Far East Shopping Centre gets offer of under S$900 million for collective sale, below guide price

An earlier deal to acquire the building for about S$910 million did not go through

May 20, 2024

Far East Shopping Centre, the Orchard Road retail property put up for en bloc sale last year, has received an offer under S$900 million, at a price that is slightly more than 5 per cent below its guide price of S$928 million, The Business Times understands.

The offer comes in the wake of a fresh tender called in April, after an earlier deal to acquire the building for about S$910 million came undone. The second tender had closed on May 2 without bids.

An extraordinary general meeting has been called for the building’s owners to sign a supplementary agreement to lower the price on the collective sale. The meeting will be held on May 31.

The process requires 80 per cent of unit owners to consent to the lower price offered.

Marketing agent CBRE declined to confirm the offer price or the identity of the prospective buyer.

The 999-year leasehold property was first marketed in July 2023, and bagged a conditional offer in September 2023 from Glory Property Developments, a company linked to Chinese businessman Du Shuanghua’s Bright Ruby Resources.

The deal was subject to conditions including approval from the Urban Redevelopment Authority (URA) for up to 20 per cent more gross floor area (GFA) under the Strategic Development Incentive (SDI) scheme, designed to encourage renewal of ageing properties in key city areas.

The redevelopment proposal submitted was rejected by URA on Jan 24, on grounds that “it constitutes only a single development site and thus does not fulfil the eligibility criteria for the SDI scheme”. One of the conditions for SDI approval is that the developer engage in a joint integrated redevelopment with adjacent sites.

If it had not fallen through, the Far East Shopping Centre deal, said to be struck at around S$910 million, would have been the largest collective sale of 2023.

Based on the maximum buildable GFA of 290,574 square feet (sq ft) under the SDI scheme, assuming full commercial usage and including a Land Betterment Charge, the S$928 million guide price worked out to S$3,421 per sq ft per plot ratio (psf ppr), CBRE said earlier.

Without the bonus GFA, the asking price would have translated to a higher psf ppr price for the land, which market watchers reckoned would not have been palatable to developers.

Built in 1974, Far East Shopping Centre comprises a five-storey retail podium, a 10-storey office block and a two-storey basement. Around 30 per cent of the property’s share value is still owned by Far East Organization, which had developed it. Next to it are Bonvests Holdings’ Liat Towers and Wharf Estates Singapore’s Wheelock Place.

Along the same stretch of Orchard Road are buildings owned by Ong Beng Seng’s Hotel Properties, which were bundled together in a redevelopment proposal approved by the URA in August last year. These include the voco Orchard Singapore hotel, Forum The Shopping Mall and HPL House.

https://www.businesstimes.com.sg/pro...ow-guide-price