Katong Mall sold for $247.6m

Source : Business Times – 10 Nov 2009

New owners will spend $55m to redevelop the property

A consortium of investors – including CapitaLand’s former head of retail Pua Seck Guan – has signed a deal to buy Katong Mall from Tuan Sing Holdings for $247.6 million.

The deal marks one of the largest investment transactions in Singapore’s property market this year.

Katong Mall was acquired by Tuan Sing in June 2008 through a collective sale deal. The property group paid $219 million for the site then.

The consortium of investors – which comprises no more than six parties and includes corporate investors, institutional investors and Mr Pua – is acquiring Katong Mall via Perennial Katong Retail Trust, a private property trust set up for the purpose of buying the mall.

The transaction is expected to be completed by end-January 2010. The sale was brokered by Landmark Property Advisers.

Katong Mall, located at the junction of East Coast Road and Joo Chiat Road, is a four-storey building with three basement levels and with remaining lease of about 70 years. The new owners will spend $55 million to redevelop the property, which is expected to increase the mall’s net lettable area by about 20 per cent, from 172,170 square feet to over 206,000 sq ft.

Works, which are expected to last for 12 to 15 months, will commence sometime next year upon approval from the relevant authorities.

‘Katong Mall has immense potential to become a thriving lifestyle-cum-food and beverage hub in the Katong and Marine Parade precincts,’ said Mr Pua. ‘The mall enjoys an excellent location and is well-supported by large affluent population catchments from the surrounding Marine Parade, Katong and Joo Chiat areas.’

In addition, Katong Mall presents ’significant value creation opportunities’ which can be harnessed through good asset planning, appropriate repositioning and optimal tenancy remixing, he added.

There are already new tenants lined up.

The BreadTalk group has expressed keen interest in taking up leasable space at the revamped Katong Mall to house a series of its brands, such as Food Republic, Din Tai Fung, BreadTalk, Toast Box and Ramen Play.

Mr Pua’s Perennial Real Estate, a Singapore-registered real estate company, also has a majority stake in the company that will manage the mall.

Tuan Sing said that after taking into account the relevant acquisition cost, the book value of Katong Mall came to $194.8 million as at end-September 2009.

The expected gain from the transaction is estimated to be about $42.7 million, or 3.75 cents per ordinary share.