Lian Beng JV buys Sembawang Shopping Centre for S$248m from CapitaLand Mall Trust

April 19, 2018

The Business Times

Source: Business Times

LIAN Beng-Apricot Sembawang (LBAS) is buying Sembawang Shopping Centre for S$248 million from CapitaLand Mall Trust for S$248 million, a price tag almost the double the suburban mall’s latest valuation.

LBAS is a 50-50 joint venture company of home-grown construction firm Lian Beng Group (Lian Beng), and ApricotCapital, the private investment firm of the Super Group’s Teo family.

The sale is among the largest in value in recent years for a standalone retail mall with an original 999-year leasehold, said Colliers International which brokered the deal.

After a bidding process for Sembawang Shopping Centre, LBAS emerged as the winner with the highest bid, which is almost double the S$126 million latest independent valuation for the property as at Dec 31, 2017.

Lian Beng said its bid price took into consideration prevailing market conditions and the current market prices of properties in the vicinity.

Lian Beng’s purchase price works out to S$1,203 psf for the mall, which has a gross floor area of 206,087 sq ft, and S$1,727 psf based on its total net lettable area of 143,631 sq ft.

Its executive chairman Ong Pang Aik said: “Considering that Sembawang Shopping Centre is a 999-year leasehold property, we think that the purchase price in per square foot (psf) is reasonable.”

With more than 99 per cent occupancy, the plan in the forseeable future is for property investment purpose, or recurring rental collection, Mr Ong added.

Among other terms of sale, Sembawang Shopping Centre is sold subject to existing tenancies and licences. The mall, which is located close to Sembawang and Yishun MRT stations, has among its major tenants Giant, Yamaha Music School, Food Junction and Daiso Japan.

The building, which consists of four retail levels, also has three car park levels with a total of 165 car park lots.

In an earlier filing on Thursday to the Singapore Exchange, Lian Beng noted that the proposed acquisition is in line with one of the group’s core business activities in property investments. It added that this is a good opportunity to participate in a “strategic investment” in which rental returns will augment the group’s earnings.

Mr Ong said in the filing that the firm will continue to diversify its revenue streams in order to mitigate the cyclical nature of the group’s core construction business.

A deposit of S$24.8 million, or 10 per cent of the purchase consideration, has been paid by LBAS upon signing of the agreement. The balance will be paid upon completion of the proposed acquisition, due on or about June 18, 2018. Lian Beng said its proportionate purchase consideration of S$124 million will be funded through bank borrowings or internal resources.

In a separate filing on Thursday morning, CMT said the divestment is expected to generate net proceeds of about S$245.6 million, and a net gain of about S$119.6 million.

CMT added that the divestment will provide it with greater financial flexibility to repay debt, finance asset enhancement works, and for general corporate working capital.

Tony Tan, CEO of CapitaLand Mall Trust Management, said: “The divestment of Sembawang Shopping Centre is in line with our portfolio management strategy of maximising returns for our unitholders. By unlocking the value of Sembawang Shopping Centre at this stage, it will realise the optimal value for CMT’s unitholders. As the mall accounts for only about one per cent of CMT’s total asset value, its sale will have minimal impact on CMT’s financial performance and distribution per unit.”

Upon completion of the sale, CMT’s portfolio will comprise 15 properties, including Tampines Mall and Westgate, located in the suburban areas and downtown core of Singapore.

As at 1.33pm on Thursday, shares in Lian Beng were trading 0.8 per cent higher to S$0.635 apiece, while units in CMT were trading 0.5 per cent higher to S$2.12 per unit.