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This was one of 太太's
first assignments upon landing in Asia to work as fund manager for one of
Asia's wealthiest tycoons. She knew she had landed at the right
place when this asset was included in the global portfolio she developed and
managed. Bugis Junction is estimated to be
worth under $1 billion, and has been on and off the market several times in
the past few years reflecting the qualities that appeal to institutional
public co's and and private investors. Its quality is top drawer
as are the tenants.
CapitaLand, KepLand
effectively in full control after buying OCBC, GE stakes
Bugis Junction has
potentially moved one step closer to being Reit-ed after CapitaLand and
Keppel Land yesterday bought over OCBC's and Great Eastern's interest in the
retail, office and hotel complex for $157 million in cash. The two listed
property giants, both part of the Temasek stable, now effectively fully
control the retail and office components of Bugis Junction (with CapitaLand
having the bigger share in these two) and 90 per cent of the
Intercontinental Hotel.
Market watchers now expect some serious
horse trading to take place between the two. For instance, CapitaLand could
clinch Bugis Junction's mall and pump it into its CapitaMall Trust, a
shopping centre real estate investment trust (Reit). And Keppel Land, which
has long been looking at setting up an office Reit, could walk away with the
office tower. The duo could then divest the hotel component. Of course,
another contender for the office component could be CapitaCommercial Trust,
another Reit in the CapitaLand stable.
There may well be other methods that
CapitaLand and KepLand could employ to unlock the value of Bugis Junction,
which is said to be worth $800-$900 million.
Kee Teck Koon, vice-chairman of
CapitaLand Commercial and Integrated Development, and CapitaLand Retail
Limited, said yesterday's 'acquisition marks an important step in
CapitaLand's strategy to enhance asset productivity'. 'Together with our
partners, we will actively explore opportunities to boost value creation at
the property level and for the eventual monetisation of the asset via a sale
into a listed Reit or private property fund.'
KepLand director (Singapore) Tan Swee
Yiow said: 'With this joint participation, the shareholders are in a closer
position to achieving the goal of unlocking value in Bugis Junction.'
Yesterday's deal comes just a month after
CapitaLand bought Parco's and Seiyu's combined interest in Bugis Junction
for $139 million. The latest acquisition of a further stake will raise
CapitaLand's share in Bugis City Holdings (BCH) to 49.5 per cent from 30 per
cent.
KepLand, which already held a 31 per cent
direct equity interest in BCH prior to the latest deal, will together with
its associate Asia No 1 Property Fund now control the remaining 50.5 per
cent of BCH. The fund - jointly managed by Henderson Global Investors
(Singapore) and KepLand's unit, Alpha Investment Partners - has tied up with
KepLand in an equal joint venture to acquire an effective interest of 19.5
per cent in BCH, being half of the 39 per cent share in the company being
divested by OCBC and its insurance arm GE. The other half is being taken up
by CapitaLand.
BCH owns respective stakes of 80, 75 and
90 per cent in the retail, office and hotel components of Bugis Junction.
CapitaLand, through last month's deal with Seiyu and Parco, gained control
of the remaining direct stakes of 20 and 25 per cent in the mall and office
tower. With the latest exercise, CapitaLand will have an effective stake of
59.6 per cent in the mall, 62.1 per cent in the office tower and 44.6 per
cent in the Intercontinental Hotel. OCBC and GE acquired the 39 per cent
interest in BCH arising from a loan to Indonesian businesswoman Endang
Mokodompit, who had bought the stake in Bugis Junction from Richard Li's
Pacific Century Regional Developments many years ago, according to earlier
reports. - by Kalpana Rashiwala SINGAPORE
BUSINESS TIMES 14 May 2005
15 Apr 2005 - Capitaland
has increased its stake in Bugis Junction after buying Parco's and Seiyu's
entire combined interest in the complex for $139 million.
Analysts say this sets the stage for
further transactions for the asset - a mall, an office tower and the
Intercontinental Hotel - that could involve one or more of these components
being sold, possibly to real estate investment trusts (Reits).
CapitaLand itself would be an eminent
candidate, with two Reits in its stable. CapitaMall Trust, for instance,
could buy the mall at Bugis Junction and CapitaCommercial Trust the office
tower, say market watchers.
However, industry observers are not
ruling out the possibility that another major Bugis Junction shareholder,
Keppel Land, which has been talking for a while about floating a Reit, could
also have its own designs on Bugis Junction. The property, which was
completed in 1995, has about 84 years left on its lease. It is estimated to
be worth under $1 billion, and has been on and off the market several times
in the past few years.
Efforts to dispose of the asset have been
complicated by the presence of four major sets of shareholders - principally
CapitaLand, Keppel Land, OCBC Bank group and the Parco-Seiyu tie-up - each
with its own agenda and priorities.
Under yesterday's deal, CapitaLand will
be raising its stake in Bugis City Holdings from 20 per cent to 30 per cent
by fully acquiring Seiyo Investment, which owns a 10 per cent stake in the
company. Keppel Land controls 31 per cent of BCH, while OCBC Bank and its
insurance arm Great Eastern are understood to hold the remaining 39 per
cent.
Seiyo is a joint-venture between Parco
and and Seiyu Holdings. The two were once sister companies in Japan's Saison
Group but Seiyu is now controlled by US retail giant Wal-Mart.
Parco has a joint venture with Keppel
Land that holds a 15-year contract ending in 2010 to manage the mall at
Bugis Junction. Seiyu has a lease, up to the year 2015, for department store
space in the centre.
BCH owns respective stakes of 80 per
cent, 75 per cent and 90 per cent stake in the retail, office and hotel
components of Bugis Junction. In addition, Seiyo Investment holds direct
stakes of 20 per cent in the mall, and 25 per cent in the office tower.
CapitaLand, through its acquisition of
Seiyo, will now have an effective stake of 44 per cent in the mall, 47.5 per
cent in the office tower and 27 per cent in the Intercontinental Hotel.
Bugis City Holdings posted a $7.82
million net profit in 2003, which was the latest financial record filed with
the Accounting & Corporate Regulatory Authority. The most profitable
part of the company's operation was the mall. -
by Kalpana Rashiwala SINGAPORE
BUSINESS TIMES 15 Apr 2005
This office tower is directly
linked to the Bugis MRT station, separate from the shopping centre and along
the new corridor of Victoria Street and North Bridge Road, this location is
served also by major bus routes that intersect at Rochor Road, North Bridge
Road, Middle Road and Victoria Street
Parco Bugis Junction, the shopping
centre, meanwhile, reported being visited by 60,000 people per weekday and
70,000 per day on weekends last year.
Parco Bugis Junction's senior marketing
communications executive, said: 'During the Singapore Food Festival, 200,000
people visited the event areas, which are the fountain and street portions
of the mall, over three-and-a-half days. Also, seasonal activities put up
during occasions such as Chinese New Year and Christmas also attract more
traffic.'
Owners give nod for sale of Bugis
Junction
All four stakeholders of Bugis Junction
have given the go-ahead for the sale of the retail, office and hotel
complex, which is said to be worth about $900 million.
International property consultant Jones
Lang LaSalle has been appointed sole marketing agent and is advising the
owners - Keppel Land, CapitaLand, OCBC Nominees and Seiyo Investment, a unit
of Japan's Saison group - on the viable mode of sale, sources say.
BT understands that the owners are
prepared to consider selling Bugis Junction 'with or without' the retail
management contract with Parco. The mall operator, also part of the Saison
group, is said to have a 15-year contract.
However, potential buyers will have to
continue with a contract of similar length with Six Continents Hotel group
(formerly Bass), which manages the 406-room Hotel Inter-Continental
Singapore within Bugis Junction.
Talk about Bugis Junction being put up
for sale has been making rounds in the market for the past few years, but as
an industry observer noted: 'This is the first time that all four
shareholders have come together and cleared all the hurdles to a sale.'
Sources say the owners are looking at all
avenues of divestment, including asset securitisation, and will set a
'realistic price' for the property.
Bugis Junction, which opened in 1995, has
about 86 years left on its original 99 years lease. It was valued at about
$950 million in December 2001. A new valuation is being finalised and given
the slide in property values, particularly offices, analysts expect the
asset's worth to have fallen closer to the $900 million mark - a sum that
would equal the four partners' total investment in the project, based on
earlier reports.
The development has defied critics who
had written it off as a 'white elephant' before its opening in the old Bugis
Street area. Parco - which has long experience in Japan of turning untested
locations into successful malls - scored another hit at Bugis Junction.
The complex's overall holding company is
Bugis City Holdings Pte Ltd (BCH), whose shareholders are KepLand (31 per
cent), CapitaLand (20 per cent), Seiyo (10 per cent) and OCBC Nominees (39
per cent). OCBC Nominees' interest relates to a stake which Indonesian
businesswoman Endang Mokodompit bought from Richard
Li's Pacific Century Regional Developments several years ago.
The complex is said to have three
strata titles - for the 15-storey office tower, the mall and the hotel,
which are owned by different subsidiaries of BCH. The 426,000 sq ft mall is
held by a company which is controlled 80:20 by BCH and Seiyo Investment. The
250,000 sq ft office tower is owned by a company whose ownership is split
75:25 between BCH and Seiyo Investment. The Inter-Continental is owned
through a unit controlled 90:10 by BCH and Inter-Continental Hotel
Investment. - By
Kalpana Rashiwa Singapore
Straits Times l 6 Feb 2003
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