IOI Prop scraps agreement with Hongkong Land

IOI Properties Group Bhd (IOI Prop) has terminated its agreement with Hongkong Land International Holdings Ltd to jointly develop and manage a land parcel at Central Boulevard in Singapore.

The termination is due to the “non-fulfillment of certain conditions precedent”, said IOI Prop. This confirms a report by The Edge Malaysia weekly in its Feb 26 issue that said some conditions precedent in the contract remained pending at the time of writing.

The process of obtaining longer-term financing also hit a snag, the weekly reported, quoting sources.

But in another report in its March 12 issue, The Edge Malaysia weekly said the developer was believed to have reached long-term financing deals with five banks to the tune of S$1.6 billion (RM4.76 billion).

The five banks are DBS Bank, United Overseas Bank, Bank of Tokyo-Mitsubishi UFJ, OCBC and Sumitomo Mitsui Banking Corp. That leaves another S$300 million in financing that is being negotiated with Bank of China, people familiar with the matter were quoted as saying.

In a filing with Bursa Malaysia yesterday, IOI Prop said the termination would not impact the development of the Central Boulevard site. This is because the group has sufficient in-depth expertise, financial capabilities and track record of other completed projects in Singapore, it said.

The group added that the termination is also not expected to have any material impact on the group’s earnings per share and net asset per share.

The group announced in November 2016 that its unit Wealthy Link Pte Ltd had successfully tendered for the Central Boulevard site for S$2.57 billion. Wealthy Link reportedly paid a deposit of RM2.4 billion for the land.

The plan was to build two office towers with 1.26 million sq ft of leasable space and a retail podium of about 30,000 sq ft on the 1.1ha land located in Marina Bay and the Central Business District of Singapore.

IOI Prop yesterday said Wealthy Link obtained the provisional permission from Singapore’s Urban Redevelopment Authority (URA) in February 2018 to commence development works on the land.

“The tender for the piling works has been awarded and construction has already commenced,” the group said.

In its November 2016 announcement, IOI Prop said the URA required successful land tenders to complete their developments within 84 months, or seven years.

Breaching any tender conditions, including missing the completion deadline, will enable the URA to repossess the land, the group said, adding that any payments made to the URA may also be forfeited in that scenario.

IOI Prop’s share price closed down one sen or 0.55% at RM1.81 yesterday, with a market capitalisation of RM10.02 billion.


This story, written by Wong Ee Lin for The Edge Malaysia, first appeared on 14 March

Related Articles From
Hongkong Land kept at 'add' on Mainland demand and limited supply
Hongkong Land posts 67% increase in FY17 earnings to US$5.6 bil on fair value of investment properties
DEAL WATCH: Marina Bay Residences penthouse on the market for $11 mil
Hongkong Land to jointly acquire British embassy in Bangkok for $782 mil