Published September 23, 2009

City Dev buys partner's half-share in Futura JV

Elad Group's stake in Leonie Hill condo firm amounts to $35.1 million


CITY Developments Ltd (CDL) has bought partner Elad Group's half-share in their equal joint-venture company that owns the Futura condo site at Leonie Hill in Singapore, for about $35.1 million.

The two bought the freehold residential property for $287.3 million in October 2006 at $1,179 per square foot per plot ratio.

The cash consideration for the half-share, which was arrived at on a willing buyer, willing seller basis, represents a discounted value of the aggregate capital contributions of Elad Group Singapore to the joint-venture company, K-El Sun Investments, CDL said in a statutory filing with Singapore Exchange yesterday evening.

'Elad remains our partner in the South Beach consortium,' a CDL spokeswoman said in response to BT's queries on the status of the group's other joint venture involving US-based Elad Group, which is owned by Israeli billionaire Yitzhak Tshuva.

In December last year, BT reported that Elad was said to be looking for buyers for its one-third stake in the South Beach project as well as its half-share in Futura.

CDL teamed up with Elad and Dubai World to clinch the plum South Beach site opposite Raffles Hotel at a state tender in 2007 during the property bull run for almost $1.69 billion.

The three hold equal shares in the joint venture.

In November last year, CDL announced a deferment of the project's construction until construction costs ease. The project was originally slated for completion by 2012, although the consortium has up to 2016 to complete the development under the sales terms for the 99-year leasehold plot.

In June this year, Hong Kong developer Nan Fung group emerged as an investor in the South Beach project, subscribing to $205 million of five-year secured convertible notes under a refinancing exercise for a loan on the 3.5-hectare site. CDL also subscribed for $195 million of the notes.

Last month, CDL executive chairman Kwek Leng Beng said construction of the delayed project is likely to begin around Q3 next year, with CDL and Nan Fung probably the ones that will pump in further money.

Elad and Dubai World are likely to be passive investors who may then see their share in the project diluted. 'I think they have other priorities,' Mr Kwek said last month.

The project will have offices, luxury hotels, retail space and residences.

In its announcement yesterday on the Futura transaction, CDL said its fully-owned subsidiary Flair Win Investments has picked up the half-share in K-El Sun Investments from Elad, together with all outstanding shareholder loans granted by Elad to K-El Sun and accrued interest for a total cash consideration of about $35.1 million. Following the deal, CDL has taken full control of K-El Sun.

CDL's spokeswoman said the Futura condo is currently vacant but has not been torn down. 'We are reviewing plans,' she added.

On the stock market, CDL closed 12 cents higher at $10.32.