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Perennial-led consortium to fully divest stake in Chinatown Point Mall for $520 mil; expects 2Q to turn profitable

PC Lee

SINGAPORE (Apr 22): Perennial Real Estate Holdings, together with its consortium of investors, is fully divesting its 100% stake in entities that own the retail mall and four strata office units in Chinatown Point, for a consideration of $225 million.

The buyer is PAR Chinatown Point, a wholly-owned vehicle of a fund which is managed by Pan Asia Realty Advisors (Singapore). a joint venture between Mitsubishi Estate Co, and CLS.

The consideration was based on an agreed property price of $520 million, which translates to $2,450 psf on total net lettable area (NLA) of Chinatown Point Mall.

Separately, Perennial has announced a loss warning for the 1Q19 ended March, due to weaker operating performance of newly operational assets and higher financing costs.

However, the group expects to turn profitable in 2Q19 on completion of the disposal of its stake in Chinatown Point Mall.

Further details of the group’s performance for the first quarter will be disclosed when the group releases its 1Q 2019 financial statements in May.

Perennial is the largest investor in Chinatown Point Mall with a 50.64% effective interest and its proportionate stake of the net proceeds to be received is expected to be $125.3 million, subject to final adjustments. The other investors of Chinatown Point Mall include Singapore Press Holdings, FPTM and some other private investors.

See: Perennial Real Estate's enlarged stake in Chinatown Point a welcome addition

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Pua Seck Guan, CEO of Perennial, says, “The transaction is a testament to Perennial’s ability in identifying quality assets, creating value via enhancement initiatives, and ultimately unlocking value via divestment for all stakeholders. The divestment is also aligned with Perennial’s active capital recycling strategy to rebalance its portfolio and maximise returns for shareholders.”

Subject to conditions, the sale is expected to close on June 6. Following the completion, Perennial’s wholly-owned subsidiary, Perennial (Singapore) Retail Management, will continue in its role as the property manager of Chinatown Point Mall.

In July 2010, Perennial Real Estate, now a wholly owned subsidiary of Perennial, syndicated a consortium of investors to form PCP LLP to acquire Chinatown Point Mall at a total purchase consideration of $250 million. Thereafter, a major redevelopment exercise was carried out costing over $91 million. Since the acquisition, two of Perennial’s wholly owned subsidiaries have been the appointed asset manager and property manager respectively of Chinatown Point Mall.

Shares in Perennial closed 1.5 cents lower on Thursday at 64 cents.