Far East Shopping Centre owners reject lower S$850 million offer; sale falls through

Only 60-odd per cent of its unit owners say ‘yes’ to the bid, which is below the guide price; an 80 per cent mandate is required

Jun 7, 2024

THE second attempt at a collective sale for Far East Shopping Centre has tanked, with the lower offer of S$850 million having failed to get enough backing from unit owners, sources told The Business Times.

This is around 8 per cent lower* (see amendment note) than its guide price of S$928 million.

An extraordinary general meeting was held on May 31 for owners of the strata-titled building on Orchard Road to sign a supplementary agreement to lower the price on the sale. But the fresh offer won the support of only 60-odd per cent of unit owners, below the requisite 80 per cent mandate.

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

The latest sale attempt by owners of the 999-year leasehold property on Singapore’s prime retail belt follows the unravelling of a deal struck in September 2023 to sell the building for about S$910 million.

The prospective buyer then was Glory Property Developments, a company linked to Chinese businessman Du Shuanghua’s Bright Ruby Resources.

That deal had hinged on conditions, such as obtaining approval from the Urban Redevelopment Authority (URA) for up to 20 per cent more gross floor area under the government’s Strategic Development Incentive (SDI) scheme. This scheme is designed to encourage the renewal of ageing properties in key city areas.

But Glory Property’s redevelopment proposal was rejected by URA on Jan 24.

When the building was first put up for sale last July, the S$928 million guide price worked out to a land rate of S$3,421 per square foot per plot ratio (psf ppr). This factored in a land-betterment charge to rebuild up to the maximum buildable gross floor area (GFA) of 290,574 square feet (sq ft) under the SDI scheme; this GFA was 20 per cent more than the site’s development baseline of 242,145 sq ft, assuming full commercial usage.

Without the bonus GFA, the lower offer of S$850 million would have worked out to around S$3,500 psf ppr, based on the maximum GFA currently allowed on the site.

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 developed it. Next to it are Bonvests Holdings’ Liat Towers and Wharf Estates Singapore’s Wheelock Place.

About two weeks ago, City Developments Ltd (CDL) acquired Delfi Orchard, also on Orchard Road, for S$439 million or S$3,346 psf ppr. CDL already owned 84 per cent of units in the freehold building, after having acquired the majority of units there for S$95 million in 1995.

CDL has said that it may explore tapping the SDI scheme in its plans for Delfi Orchard. The group owns several other buildings in the area, including Palais Renaissance, Orchard Hotel and Claymore Connect. The group also holds a stake in St Regis Singapore, Boulevard 88 condominium on Orchard Boulevard, and The Singapore Edition hotel on Cuscaden Road.

Another Orchard area mall put on the market, Scotts Square, has yet to find takers at its S$450 million asking price, which pitches the property at S$3,438 psf ppr.

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

Amendment note: An earlier version of this story gave the offer price at S$880 million, about 5 per cent lower than the S$928 million guide price. BT has since clarified with sources that the offer is S$850 million.

https://www.businesstimes.com.sg/pro...-falls-through