term."