Another potential deal for Midlink Plaza site?

20140910-bt-another-potential-deal-for-midlink-plaza-site-pic ANOTHER deal could be brewing for the sale of the former Midlink Plaza site in Middle Road, after an earlier proposal to inject the property into listed nightspot operator LifeBrandz as part of a reverse takeover deal vaporised recently.

This time around, China's Nanshan Group - which is involved in diversified businesses ranging from aluminium and golf courses to education and wine - is said to be in negotiations to buy the property on a completed basis.Talk in the market is that a price of about S$270 million is being discussed. The site, which has a balance lease term of about 65 years, is being redeveloped into a 396-room boutique hotel, with some strata retail space.

Nanshan is understood to be the Chinese party that last year acquired the Park Regis Singapore hotel along New Market Street/Mer-chant Road for around S$250 million. It has also been taking part in Singapore state land tenders. It was the fourth highest bidder at last month's tender for a commercial and residential site next to Potong Pasir MRT Station. It also participated, again unsuccessfully, in last week's tender for an executive condominium site in Choa Chu Kang Drive.

Midlink Plaza is owned by 122 Middle Investment Pte Ltd, whose shareholders include Lian Beng Group, Centurion Properties, coffeeshop operator Chang Cheng Group and a vehicle controlled by K Box chain owner Jason Lee.

Earlier this year, a memorandum of understanding (MOU) had been inked proposing the injection of 122 Middle Investment into LifeBrandz as part of a reverse takeover deal. Last month, however, LifeBrandz said in regulatory filing with Singapore Exchange that the company and the parties had not been able to arrive at a mutually agreeable structure and had hence agreed to terminate the MOU. That deal is said to have valued the Middle Road property at about S$285 million.

It remains to be seen if a sale of the property to Nanshan Group materialises. Market watchers reckon what is being negotiated could potentially be a complex arrangement with profit upside for the vendors and income guarantees thrown in.

The Lian Beng-led consortium acquired Midlink Plaza, which was a nine-storey strata office and retail building, through a collective sale in 2011, brokered by Credo Real Estate, now part of JLL. The price of S$126.8 million worked out to slightly under S$1,000 per square foot per plot ratio, according to earlier media reports.

The consortium succeeded in getting approval to redevelop the 22,875 sq ft site into a hotel project with retail space, but the authorities did not agree to top up the lease for the site - which had a balance lease term of around 68 years at the time of the transaction - to a fresh 99-year term. Currently, the balance lease on the site is about 65 years.

Urban Redevelopment Authority's written permission for the redevelopment project granted a year ago is for a 14-storey hotel project with 396 rooms and about 33,600 sq ft gross floor area of retail space. BT understands the project will have roughly 20,000 sq ft of strata retail space.

Source: Business Times, 10 Sep 2014