PROPERTY developer Oxley Holdings announced on Tuesday that it had signed a deal to sell Chevron House for up to S$1.025 billion, just 16 months after acquiring the prime office building in Raffles Place for S$660 million.
Oxley said that on April 29, it entered into a sale-and-purchase agreement (SPA) with Golden Compass (BVI) for the latter to buy the entire interest in its wholly-owned subsidiary Oxley Beryl, and take over the existing bank loans for an aggregate value of up to S$1.025 billion.
Oxley Beryl owns Chevron House, a 32-storey commercial development comprising 27 levels of office space and a five-storey retail podium; the building's existing net lettable floor area (NLA) is about 261,280 sq ft.
Oxley's corporate presentation in February revealed that the plan is to increase the building's NLA by 43 per cent to about 374,165 sq ft, subject to approval from the authorities.
The S$1.025 billion sale price works out to about S$2,739.43 psf on the increased NLA. The property sits on a site with a 99-year leasehold tenure from December 1989, leaving nearly 70 years on the lease.
Oxley said the proposed sale is expected to have a positive impact on its net tangible assets per share and earnings per share for the current financial year ending June 30.
It will complete the alterations, additions and asset enhancement works, begun on March 1 on the property, before the final completion of the proposed sale.
The consideration was arrived at through arm's-length negotiations, taking into account the enterprise value of Oxley Beryl, said Oxley.
Under the deal, Golden Compass is to pay S$210 million upon the first completion of the proposed sale, after which 82.35 per cent of the issued and paid-up capital of Oxley Beryl, among others, will be transferred to Golden Compass.
The buyer is to then pay the balance of the consideration and discharge Oxley Beryl's bank loans upon the final completion of the sale, after which the remaining shares in Oxley Beryl will be transferred to Golden Compass. The final completion will take place after the works are done and after the retail and banking units there have been divested.
The Business Times understands that the buyer will take over the S$450 million in borrowings that Oxley had taken out to finance its 2017 acquisition of Chevron House. The sale will thus reduce Oxley's debt by that amount.
The SPA also provides for certain retention sums which will be released when the relevant conditions are fulfilled. Oxley did not disclose these sums or conditions.
Completion of the proposed sale is subject to certain conditions precedent, including shareholders' approval if required by the Singapore Exchange (SGX).
Golden Compass is wholly-owned by the US-based real estate fund AEW. BT had reported in March that Oxley had accepted an expression of interest from AEW to acquire Chevron House.
As one of Singapore's most highly-geared developers, Oxley has been in deleveraging mode of late. It told BT in March that it aims to gradually reduce its net gearing to one time by end-2019, from 2.55 times net debt-to-equity as at end-2018.
It has S$300 million in bonds due in November 2019 and S$150 million in bonds maturing in May 2020.
To pare down its debts, Oxley is focused on selling assets and a quick turnover for completed projects.
In Singapore, aside from Chevron House, it is also looking to sell its Novotel and Mercure hotels on Stevens Road. Oxley has hired exclusive agents to sell the hotels, after having called off a S$950 million sale in March. The company has received interest for the hotels from parties in Hong Kong, BT understands.
Oxley shares closed at S$0.33, up three Singapore cents on Tuesday.
Source: Business Times, 6 May 2019