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Old Seagate building gets top bid of S$250m

Ho Lee seeking to divest property via share sale in holding company 7000 AMK

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The industrial property in Ang Mo Kio, comprising a seven-storey production block and a five-storey office block, has GFA of 1.07 million sq ft with 42 years left on its lease. With a maximum plot ratio of 2.5, 500,000 sq ft more of GFA can be built.

Singapore

THE former Seagate building at 7000 Ang Mo Kio Avenue 5 has received six bids from potential buyers through an expression of interest, with the top bid crossing S$250 million or in excess of S$300 per square foot of net lettable area (NLA), BT has learnt.

Ho Lee Group, owner of the property, is seeking to divest the hi-tech industrial building through a share sale of the property's holding company 7000 AMK Pte Ltd.

It had in 2011 acquired the building from Seagate Technology International for S$91.5 million. It further spent in excess of S$10 million to upgrade the building.

BT understands that Singapore-listed Viva Industrial Trust (VIT) and IO Data Centre each have a right of first refusal (ROFR) to acquire the building. They would, however, have to match the top bid and have up to two weeks to exercise the ROFR.

IO Data Centre, a tenant at 7000 Ang Mo Kio Avenue 5, was granted the right to purchase the property in its tenancy agreement with Ho Lee Group.

VIT was given the ROFR during its IPO in 2013 by Ho Lee Group, one of its IPO sponsors that still holds about 6.7 per cent stake through Ho Lee Group Trust.

The industrial property in Ang Mo Kio, which comprises a seven-storey production block and a five-storey office block, has a gross floor area (GFA) of 1.07 million sq ft with a balance tenure of 42 years. Given the maximum plot ratio of 2.5 for the site, an additional GFA of half a million sq ft can be developed.

Sources say bidders for the property during the expression of interest include listed Reits as well as some private companies. Some market watchers note that the former Seagate building has a desirable tenure given that the government has shortened new industrial sites with lease terms of 20-30 years.

Its strong power system and chill water system also make it suitable for high-tech companies and clean-room industries.

One industrial space consultant noted that the attractiveness of acquiring the property will ultimately hinge on the underlying rental yield and lease maturities.

There could also be a down period if the new owner decides to undertake any asset enhancement.

The building is more than 80 per cent occupied for both its office and industrial space with diverse tenants such as Seagate, Wing Tai, Singapore Power and other high-technology tenants.

Set up in 1971, Ho Lee Group primarily undertakes construction and construction-related businesses, as well as property development and investment.

Its other businesses include steel fabrication, equipment and machinery manufacturing as well as aluminium manufacturing, through its subsidiary LH Group Ltd (formerly known as Liang Huat Aluminium Ltd) which is listed on the mainboard of the Singapore Exchange.