Boustead Singapore and Jumbo Group have announced a potential transaction involving an asset at 26 Tai Seng Street, known as J'Forte, that is owned by Boustead Industrial Fund (BIF). Boustead Singapore holds a 25% interest in BIF, while Jumbo Group is best known for its chain of Jumbo Seafood restaurants. Both companies are listed on the Singapore Exchange (SGX).

Under a framework agreement signed by Jumbo Group of Restaurants (JGOR), a subsidiary of Jumbo Group, and Perpetual (Asia), the trustee for BIF, a special purpose vehicle (SPV) will be established, with JGOR holding 30% and the BIF trustee holding 70%.

The SPV will enter into a put and call option agreement with the BIF trustee, which will allow the parties to trigger the sale of the leasehold interest in the property to the SPV after the assignment prohibition period (APP) imposed by JTC Corp on the property ends in April 2033. The APP is the minimum duration that JTC lessees are required to hold the lease, with transfers not permitted during the period.

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The framework agreement also provides JGOR with the right of first refusal in the event a third party makes an offer for the property prior to its sale to the SPV. JGOR will invest approximately $20.1 million in equity capital for the SPV, which will be funded through internal resources. The SPV is expected to be established within a month from May 30.

After the expiry of the APP, assuming the parties proceed with the deal and subject to obtaining the relevant approvals, the SPV will buy the leasehold interest in the property for a purchase price of $109.5 million. In a Jan 19 filing to the SGX, Boustead says the price was negotiated on a willing-buyer and willing-seller basis, taking into account the total investment cost at the time BIF acquired the property.

J'Forte is an eight-storey industrial building approved for food production on Tai Seng Street, close to Tai Seng MRT Station. BIF currently holds the property under a 30-year lease from JTC Corp commencing from June 9, 2007, with an option to renew for a further 30 years. BIF bought the property from restaurant business Suki Sushi in 2023.

Jumbo Group occupies over half of J'Forte's leasable area under a long-term lease arrangement, with the company's corporate headquarters and central kitchen located there. "By taking a position as a co-investor, the Group can mitigate exposure to future rental volatility,  reduce the risk of relocation disruptions, and enhance visibility over long term occupancy and cost structure," says the company in its SGX filing.

Jumbo Group also cautions that "there is no certainty or assurance as at the date of this announcement that the proposed investment will be completed, or that no changes will be made to the terms thereof." In the event that the SPV and the BIF trustee do not enter into a put and call option agreement within one month after the APP expiry, the framework agreement between the parties will terminate.