IOI Properties receives proposal from CEO to jointly develop Shenton House in Singapore
KUALA LUMPUR (June 25): IOI Properties Group Bhd (KL: IOIPG) has actually received a proposal from its group ceo cum major investor Lee Yeow Seng to participate in the development of Shenton House, a commercial property situated in Singapore that his private vehicle has appropriately tendered for, for S$ 538 million (RM1.9 billion).
Shenton House covers 3,377 square metres and is assigned for retail use with a gross plot ratio (GPR) of 11.2. The premises has a 44-year land lease, with the potential to be stretched to a fresh 99-year lease.
This is to resolve and mitigate the possible problem of attention that will occur because of his role in the redevelopment of Shenton House via Shenton 101, in which he is the sole shareholder. The intention of the proposition is to arrange the interests of IOIPG with that of Shenton 101, that will support the redeveloped real property as venture upon its effective redevelopment.
IOIPG stated the proposition stands for 4 months, and that might be extended by another 2 months if a written demand is received from IOIPG.
Yeow Seng and his brother Datuk Lee Yeow Chor are primary shareholders of IOIPG through their substantial shareholdings in Vertical Capacity Sdn Bhd, that carries 65.67% in IOIPG.
At market close on Tuesday, IOI Properties’ shares dropped 4 sen or 1.75% to RM2.25, giving the company a worth of RM12.39 billion.
Shenton 101 was the sole prospective buyer of Shenton House, that is located in Singapore’s main business center. Yeow Seng formerly stated he felt it was more appropriate to bid for Shenton House via his own vehicle due to the size of the subject and the stiff time set by the sales board on the collective sale.
“The good faith purpose of Yeow Seng is not to make a private gain emerging from the proposal. As such, the factor to consider is to feature the first expense of investment of equity in Shenton 101 and the cost accumulated by Shenton 101 for the procurement of Shenton House and any upfront fees incurred by Shenton 101 such as experts’ fees and expenses and tender, application and approval costs in addition to cost of finance,” IOIPG added.
According to IOIPG, Yeow Seng has suggested the acquisition consideration be figured out based on the actual expense of assets accumulated by himself and Shenton 101, multiplied by the equity interest in Shenton 101 to be acquired by IOIPG, or an equal registration value for the subscription of brand-new stakes in Shenton 101.
“Yeow Seng has stressed to IOIPG that Shenton 101 is prepared and capable to proceed with the improvement preparation of Shenton House under the terms of the tender which Shenton 101 is well on the way to put in place funding to enable it to proceed with the redevelopment and that the reason that Yeow Seng is expanding the proposal to IOIPG is to help solve or deal with the potential problem of interest circumstance,” IOIPG’s declaring read.
“Further, according to the Singapore’s main business district reward system, Shenton House is qualified for a 25% bonus gross floor space that can be redeveloped into a mixed-use commercial with non commercial project or a hotel at the GPR of 14. Thus, Shenton House is set aside for redevelopment into a fresh 99-year leasehold business development,” IOIPG claimed.
According to a stock exchange filing, Yeow Seng has suggested that IOIPG acquire all or part of his own vehicle, Shenton 101 Pte Ltd, that is preparing to redevelop Shenton House, works for which are scheduled to commence by the end of 2025.
The present extra existing funding obligation– omitting the property development cost, which is to be settled– is S$ 476 million, which includes land betterment premium, rent top-up costs, and operation expenditures, it claimed.
