CapitaLand sells two Kallang properties

Group now left with another two S'pore industrial assets in its portfolio

CAPITALAND has agreed to sell two of its industrial properties in Kallang for a total of $68 million to construction and industrial property development group Chiu Teng.

The move, which is part of a strategy to divest non-core assets, leaves CapitaLand with just two industrial properties - Corporation Place in Jurong, in which it has a 75 per cent stake, and Technopark@Chai Chee, which it fully owns.

BT reported in November last year that the property giant was believed to be looking to sell its four industrial properties in Singapore either individually or as a portfolio.

Technopark had a book value of $210 million at end-2008. Corporation Place was understood to be worth about $80 million at end-June 2009.

A CapitaLand spokeswoman said: 'We will continue to look into the possibility of divesting Corporation Place and Technopark at the appropriate time, for the right price and when target returns are met. However, as of now, we have no definitive plans for their sale.'

CapitaLand said in a news release yesterday that it expects to book a gain of about $19.2 million on the completion of sale of the two leasehold Kallang properties, which is expected to be next month.

Had the sale been effected on Jan 1, 2009, CapitaLand's earnings per share for the nine months ended Sept 30 would have increased almost 10 per cent, from 4.1 to 4.5 cents.

CapitaLand said yesterday the book value at Sept 30, 2009, of Kallang Bahru Complex (KBC) was $28.9 million and that of Kallang Avenue Industrial Centre (KAIC) was $19.4 million.

Colliers International brokered the sale of the two properties through an expression-of-interest and tender process that ended last month. Chiu Teng was the highest bidder.

Bidders had to make offers for the two assets together, said Colliers managing director Dennis Yeo.

'The properties have redevelopment potential,' he said. 'Under Master Plan 2008, the sites are zoned for Business 1 use with a plot ratio of 2.5 plus a bonus plot ratio of 0.5 for white uses such as offices, shops and showrooms.'

KAIC, which is on a site with a remaining lease of about 65 years, comprises four blocks of two-storey light industrial factory space occupied by SMEs such as carpentry, printing and engineering workshops.

KBC is a nine-storey flatted warehouse with total net lettable area of about 170,000 square feet. It is on a 109,000-sq-ft site with a remaining lease of about 68 years. The current occupancy rates for KBC and KAIC are 97 per cent and 82 per cent respectively.

CapitaLand Commercial CEO Ee Chee Hong said: 'This sale is in line with our active portfolio management strategy which includes divesting non-core assets. The current positive market sentiment provided us a window of opportunity to unlock the value of KAIC and KBC through divestment.

'Proceeds from the sale will be redeployed to new investments that will enhance our presence in our core office business, and for expansion in high-growth overseas markets.'

Source: Business Times, 5 Nov 2009