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Published October 12, 2011

Royal Brothers reweaves a family property web

Swaps involving over $1b of properties between Raj and Asok Kumar pave way for succession planning

By KALPANA RASHIWALA


(SINGAPORE) The Royal Brothers group, controlled by brothers Raj Kumar and Asok Kumar Hiranandani, is being restructured involving a swap of assets estimated to be worth over $1 billion between the two men, say sources.

The move is said to be aimed at succession planning, allowing their respective sons, Kishin and Bobby, flexibility to grow according to their own business styles.

Market watchers note that the two sides have bid against each other for hotel sites at state tenders in recent years, but the restructuring and asset swap at Royal Brothers group is said to be amicable.

The exercise covers various properties across Singapore, including the Royal Brothers Building, Cuppage Terrace and strata units in Lucky Plaza, Far East Plaza and other Orchard/Scotts roads buildings, Peninsula Plaza and Queensway Shopping Centre.

Mr Asok Kumar is said to be selling his half share in the 999-year leasehold Royal Brothers Building at Malacca Street near Raffles Place MRT Station to RB Capital, a real estate and hotel outfit started by Mr Raj Kumar's son, Kishin. The other half in the building will continue to be held by Mr Raj Kumar.

Royal Brothers bought the asset, formerly known as DBS Securities Building, for $51 million in 2001. The 16-storey building is currently 100 per cent occupied. DBS Bank is the major tenant.

The property has redevelopment potential. It stands on a land area of 7,382 sq ft and has gross floor area of 84,077 sq ft, reflecting a plot ratio of 11.39, according to an earlier media report.

Under Master Plan 2008, the site is zoned for commercial use and is zoned for 12.6+ gross plot ratio. The site would qualify for an additional 10 per cent plot ratio based on the site's proximity to the Raffles Place MRT Station. This would take the plot ratio to 13.86. The property may also qualify for additional gross floor area under other incentives, say market watchers.

They reckon the site can be redeveloped to over 40 storeys.

A redevelopment, when it eventually takes place, will help to rejuvenate that stretch of the old financial district, say analysts.

Another asset in which stakes will change hands is Cuppage Terrace, a row of 17 conservation shophouses next to The Centrepoint mall sitting on a site with 99 years lease from March 31, 1989.

Market watchers reckon the asset could be worth more than $100 million today.

Mr Raj Kumar is said to have taken over his brother's half stake in this asset, assuming full control. However, market watchers reckon RB Capital could later take a stake in Cuppage Terrace.

At Lucky Plaza on Orchard Road, Mr Asok Kumar is believed to be buying his brother's half stake in a substantial number of shop units in the basement to gain full ownership of these units. Mr Raj Kumar will acquire Mr Asok Kumar's 50 per cent stake in strata units scattered above the basement.

At Far East Plaza along Scotts Road, Mr Raj Kumar is buying Mr Asok Kumar's half stake in shop units all over the building. Hence Mr Raj Kumar will take his stake in the units to 100 per cent from 50 per cent.

Market watchers suggest the two men can also be expected to neaten their ownership of strata units in other buildings in the Orchard/Scotts roads belt with Mr Asok Kumar gaining full control of some units and Mr Raj Kumar doing likewise for other units in these buildings. The same is expected at Peninsula Plaza, near City Hall MRT Station, where the duo own some units in the basement and on level 1.

The brothers will continue to jointly own their stakes in a few properties with potential for collective sale, including the freehold Queensway Shopping Centre, where they are said to own about 20-30 per cent of share values in the retail space.

While the Royal Brothers entity will remain for the purpose of continuing ownership of jointly-held properties, word on the street is that going ahead, the two sides are likely to use different variations of the name Royal to conduct their separate businesses.