Perennial Real Estate Holdings popularly known as Perennial is selling its stakes at Chinatown Point Mall along with its consortium that include the Singapore Press Holdings (SPH).
This stake sale is expected to earn them approximately S$520 million. As part of the disinvestment plan they would sell all their stakes in the mall along with the 4 strata office units they have at Chinatown Point at the moment.
This integrated development is located in the centre of Chinatown precinct and part of the CBD.
Perennial had formed a consortium Perennial Chinatown Point LLP or PCP LLP in July 2010 to buy S$250 million Chinatown Point Mall.
On Monday (April 22), PCP LLP that they have agreed on share purchase alongside PAR Chinatown Point which is wholly owned by Pan Asia Realty Advisors (Singapore). Pan Asia on its part is also a joint venture that involved CLSA along with Mitsubishi Estate Co.
Perennial in an official statement said that this sale is a part of its capital recycling strategy where it aims to streamline the portfolio, improve its flexibility as far as acquiring new properties are concerned and increase the returns for its investors.
As a part of this deal S$225 million would be in cash for the shares issued and others in shareholder loans. In terms of the rate, the S$520 million sale price translates into S$2,450 psf for Chinatown Point Mall’s net lettable area.
Perennial currently holds 50.64 effective interests in Chinatown Point Mall which also makes it the largest investor.
It is expected to pocket approximately S$125.3 million based on its proportionate stake in the net proceeds and other adjustments.
Among the other investors in this Mall are SPH publishers of The Business Times and FPTM Pte Ltd.
SPH in its filing to Singapore exchange mentioned that as a part of the deal they expect to pocket S$10 million from the sale.
CT Point Investments Pte Ltd a wholly owned subsidiary of the SCH has 30.68% direct stake in PCP LLP along with this it also has indirect stakes in different entities owning Chinatown Point Mall.
Major development works were carried out at Chinatown Point Mall since it was acquired in 2010 amounting to more than S$91 million.
Interestingly the property manager and the asset manager appointed were wholly-owned subsidiaries of Perennial. In its statement Perennial said that as per the established procedure and past precedents the transaction is expected to be completed by June 6. Once this is completed Perennial (Singapore) Retail Management shall continue to remain the property manager for Chinatown Point Mall.
Perennial’s CEO Pua Seck Guan stated that this transaction is a proof of Perennial’s ability in identifying good assets, enhancing their value while holding them and divesting them at the right time earning good returns for their investors.
The company in a separate note on Monday stated that it expects to report losses in just concluded Q1 of 2019.
It is attributing these losses to weaker performances of the recently acquired assets and the high cost of financing. They are hopeful of reporting profits in the second quarter where they are expected to seal the Chinatown Point Mall and the new assets also start minting profits.