SINGAPORE - Debt-laden property developer Oxley Holdings announced on Tuesday morning (April 30) that it has signed a deal to sell Chevron House for up to $1.025 billion, just 16 months after acquiring the prime office building in Raffles Place for $660 million in December 2017.
Oxley said that on April 29, it entered into a sale and purchase agreement with Golden Compass (BVI) for the latter to buy the entire interest in its wholly owned subsidiary, Oxley Beryl, and take over the existing bank loans for an aggregate value of up to $1.025 billion.
Oxley Beryl owns Chevron House at 30 Raffles Place, a 32-storey commercial development comprising 27 levels of office space and a five-storey retail podium with an existing net lettable floor area (NLA) of about 261,280 sq ft.
Oxley's corporate presentation in February showed that the plan is to increase the building's NLA by 43 per cent to about 374,165 sq ft, subject to approval from the authorities. The $1.025 billion sale price works out to about $2,739.43 psf on the increased NLA.
The property sits on a site with a 99-year leasehold tenure from December 1989, leaving a nearly 70 years' balance lease.
Oxley said the proposed sale is expected to have a positive impact on its net tangible assets per share and earnings per share for the current financial year ending June 30, 2019.
It will complete the alterations, additions and asset enhancement works on the property, which started on March 1, before the final completion of the proposed sale.
The consideration was arrived at through arm's length negotiations, taking into account the enterprise value of Oxley Beryl, said Oxley.
Under the deal, Golden Compass is to pay $210 million upon the first completion of the proposed sale, after which 82.35 per cent of the issued and paid-up capital of Oxley Beryl, among others, will be transferred to Golden Compass.
The buyer is to then pay the balance of the consideration and discharge Oxley Beryl's bank loans upon the final completion of the sale, after which the remaining shares in Oxley Beryl will be transferred to Golden Compass. The final completion will take place after the March 1 works are completed and after the retail and banking units in Chevron House have been divested.
The SPA also provides for certain retention sums which will be released when the relevant conditions are fulfilled. Oxley did not disclose these sums or conditions.
Completion of the proposed sale is subject to certain conditions precedent, including shareholders' approval if required by the Singapore Exchange (SGX).
The Business Times reported last month that Oxley had accepted an expression of interest to acquire Chevron House, with the interested party believed to be US-based real estate fund AEW.
As one of Singapore's most highly-geared developers, Oxley has been in deleveraging mode of late.
It said it aims to gradually reduce its net gearing to one time from 2.55 times net debt-to-equity as at Dec 31, 2018.
It has $300 million in retail bonds coming due in November 2019 and $150 million in retail bonds maturing in May 2020.
To pare down these debts, Oxley is focused on selling assets and a quick turnover for completed projects.
In Singapore, aside from Chevron House, the company is also looking to sell its Novotel and Mercure hotels in Stevens Road to bring down its debt burden.