City Developments announced on Tuesday that its wholly-owned subsidiary, Baynes Investment Pte.Ltd., has agreed to sell the present and future cashflow of the dividends and other shareholders' distributions in its wholly-owned subsidiary, Cityview Place Holdings Pte. Ltd, for $800 million in cash.
On completion of the proposed transaction, Cityview will repay an existing shareholder's loan of $700 million to CDL, which will continue to manage the real estate assets held by Cityview.
Cityview owns "The W Singapore - Sentosa Cove", a 240-room, 5-star luxury hotel in Sentosa and holds the retail property with a net lettable area of 44,121 square feet at the "Quayside Isle", a food and beverage waterfront development in Sentosa Cove. It was also the developer of "TheResidences at W Singapore", an adjacent gated 228-unit condominium development.
The cashflow from the dividends will be purchased by Sunbright Holdings Limited, a special purpose vehicle established in the Cayman Islands.
Sunbright will be initially funded by three institutional investors, Blackstone Tactical Opportunities Fund, CIMB Bank's Labuan Offshore Branch and CDL wholly-owned subsidiary Astoria Holdings, which will contribute 37.5 per cent of the equity.
CDL said the deal will allow it to unlock the shareholders' value in Cityview and forge a strong partnership with its co-investors in Sunbright to invest in cashflows from quality assets such as the Quayside Collection.
Additionally, had the transaction taken place on 30 September 2014, it would have improved CDL's net gearing to 25 per cent from 36 per cent. This does not factor in any revaluation gains in investment properties.