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Suntec Real Estate Investment Trust (Suntec REIT) has sold Park Mall in Orchard Road for S$411.8 million, the REIT announced in an SGX filing dated 29 June.
The buyer, Park Mall Pte Ltd, is a joint venture (JV) firm where Suntec has a 30 percent stake. The remaining 70 percent are shared equally by developer Singhaiyi and its controlling shareholder Gordan Tang.
Located within Singapore’s iconic shopping belt, Park Mall is an integrated office, lifestyle and home furnishing mall that is more than 40 years old, with remaining land lease tenure of 53 years. Park Mall was acquired by Suntect REIT in 2005 for S$245.1 million.
“The divestment is in line with Suntec REIT’s proactive approach in reviewing and evaluating asset plans of its portfolio. The divestment will also allow Suntec REIT to free up capital, providing greater financial flexibility,” said Yeo See Kiat, CEO of its manager, ARA Trust Management.
Following the divestment, the JV will redevelop Park Mall into a commercial project consisting of two office blocks with an ancillary retail component. The property’s lease term will also be refreshed to 99 years.
“The redevelopment will unlock the underlying value of the property by further enhancing the gross floor area of the site. In addition, Suntec REIT will have the ability to own part of the redeveloped property by acquiring one office block upon completion,” Yeo added.
Based on a report from Credit Suisse, a portion of the proceeds will be used by the trust to fund its share of redevelopment cost of up to S$115 million, while the rest will be redeployed for other purposes such as repaying loans.
As for the redevelopment, SingHaiyi will provide project and development management services, while ARA will be the asset and property manager for the redeveloped mall. The latter will also provide consultancy services on the JV firm’s exit strategies.
Image Source: Park Mall website.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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