Real estate business

Temasek and Ong Beng Seng make an offer for SPH Real Estate Business

Offer for SPH would give Temasek Group control of Paragon Mall and other Singapore properties

Keppel Corporation’s plan to acquire the real estate business of Singapore Press Holdings is being challenged by a competing bid from an unlikely source: a consortium backed by state-owned holding company Temasek and hotel mogul Ong Beng Seng.

Cuscaden Peak, a company formed by Ong and its SGX-listed Hotel Properties group and the units of Temasek CapitaLand and Mapletree, on Friday offered a cash consideration of S $ 2.10 ($ 1.56) for each SPH share. . Completion of the transaction would require Cuscaden to undertake a chain bid for all units of SPH REIT, the consortium said in a filing with the Singapore Stock Exchange.

Keppel, whose largest shareholder happens to be Temasek, offered the equivalent of S $ 2.099 per SPH share in August in a cash deal valuing publisher Straits Times at S $ 3.4 billion ( $ 2.5 billion). Both proposals are conditional on the transformation of SPH from its media activity into a non-profit entity.

“Cuscaden would like to stress that SPH has not entered into any final legally binding agreement with Cuscaden regarding the proposed acquisition or the eventual project,” the consortium said on Friday.

Empire Resort

Billionaire Ong is best known for his Hard Rock chain of hotels and cafes, which he controls through Hotel Properties. The holding company, which he founded and controls through his majority stake, owns stakes in a portfolio of 38 hotels and resorts in 15 countries, including the Four Seasons Singapore and the Hilton Singapore, as well as sites operating under Hard Rock, InterContinental and Marriott. brands.

Ong Beng Seng has stakes in resorts, hotels and residential properties in 15 countries

Along with his wife Christina, Ong is estimated to have a personal fortune of $ 1.45 billion, and his resort-dominated hotel empire appears to have survived despite his 2020 annual revenue drop from 53.5% to 258.8 million. Singaporean dollars ($ 191.87 million), according to reports. in the financial media.

As of December 31, Hotel Properties had S $ 95.7 million in cash, of which S $ 4.2 million was already encumbered, compared to S $ 150.3 million in short-term borrowings.

In May of this year, Hotel Properties raised S $ 125 million in debt financing by selling bonds bearing 3.75% interest and maturing in 2028.

Strange bedfellows

Under the new partnership, companies controlled by Ong and Hotel Properties own 40 percent of Cuscaden Peak, while CapitaLand and Mapletree own 30 percent each. Temasek in turn owns 52% of CapitaLand and 100% of Mapletree.

Office investment

Cuscaden’s offer reverses the earlier deal between Keppel and Singapore Press Holdings, which would pay S $ 1.08 billion in cash and S $ 1.16 billion in shares of Keppel REIT to shareholders of SPH, who would also receive S $ 1.16 billion in shares of the media group’s SPH REIT.

SPH controls the manager of SPH REIT, a real estate investment trust that owns the Paragon, Clementi Mall, Rail Mall and other shopping centers in Singapore, as well as the Figtree Shopping Center in Sydney and the Westfield Marion Shopping Center in South Australia. SPH directly owns the Seletar Shopping Center and Woodleigh Residences in Singapore, as well as student accommodation in the UK and Germany.

Case in limbo

SPH underwent a strategic review in May and determined the need to restructure its media business – which includes the Straits Times, Business Times and various newspapers published in Chinese, Malay and Tamil – and realize the potential of its real estate branch, resulting in the selection of Keppel as a suitor.

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Keppel and SPH previously worked together on the M1 and Genting Lane data center joint ventures, which would become Keppel’s property if the acquisition was completed. Both companies are also shareholders of the manager of Prime US REIT, listed on SGX.

“The proposed acquisition of SPH is fully in line with Keppel’s Vision 2030, in which we seek to develop Keppel’s business as a provider of solutions for sustainable urbanization through organic and inorganic options,” said Keppel chief executive Loh Chin Hua said in August.

SPH continues to be owned by a series of local Singaporean shareholders, with Great Eastern Assurance holding the largest stake at 22.6 percent, while OCBC bank and union fund NTUC Income each hold over 16 percent. . Singtel, DBS Bank and Fullerton Private Ltd, controlled by Temasek, together hold more than 27%.

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