Friday, October 23, 2009

OUE sells 21 Angullia Park for $283m to China Sonangol

OVERSEAS Union Enterprise (OUE) has sold its freehold residential site at 21 Angullia Park for $283 million, which will result in a profit of about $19.1 million.

The buyer is China Sonangol Land, a relatively unfamiliar name in the property market here. It is part of China Sonangol International, a Hong Kong- based group which also invests in oil, gas, minerals and reconstruction projects in Africa and Latin America.

According to CB Richard Ellis (CBRE), who brokered the deal, this could be the largest private residential land transaction since the $435 million sale of Westwood Apartments in 2007.

Formerly known as The Parisian, 21 Angullia Park has a site area of 49,113 square feet. The purchase price of $283 million works out to about $2,058 per sq ft per plot ratio (psf ppr).

CBRE estimates that this could lead to a breakeven price of $2,500-$2,600 psf and a selling price of around $3,500 psf, depending on when the site is launched.

OUE bought the site en bloc for $228.1 million in December 2006. According to CBRE investment properties executive director Jeremy Lake, the developer paid another $23 million as development charge and differential premium. It also incurred expenses for demolition and piling works, and in obtaining planning approval.

Based on OUE’s June 30 financial report, the site was valued at $261.1 million. It has planning approval for a 36-storey project comprising 52 three- and four-bedroom units and two penthouses.

With the deal, China Sonangol will take over OUE’s interest in its unit OUE (Angullia), which had a negative net tangible asset value of $24.4 million as at June 30.

China Sonangol will also take over $123.8 million in loans from OUE to OUE (Angullia). In addition, it will pay Standard Chartered Bank $164.5 million for the full discharge of OUE (Angullia)’s liabilities and the release of related security.

Assuming that the deal had been completed on Jan 1 last year, OUE’s earnings per share for FY2008 would have been 31 cents, up from 21 cents.

‘The transaction presents the group with an opportunity to review its financing strategy for its property development business segment by disposing of the Parisian and focusing its resources on the Grangeford, the larger of the two,’ OUE said yesterday.

OUE bought The Grangeford through a $625 million collective sale in 2007. It said it intends to launch the site ‘in due course’, and would require funds to plan this development.

Meanwhile, the successful sale of The Parisian is a positive sign for the luxury property market here, CBRE’s Mr Lake said. He understands there was at least one other overseas developer strongly interested in the site, and this shows that there are foreign players keen to participate in the market’s pick-up.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak noted that another potential collective sale site, Laguna Park, also drew interest from a foreign- owned company.

He reckoned these overseas firms could have profited from their markets and are looking for business opportunities elsewhere. With the launch of the integrated resorts (IRs) next year, these companies could be ‘positioning themselves for the potential rally in the luxury sector next year’.

Source: Business Times, 23 Oct 2009

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