SINGAPORE (Mar 19): IOI Properties Group (IOI Prop) has terminated its agreement with Hongkong Land International Holdings Ltd to jointly develop and manage a land parcel on Central Boulevard in Singapore.
The termination is owing to the “non-fulfilment of certain conditions precedent”, says IOI Prop. This confirms a report by The Edge Malaysia 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 said the developer was believed to have reached longterm financing deals with five banks amounting to $1.6 billion.
The five banks are DBS Bank, United Overseas Bank, Bank of Tokyo-Mitsubishi UFJ, OCBC and Sumitomo Mitsui Banking Corp. That leaves another $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 on March 13, IOI Prop said the termination would not impact the development of the Central Boulevard site. This is because the group has sufficient indepth 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 its earnings per share and net asset per share.
The group had announced in November 2016 that its unit, Wealthy Link Pte Ltd, had successfully tendered for the Central Boulevard site for $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 site located in Marina Bay and the Central Business District of Singapore.
IOI Prop said on March 13 Wealthy Link obtained provisional permission from URA in February 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 URA required developers to complete their projects within 84 months, or seven years.
Should any tender conditions be breached, including missing the completion deadline, URA may repossess the land, the group said, adding that any payments made to URA may also be forfeited in that scenario.
IOI Prop’s share price closed down one sen, or 0.55%, at RM1.81 on March 13. It has a market capitalisation of RM10.02 billion ($3.36 billion).
This story first appeared in The Edge Financial Daily on March 14, 2018
