OUE in preliminary talks to sell site of The Parisian

Its shares fall 31% to close at $10 after company updates SGX on the move

OVERSEAS Union Enterprise (OUE) is considering the sale of 21 Angullia Park – a freehold residential site formerly known as The Parisian – which it bought en bloc for $228.1 million in 2007.

The company said yesterday it is ‘engaged in preliminary discussions in relation to the possible disposal’ of the site. It added that it is reviewing its overall financing strategy.

‘As at the date of this announcement, there has been no agreement of definitive terms and there is no certainty that such discussions and review will proceed beyond preliminary stages or result in any transaction,’ it said.

OUE was responding to a Singapore Exchange query on the counter’s movement last Friday. OUE shares surged 57 per cent or $5.27 to close at $14.50 – a high not seen in more than a year.

After the update yesterday, the shares tumbled 31 per cent or $4.50 to $10.

OUE bought 21 Angullia Park near Orchard MRT Station when the property market – especially the high-end sector – was booming. Several developers were gunning for sites via collective sales.

The price of $228.1 million worked out to $1,735 per square foot per plot ratio (psf ppr) – a record on a psf basis for a while. This took into account an estimated $10.5 million development charge. Based on an earlier report, the breakeven cost for the project could be around $2,200 psf.

The company had plans to launch a luxury condominium – comprising mostly large units – on the site in early 2008.

But the financial crisis last year abruptly froze activity in the property market and the high-end sector was particularly hit.

So far, OUE has not launched 21 Angullia Park.

In August, the company posted a net loss of $47.8 million for the second quarter ended June 30. It said the weaker result was mainly due to the recognition of impairment losses of $52.2 million for two development properties, The Parisian and The Grangeford.

In June, OUE said its units had obtained a secured term loan for up to $300 million. The facility is secured by, among other things, first legal mortgages over 21 Angullia Park, 25 Leonie Hill, The Grangeford, fixed and floating charges over all present and future assets of the borrowers, and the assignment of insurance in respect of the properties.

The property market has been on the mend for the past few months. For instance, transaction prices at Four Seasons Park near 21 Angullia Park have been rising. A caveat was lodged in August for a 3,821-sq-ft apartment at $2,277 psf, whereas a unit of the same size went for $1,701 psf in February.

Source: Business Times, 6 Oct 2009