Chip Eng Seng sells shophouses for total consideration of $24.2 mil

Chip Eng Seng has, through its subsidiary CES Capital Holdings, disposed of its shophouse properties in Tanjong Pagar and Geylang for a total consideration of $24.2 million.

CES Capital Holdings, on April 7, entered into a sale and purchase agreement to sell its conservation shophouses at 84/A/B and 86/A/B both at Tanjong Pagar Road for a consideration of $10.68 million.

CES Capital Holdings, on the same day, granted an option to purchase three adjoining units at 115 Geylang Road, where the option fee for the grant is $135,000, and the purchase price being $13.5 million.

The purchaser of the properties at Tanjong Pagar and the grantee of the option to purchase at Geylang are unrelated to the construction group, as well as each other.

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SEE: Chip Eng Seng to acquire Sembcorp Industries' commercial construction unit for $49.9 mil

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The properties in Tanjong Pagar and Geylang were acquired by Chip Eng Seng in 1988 and 1996 respectively, and have been held by the group as investment properties. The properties are currently tenanted and will be sold subject to the tenancy agreements subsisting as at the date of completion.

According to the group, the shophouse properties do not contribute significantly to its topline and overall profitability despite generating a stable stream of recurring profit income.

The proposed disposals, which are in line with its asset management strategy to divest non-strategic or non-core assets, will allow the group to recycle the capital from the net proceeds derived from the sale.

The completion of the proposed disposals are not expected to have a significant impact on the group’s net tangible assets (NTA) and earnings per share (EPS) for the current FY ending Dec 31.

Shares in Chip Eng Seng closed flat at 50 cents on April 7.