LOW Keng Huat (Singapore) Limited (LKHS) said that it is acquiring a 20 per cent stake in AXA Tower as part of the consortium led by Perennial Real Estate Holdings Limited (PREH) to acquire the property for an aggregate S$1.17 billion or S$1,735 per square foot (psf) of net lettable area (NLA). LKHS said on Monday that its wholly owned unit Huatland Development Pte Ltd (HDPL) executed a letter of participation for the acquisition of a 20 per cent stake in an entity that will be acquiring AXA Tower located at Shenton Way. "The transaction represents an opportunity for the LKHS Group to acquire a significant equity stake in a property which provides a strong upside potential," the group said.
The total purchase consideration by the consortium will be funded through senior borrowings and proceeds from the issuance of investment securities by a special purpose vehicle, which will acquire all the shares in Raffle AXA Tower Pte Limited - the sole owner of AXA Tower.
HDPL's 20 per cent stake of the investment securities subscription amounts to S$75.6 million, which it intends to satisfy in cash.
Currently, AXA Tower has unutilised plot ratio that translates to an additional gross floor area of more than 210,000 sq ft. The property is also allowed to house medical suites amounting to no more than 32,000 sq ft. The consortium will explore ways to utilise the additional gross floor area and permissible medical suite usage to maximise the value of the asset. The strata sale of the office space at the prime property will also be explored.
In conjunction with the proposed investment, PREH will be appointed the asset manager, property manager and project manager for AXA Tower.
Based on the audited financial statements of Raffle AXA Tower as of Dec 31, 2013, its book value and the net tangible asset value of its issued shares is S$458.6 million.
Source: Business Times, 3 Feb 2015