Perennial Real Estate Holdings (Perennial) and its consortium of investors, including Singapore Press Holdings (SPH), are selling their stakes in Chinatown Point mall for $520 million in total, the listed companies announced yesterday.
This includes the divestment of their entire interests in the retail mall and four strata office units in Chinatown Point, an integrated development in the heart of Chinatown and within the Central Business District.
In July 2010, Perennial syndicated a consortium of investors to form Perennial Chinatown Point LLP (PCP LLP) to acquire Chinatown Point mall for $250 million.
Yesterday, Perennial said PCP LLP has entered into a share purchase agreement with PAR Chinatown Point, a wholly owned vehicle of a fund managed by Pan Asia Realty Advisors (Singapore), which is in turn a joint venture between Mitsubishi Estate Co and CLSA.
Perennial said the transaction is in line with its active capital recycling strategy to rebalance its portfolio, enhance its financial flexibility and maximise its returns to shareholders.
The deal value includes $225 million in cash for the issued shares and the assignment of shareholder loans. The transaction price of $520 million also translates to $2,450 per sq ft on total net lettable area of Chinatown Point mall.
Perennial is the largest investor in the mall, with a 50.64 per cent effective interest, and its proportionate share of the net proceeds is expected to be about $125.3 million, subject to final adjustments, the company said.
The other investors include SPH, which publishes The Straits Times, and FPTM.
In a separate filing to the Singapore bourse yesterday, SPH said it expects its share of the gain to be about $10 million.
SPH's wholly owned subsidiary, CT Point Investments, has a direct stake of 30.68 per cent in PCP LLP.
After Chinatown Point was acquired in 2010, a major redevelopment exercise was carried out at a cost of over $91 million. Two of Perennial's wholly owned subsidiaries were appointed asset manager and property manager of the mall.
Perennial said that subject to the conditions precedent being satisfied, the transaction is expected to close on or around June 6. Following the completion, Perennial (Singapore) Retail Management will continue in its role as the property manager of Chinatown Point mall.
Perennial chief executive Pua Seck Guan said: "The transaction is a testament to Perennial's ability in identifying quality assets, creating value via enhancement initiatives, and ultimately unlocking value via divestment for all stakeholders."
Separately, Perennial yesterday also noted in a profit guidance that it expects to post a first-quarter net loss for the three months ended March 31, primarily due to weaker operating performance of its newly operational assets, as well as higher financing costs.
The group expects to turn profitable in the second quarter on completion of the disposal of its stake in Chinatown Point mall. It added that further details of the group's performance will be disclosed when it releases its first-quarter results next month.
Perennial shares closed 3.9 per cent higher at 66.5 cents yesterday, while SPH shares were up 0.4 per cent to $2.48.