A pair of adjacent shophouses at 277 and 279 South Bridge Road has been put up for sale with a price tag of $15.5 million. The properties are located within walking distance of the upcoming Maxwell MRT Station on the Thomson-East Coast Line, Maxwell Food Centre with its Michelin-star food stalls, and the dining and lifestyle options along Ann Siang Hill and Club Street.
The three-storey shophouses have a total gross floor area of 6,861 sq ft. They both have a 99-year lease starting from November 1992, which means the properties have remaining leases of 72 years. They are zoned for commercial use and have URA approval for F&B operations “which is one of the main draws” for potential buyers, says Jeffrey Sim, associate executive director of OrangeTee & Tie, the appointed exclusive marketing agent.
Currently, the property houses three businesses, namely a medical aesthetics clinic, a general practitioner and a dentist. They are operated by the landlord of the buildings. The landlord and owner is a party made up of 11 stakeholders who are seeking to consolidate their assets, according to one of the stakeholders, who wants to be known only as Foong.
The shophouses were purchased in 2013 for $13 million. When the stakeholders bought the two units six years ago, the first level was occupied by a Chinese hotpot restaurant. After the tenant vacated the premises, the stakeholders decided to use the property for their own business operations, starting with the general practitioner. The various medical operations are complementary to one another, says Foong. The stakeholders spent $2 million to renovate the shophouses, he adds.
The property will be offered on a “sale-and-leaseback arrangement” as the owners still want to continue operating their businesses there, says OrangeTee’s Sim. The current owners have agreed to continue leasing the space at a monthly rental rate of $68,750 for the next three years. Based on the asking price, the gross rental yield is about 5.3% per annum.
The owners also want the option to buy back the shophouses at the end of three years at $18 million. However, in the event that the businesses on the premises default on their rental payments for two consecutive months, then the option to purchase is void, says Sim.
The shophouses are being offered for sale by private treaty. Interest has come from cash-rich investors, according to Sim.