Published February 22, 2007

Anderson 18: Wing Tai, Hong Leong tie-up seen

Any en bloc deal likely to be concluded only after revised DC rates take effect


HONG Leong Group, which includes listed City Developments, and Wing Tai are said to have teamed up to bid for the Anderson 18 collective sale site which has a $475 million reserve price.

Anderson 18's sales committee is understood to have raised their reserve price to $475m

However, any deal is not expected to be concluded until revised development charge (DC) rates take effect from March 1.

Initially, Anderson 18's owners had agreed to a reserve price of about $427 million (or about $1,500 psf of potential gross floor area including DC) for their freehold site when the tender for the property was launched in early December.

But following news of the collective sale of The Parisian at Angullia Park at a record price of $1,735 psf per plot ratio inclusive of DC, Anderson 18's sales committee is understood to have raised their reserve price to $475 million.

Inclusive of an estimated DC of about $39 million which the buyer of Anderson 18 will have to pay to the state for redeveloping the 112,095 sq ft freehold site into a new condo with a 2.8 plot ratio (ratio of potential maximum gross floor area to land area), the $475 million revised reserve price works out to a unit land price of about $1,637 psf per plot ratio.

The higher the new March 1, 2007 DC rate for the location, the higher will be the total unit land price to the successful bidder of Anderson 18. And this will have a bearing on whether CDL/Wing Tai - or any other parties for that matter - will agree to give Anderson 18 buyers their price.

Interestingly, CDL and Wing Tai are said to have initially bid separately when the tender for the site closed on Jan 25. Far East Organization and Pontiac Land Group are also said to have bid during the tender. However, all bids came in below the revised reserve price of $475 million.

Once the March 1, 2007, DC rates are announced, market watchers would not be surprised if Far East and Pontiac re-enter the race for Anderson 18, along with fresh parties.

An interesting point to note is that Wing Tai bought the Ardmore Point site, just behind Anderson 18, in October last year for $1,369 psf per plot ratio including a $31 million DC.

Market watchers suggest the Hong Leong/Wing Tai tie-up for any purchase of Anderson 18 may also extend to the Ardmore Point plot, that is, Hong Leong could also take a stake in Wing Tai's Ardmore Point plot.

This would help the two developers enjoy a lower average land cost for the two plots which, if combined, add up to 172,628 sq ft of land area - big enough to be redeveloped into a new condo with about 240 units averaging 2,000 sq ft. And a new project on the combined site would also boast a more prestigious address at Ardmore Park.

This would not be the first time Hong Leong Group and Wing Tai would be teaming up. In May 1995, they joined forces to buy one of The Claymore's two blocks for $273.2 million or $1,260 psf of strata area from the project's developer, Japan's Tokyu group. They later resold apartments in the block on a piecemeal basis.

In any case, both developers are familiar with the Draycott location - Wing Tai developed the Draycott 8 condo and Hong Leong is developing The Tate Residences.