CDL and Alpha Investment Partners in S$1.1 billion Singapore office venture

Real estate giant City Developments (CityDev) will inject three of its office properties into an investment platform, in a move that will free up hundreds of millions of dollars in funds for new investments.

In a statement on Tuesday (Dec 15), CityDev said the three properties are Central Mall (Office Tower), 7 & 9 Tampines Grande and Manulife Centre.

The properties – valued at around S$1.1 billion – will be sold to a joint office investment platform co-owned by CityDev and Alpha Asia Macro Trends Fund II (AAMTF II), which is managed by Keppel’s Alpha Investment Partners.

CityDev Executive Chairman Kwek Leng Beng said: “Over the past two years, we have been advancing our two-pronged diversification strategy of developing new overseas and investment platforms. By building on the success of our first PPS transaction last year, this new initiative allows us to recycle capital for our growth plans.”

CityDev Chief Executive Officer Grant Kelley said: “Fundamentally the intent with the use of proceeds is to recycle capital for our growth plans both domestic and international. Last week we announced the closing of our first Australian investment in several years. In addition to that in the past month we’ve closed two major deals to the west of London.”

“We’ve been fairly clear in our investment objectives which are to find quality assets in five key markets, Australia, China, Japan, the UK and US, which makes sense for our shareholders on a risk adjusted basis,” he added.

PPS is an acronym for Profit Participation Securities, a sort of investment structure that allows a firm to sell future earnings from its properties while retaining control.

According to CityDev, the total aggregated value of the securities issued in the PPS transaction is S$333.5 million, comprising S$133.3 million of securities subscribed by a wholly-owned subsidiary of CityDev and a contribution of S$200.2 million by AAMTF II.

DBS and Oversea-Chinese Banking Corporation (OCBC) will provide S$750.1 million in senior loan facilities.

CityDev did not say how much new funding it will raise from this transaction. It will, however, continue to manage the three office properties, which currently have a strong occupancy of 98 per cent.

The PPS announced by CityDev on Tuesday is the firm’s second. Last year, it partnered with Blackstone’s Tactical Opportunities Fund and CIMB Bank for a S$1.5 billion PPS that invests in the cash flows of its upscale properties in Sentosa Cove, called the Quayside Collection.

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