LKH tie-up exercises options to buy Westgate Tower

20140124-bt-lkh-tie-up-exercise-options-buy-westgate-tower A 60-40 consortium comprising Sun Ventures Homes and mainboard-listed Low Keng Huat (Singapore) has exercised its options to buy Westgate Tower from CapitaLand for $579.4 million.

The tie-up had been granted options to acquire the office strata units on levels 6 through 25 in the 99-year leasehold office tower earlier this month, and exercised those options yesterday.

The purchase of Westgate Tower is being made through the consortium's two associated companies: Westgate Commercial Pte Ltd and Westgate Tower Pte Ltd. A 5 per cent option deposit totalling some $29 million has already been paid.

The purchase price for Westgate Tower works out to about $1,900 per square foot based on its net saleable area of about 305,000 sq ft. Low Keng Huat has indicated that the deal was done for long-term investment purposes.

Located next to Jurong East MRT station, Westgate Tower is the office component of the Westgate integrated development (which also includes the Westgate shopping mall) and is currently under development. It is expected to be completed by the end of this year.

CapitaLand expects to book a net gain of about $90 million upon the strata offices obtaining their temporary occupation permit. This will not have a material impact on the property giant's net tangible assets (NTA) per share, but would have boosted earnings per share (EPS) for the period ended Sept 30, 2013 from 16.6 cents to 18.7 cents assuming the deal was completed on Jan 1.

Low Keng Huat said the purchase of Westgate Tower should not have a material impact on both its NTA per share and EPS for the current financial year ending this month.

Shares in CapitaLand fell one per cent to $2.87 yesterday, while the counter for Low Keng Huat dropped 0.7 per cent to 68.5 cents.

Source: Business Times, 24 Jan 2014