Thakral Corporation Ltd (TCL) announced on 21st May that it planned to acquire a 18,998 sq ft (or 1,765 square metres) office property at The Riverwalk in Singapore, as part of its strategic thrust to expand its investment portfolio in Southeast Asia.
The proposed acquisition of the office property, which is an interested person transaction subject to approval by shareholders, will be made via a Put and Call Option Agreement signed between TCL and Thakral Investment Holdings Pte Ltd.
While the entire shareholding of Thakral Realty (S) Pte Ltd (“TRSPL”) will be purchased for a net sum of S$9 million, the total consideration to acquire the proposed office property will be S$30 million, taking into account TRSPL’s current outstanding loan of S$21 million.
TRSPL owns The Riverwalk office property, which has a lease tenure of 99 years commencing 15 December 1980. The office unit is fully-tenanted and has a valuation of S$30.5 million (according to a recent valuation conducted by Jones Lang LaSalle Property Consultants Pte Ltd or “JLL”).
The value of the proposed acquisition of the office property is based on commercial terms taking into consideration the book value and net tangible assets of TRSPL, the outstanding property loan of S$21 million and the location, size and value of the office unit, which is located on the third storey of a 27-storey commercial and residential development which comprises a four-storey commercial space with basement shopping podium and a 21-storey apartment tower.
Situated along the Singapore River and close to the Central Business District (CBD), The Riverwalk is surrounded by several key commercial and government buildings and is easily accessible by public transport (including buses and the Clarke Quay MRT station) and the Central Expressway (CTE).
Upon the completion of the proposed acquisition of the office property, TCL will sign a 3-year leaseback agreement with the tenants of the office unit. The monthly rental will be S$5.50 per square foot (inclusive of building maintenance fees and sinking fund contributions). The gross monthly rental will be in the region of S$101,739.
Mr. Inderbethal Singh Thakral, TCL’s Chief Executive Officer, said, “We believe that real estate in South East Asia – especially Singapore – is in a sweet spot. Given the uptrend in the local property market and Singapore’s improving economic outlook, demand for well-located commercial office space is expected to grow. We are therefore entering the Singapore market at an opportune time as the value of such office buildings is forecast to appreciate in the coming years.”
He added: “The rental revenue from our investment in this Riverwalk office unit will also provide us a stable source of recurring income.”
To finance the proposed acquisition, the Group (comprising of TCL and its subsidiaries) will deploy some of the proceeds garnered from the recent sale of its warehouse properties in Hong Kong.
The Group said that it will hold an Extraordinary General Meeting at a later date to seek shareholders’ approval for the proposed acquisition. A circular to shareholders containing further details of the proposed acquisition will also be issued in due course.
Thakral Corp was once known for selling TV sets and cameras, but is now a diversified company listed on the Singapore stock exchange involved in manufacturing, logistics and property development in India, China and south-east Asia.
Since 2011, one of Thakral Corp’s subsidiary Thakral Capital Holdings, has invested (in partnership with big fund players such as Aberdeen and Apollo) more than A$300 million (S$311 million) of capital in Australia’s property market.
Thakral Corp said that its proposed acquisition of the leasehold office property at the Riverwalk Singapore is in line with the company’s strategic expansion plans in Southeast Asia.
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