Compass Point sold for $519m or $1,925 psf

Business Times: Thu, May 17

A JOINT venture between insurance giant Prudential UK and Frasers Centrepoint has bagged Compass Point mall in Sengkang for $519 million after its tender bid was accepted by the seller. The price works out to $1,925 per square foot (psf) based on the net lettable area of 269,546 sq ft and a net yield of about 5.6 per cent based on the mall's estimated net operating income of $29 million. Earlier, entities linked to Prudential's Asia Property Fund (APF) formed an 81.01:18.99 joint venture with Frasers Centrepoint - Gemshine Investments - to bid in the tender for Compass Point, which closed on May 3. Gemshine was either the highest bidder or sole bidder in the tender, reckon market watchers. In any case, it had the right of first refusal (ROFR) to buy the mall assigned to it by APF, as reported earlier in BT Weekend. The five-storey mall, next to Sengkang MRT Station, is operating at nearly full occupancy. Anchor te-nants include Best Denki, Cold Storage, Metro, National Library Board and Kopitiam. Frasers Centrepoint, formerly known as Centrepoint Properties, developed the mall at a total cost of about $210 million before securitising it in November 2002 for $335 million. Under that exercise, $134 million of junior bonds and $201 million of senior bonds (the latter re-presenting pure debt) were issued. The junior bond holders get to keep the full upside of any capital appreciation when the property is eventually sold. APF and Frasers Centrepoint jointly control all but $50,000 of the $134 million junior bonds; the split between them is 81.01: 18.99, exactly the same proportion as their ownership of Gemshine. Under an arrangement announced on April 30, APF and Frasers Centrepoint transferred their respective holdings of the junior bonds as well as the attached preference shares issued by Sengkang Mall Ltd to Gemshine. Sengkang Mall Ltd controls five special-purpose vehicles which were set up to own Compass Point under the 2002 asset securitisation structure. APF also assigned its ROFR, which was granted to Prudential under the securitisation deal, to Gemshine. This basically gave Gemshine the option of matching the highest price received at Compass Point's tender - in the event that it was not the highest bidder. All the bonds are due in November this year and hence the tender - conducted by CBRE - was held to sell Compass Point and use sales proceeds for a full redemption of the senior and junior bonds. Compass Point's $519 million sale marks the second major property investment sales deal this week. On Tuesday, Fragrance Group clinched Tower 15 at Cantonment Road for $360 million. The price works out to about $1,420 psf of gross floor area (GFA) based on the 29-storey freehold building's existing 253,455 sq ft GFA. No development charge would be payable for a new project on the site if it does not exceed this GFA. Tower 15 - which incorporates Klapsons The Boutique Hotel on the second to fourth levels - is on land area of 39,336.67 sq ft. Offices are on the fifth level and upwards. Fragrance is said to be buying the property from a private vehicle controlled by the Lee family that controls listed Ezra Holdings. Fragrance is exploring various development possibilities, including a commercial development with retail shops and offices or an integrated development with retail shops, offices and residential units. The deal is said to have been sealed by a private treaty brokered by DTZ. Source: Business Times