Chip Eng Seng, SingHaiyi and Haiyi Group jointly buy 21% stake in 8 Shenton Way

SINGAPORE (EDGEPROP) - Chip Eng Seng and Sing-Haiyi Emerald have respectively entered into share purchase agreements to collectively acquire a 21% interest in the property at 8 Shenton Way (formerly known as AXA Tower) in the CBD.

Gordon Tang and his wife Celine Tang are controlling shareholders of Chip Eng Seng, where Celine serves as the non-executive chairman. The Tangs also have a controlling stake in property company SingHaiyi Group, which they privatised last November. The Tangs also control Sing-Haiyi Emerald, which is a joint venture between Sing-Haiyi Group and Haiyi Holdings.

Chip Eng Seng, through its wholly-owned subsidiary CEL Shenton, and Sing-Haiyi Emerald each purchased a 21% stake in PRE 13, a subsidiary of Perennial Holdings, for a respective consideration of $2.13 million. PRE 13 holds a 50% stake in AXA Tower, with the remaining 50% stake held by Alibaba. Alibaba purchased its stake in May 2020 in a deal that valued the property at $1.68 billion.

The stakes in PRE 13 are being purchased from Kuok (Singapore), Shenton Circle, Imagine Properties, PE One (a subsidiary of Singapore Press Holdings) and Huatland Development. The acquisitions were made on a willing-buyer and willing-seller basis and took into account the net asset value of PRE 13 as at Feb 28. It also took into consideration the agreed asset value of the property at $1.68 billion, as well as the redevelopment potential of the property and the marketability of the new development.

Under the share purchase agreements, CEL Shenton and Sing-Haiyi Emerald will each take over a proportionate principal amount of the shareholders’ loans granted by the sellers to PRE 13. The entities will also commit to contribute their proportionate shares of additional shareholders’ loans required for the redevelopment of the property and other funding requirements. The acquisition by either CEL Shenton or Sing-Haiyi Emerald is not conditional on the other’s acquisition.

Following the completion of the acquisitions, CEL Shenton and Sing-Haiyi Emerald will hold a total stake of 42% in PRE 13, translating into an effective interest of 21% in AXA Tower. The remaining 58% stake in PRE 13 will be held by Perennial Singapore Investment Holdings, Piermont Holdings and HPRY Holdings. Piermont Holdings is a wholly-owned subsidiary of agribusiness group Wilmar International, while HPRY Holdings is wholly owned by Kuok Khoon Hong, a director and controlling shareholder of Perennial. Kuok is also the chairman and CEO of Wilmar

In a filing to the Singapore Exchange on April 5, Chip Eng Seng states the proposed acquisition will allow the company to acquire a meaningful stake in a prime real estate site located within the CBD. In addition, the company is able to participate in a large-scale redevelopment project, which is expected to be an iconic landmark within the CBD upon its completion.

The project will add to the pipeline of Chip Eng Seng’s property development projects in Singapore, which includes the redevelopment of Maxwell House into a new mixed-use development with about 330 residential units and a retail podium of more than 46,000 sq ft. Chip Eng Seng had acquired Maxwell House en bloc, jointly with SingHaiyi and Chuan Investments, the investment arm of Hong Kong-listed Chuan Lim Construction, with operations in Singapore. (See potential condos with en bloc calculator)

The purchase of Maxwell House was made in May last year for $276.8 million. Chip Eng Seng holds a 40% stake in the joint venture, with SingHaiyi and Chuan Investments holding a 30% stake each. The existing Maxwell House is a 99- year leasehold, 13-storey commercial building that was completed in 1971. (Find Singapore commercial properties with our commercial directory)

Chip Eng Seng said in its April 5 announcement that it will be able to mitigate its financial and execution risks through participating in a largescale redevelopment project with other partners.

AXA Tower is a 50-storey office tower that sits on a total site area of 118,229 sq ft. It has a 99- year leasehold land tenure starting from July 19, 1982. It will be redeveloped into a mixed-use commercial and residential development, comprising office, retail, hotel and residential components, with a maximum allowable gross floor area of 1.55 million sq ft and a gross plot ratio of 13.125.

Perennial Holdings, together with Wilmar and Kuok, through their respective entities, will continue to hold a majority equity interest in PRE 13, translating to a 29% effective stake in AXA Tower, according to Perennial in its announcement on April 5. The transaction is expected to be completed at end-April 2022, subject to various conditions.

With the completion of the transaction, the existing shareholders of the property, together with Chip Eng Seng, SingHaiyi Group and Haiyi Group, will proceed with the large-scale redevelopment works at AXA Tower. Preliminary redevelopment works have started, and are slated for completion in 2028. Perennial is expected to provide property management and asset management services for the new property upon completion.

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