Ho Bee Land Divest Properties In Rush To Refinance £718mil Purchase Of The Scalpel
UNITED KINGDOM – Ho Bee Land is offloading properties in its home market after investors raised concern over the Singapore-based developer ability to repay significant debts following its £718 million (back then S$1.3 billion) acquisition of The Scalpel office tower in London in early-2022, reported Mingtiandi on Wednesday evening (15 March, SGT).
The developer announced on the Singapore Exchange (SGX) that it has entered into a deal to divest two freehold industrial buildings – 12 Tannery Road and 31 Tannery Lane – in Geylang for S$115 million. The transaction is expected to be completed by June 2023.
While the selling price represents a premium of almost 70 percent from the asset’s independent combined valuation of S$67.9 million as at the end of December 2022, market watchers commented that the industrial assets are pretty valuable as they’re freehold and the Singapore government has a tight control over state-owned industrial sites.
“Freehold industrial properties tend to stand out as a flexible asset class, given that there are minimal restrictions in the acquisition process,” Colliers’ Executive Director & Head of industrial services Lynus Pook told Mingtiandi.
“From the view point of capital preservation, freehold assets tend to have an upper hand as historical trends have shown there is capital appreciation for this asset class,” he added.
The sale of the industrial properties was announced just five days after the developer’s CEO Nicholas Chua, reassured its stockholders that Ho Bee was finalising documents for a S$810 million term loan to repay the S$930.8 million bridge loan used to fund its acquisition of The Scalpel, which was ranked as one of the biggest deals for a single building in the UK last year.
“The disposal is part of the group’s capital recycling strategy and is in its normal course of business,” said Ho Bee, adding that it’s poised to record a S$47.1 million gain from the divestment of 12 Tannery Road and 31 Tannery Lane.
The sale comes shortly after stockholders reacted to Ho Bee’s latest financial results posted on 27 February by asking about the developer’s capacity to settle a huge amount of current liabilities to the tune of S$1.23 billion that is due within 12 months from the 31 December end of its present financial year. Last month, Ho Bee Land only had about S$327.4 million in cash.