Grace Shine has inked a conditional sale and purchase agreement (SPA) with Artemis, a Singapore-incorporated investment holding firm that is linked to a private fund managed by CapitaLand Fund Management. Photo: Google Street View

Mainboard-listed MYP has agreed to sell freehold commercial building ABI Plaza in Tanjong Pagar to Artemis Ventures for $200 million.

This comes after its fully-owned subsidiary Grace Shine has inked a conditional sale and purchase agreement (SPA) with Artemis, a Singapore-incorporated investment holding firm that is linked to a private fund managed by CapitaLand Fund Management, reported The Business Times (BT).

With a total net lettable area of around 92,498 sq ft, the 12-storey office tower at 11 Keppel Road has four car-park levels as well as an average floor plate of about 12,500 sq ft per floor.

Completed in 1994, the property stands to benefit from the central business district incentive scheme of the Urban Redevelopment Authority.

In an SGX filing, MYP revealed that the property will be sold on an “as is, where is” basis as at the SPA’s date, “subject to and with the benefit of tenancies, leases, licences and/or occupation agreements that are subsisting” at the completion of the deal.

Grace Shine acquired the office building in 2011 for $175 million. Subsequently, MYP acquired Grace Shine in two tranches in 2013 and 2015, and the total cost of acquisition attributable to the building was $165.8 million.

The BT report noted that while the latest deal price is around 20.6% higher than the cost of acquisition, it was 23.1% lower than the $260.1 million market value of the property as at 31 March.

Teho Property Consultants carried out the latest independent valuation of ABI Plaza using the market comparison and capitalisation of income methods. It was commissioned by MYP as part of the group’s annual valuation of its portfolio of investment properties.

MYP noted that the consideration for the proposed disposal took account, among others, the market value of the property, the prevailing economic conditions affecting the property market as well as the offers received by MYP.

In June, ABI Plaza was put up for sale carrying a guide price of more than $280 million. However, when the expression of interest exercise for the property closed on 30 July, only a few parties reportedly made submissions, all of which were below $200 million.

BT reported that the CapitaLand-managed private fund later emerged as the frontrunner for the office tower at around $206 million. It then entered into exclusive due diligence.

MYP explained that the proposed disposal is in line with the efforts of the group to maintain a strong balance sheet with adequate resources for future investment needs for long term and sustainable growth.

In view of the uncertainty in the global economy and property market due to Covid-19 pandemic, the sale will enable the group to unlock the underlying value of the property and “redeploy the proceeds to potential higher-yielding assets to optimise returns to shareholders of the company”, said MYP in the SGX filing.

MYP intends to use the net proceeds of the disposal, which is estimates to be $197.5 million, towards general working capital and repayment of bank loan.

The proposed disposal is subject to either the approval of MYP shareholders at an extraordinary general meeting (EGM) to be convened, or a waiver from the Singapore Exchange from the requirement to do so, within 16 days from the date of the SPA.

Once successful, the disposal’s completion is expected to take place on the later of four weeks from the date of the SPA, four weeks from the waiver’s date, or two weeks from the date of the EGM.

MYP said ABI Plaza’s net tangible asset value and book value each stand at around $260.1 million. For FY2020, pre-tax net loss attributable to the building was around $429,000.

As such, the proposed disposal would amount to a “book” loss on disposal of around $60.1 million, although the actual “cash” profit from the disposal will be $34.2 million based on the historical cost of acquisition.

Source: CommercialGuru, 29 Sep 2020