A unit of crane supplier Tat Hong Holdings has sold the lease of its property in Tuas back to landlord JTC Corp for $21 million.
The firm had failed to sell the property to third parties and had relocated its operations elsewhere.
Tat Hong HeavyEquipment, a wholly-owned Tat Hong subsidiary, has accepted the offer to surrender the lease of 11 Gul Crescent as "the property is now redundant", said Tat Hong in a Singapore Exchange filing yesterday.
The property has a site area of about 29,390 sq m with two single-storey office buildings, three single-storey warehouses and two other ancillary buildings. It has a remaining lease of about 25 years.
The firm announced in September 2013 that it would sell the property as part of its plans to optimise operations in land-scarce Singapore. It had originally put the property up for sale at an indicative price of around $33 million.
Offers received at that time were "not acceptable" and the property was withdrawn from the market, said Tat Hong. In May last year, it agreed to sell the property to Mini Environment Service for $25 million but the sale fell through as "certain conditions were not fulfilled".
In late November last year, Tat Hong said it was in talks with another potential buyer for the property.
While waiting for the sale of the property, the company proceeded with its plans to optimise its Singapore operations and relocated its crane storage and maintenance operations to other sites at Tuas Bay Drive, Tuas South as well as Kulaijaya, Johor, it said.
The property had a net book value of $11.4 million as at Jan 31 and Tat Hong will recognise a pre-tax gain on the disposal of $9.5 million.
The completion of the deal is expected to take place on March 29.
Last Friday, Tat Hong reported a net loss of $6.7 million for the third quarter ended Dec 31, owing to weak demand in South-east Asia and Australia.
The crane operator had a profit of $4.5 million in the same period a year earlier.
Revenue fell 19 per cent to $124.8 million in the quarter due to lower turnover across all its businesses, which include rentals of cranes, tower cranes, general equipment as well as distribution.
"The group is facing difficult economic and sectoral outlooks in its key markets and expects its performance to be depressed in the 2016 financial year," Tat Hong said in a press statement last Friday.
"The group will continue to rationalise its operations and its defleeting exercise to reduce overall operating costs," it added.
Tat Hong shares closed 1.5 cents higher at 43 cents before the announcement.