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Farrer Court collective sale fetches hefty $1.3b
CapitaLand-led deal chalks up highest sum paid for an en bloc sale
By: Kalpana Rashiwala
[SINGAPORE] A whopping $1.3388 billion.
That's the price that a consortium - comprising CapitaLand, Hotel Properties, US-based Wachovia Development Corporation and possibly a foreign fund - is paying to buy Farrer Court.
According to Credo Real Estate, which brokered the sale, the sum is the highest ever fetched for a collective sale to date, and is possibly also the biggest ever residential land transaction in Singapore.
The unit land cost to the developers for the leasehold District 10 site works out to $762 to $783 psf of potential gross floor area. This is inclusive of two payments the buyers will have to make to the state - an estimated $275 million differential premium for enhancing the intensity of the site's use to a 2.8 plot ratio, and a further sum of about $175 million to $225 million for topping up the site's lease from a remaining term of about 69 years to 99 years.
The privatised HUDC estate has 618 existing apartments of two sizes - 1,615 sq ft and 1,453 sq ft. Their owners will get respective sums of $2.238 million and $2.122 million per unit. Based on the apartments' existing strata areas, the proceeds to owners work out to $1,386 psf and $1,460 psf respectively. Before work on a collective sale at Farrer Court began in Q2 last year, the apartments were changing hands at about $500,000 to $600,000 each. The sums that the owners will receive are about 11.5 per cent higher than the sums they would have received based on the $1.2 billion reserve price in the collective sale agreement (CSA).
The deal is subject to approval from the Strata Titles Board. Owners with about 81 per cent of share values have signed the CSA so far. Rodyk & Davidson is representing the majority owners.
Industry players reckoned the construction costs, fees, interest and holdings costs for the developers could amount to a further $1 billion to $1.1 billion - resulting in an all-in investment of about $2.8 billion to $2.9 billion for the buyers.
Market watchers said the breakeven cost for a new condo on the site may be about $1,200 to $1,300 psf. At 838,488 sq ft, Farrer Court also has the biggest land area for a collective sale site transacted.
CapitaLand will lead the consortium buying Farrer Court, with a 35 to 40 per cent stake. HPL said its stake is expected to be 20 to 30 per cent.
CapitaLand said the plan is to redevelop the site into a new 36-storey condo with about 1,500 generously-sized apartments. The project will be ready for launch in first-half 2009. CapitaLand is the lead development manager.
'Existing owners will be given the first right of refusal to purchase units in the new development, similar to what was extended to former owners of Char Yong Gardens and the site for The Seafront on Meyer,' CapitaLand Group president and CEO Liew Mun Leong said yesterday. 'The Farrer Court site is a large-sized property that will give us the opportunity to work with world renowned architects who have an international portfolio, to create a unique landmark project.'
The transaction is expected to be completed by Q2 2008.
CapitaLand said its latest acquisition of Farrer Court will increase the size of the residential landbank the group is managing in Singapore to about 5.5 million sq ft of potential gross floor area.
The tender for Farrer Court, which closed on Wednesday afternoon, attracted one other bidder - believed to be GuocoLand, which earlier this year bought the nearby freehold Leedon Heights site for $835 million or $1,062 psf per plot ratio.
Farrer Court is the only private residential site in the Farrer Road and Holland Road area accorded a high plot ratio of 2.8 and a maximum height of 36 storeys. Most of the surrounding sites are designated for either landed housing or low or medium-rise developments.
When signing of the collective sale agreement began in late September last year, the initial proposed reserve price was $700 million. By January this year, this had been revised upwards to $840 million, with a final revision to $1.2 billion in March.