CDL's office deal: What's next for the group and industry?
A look at the possibility of more profit participation securities deals.
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Kalpana Rashiwala
LAST week, City Developments Limited (CDL) rolled out its second "profit participation securities" (PPS) deal, this time to unlock about S$1.1 billion from three Singapore office assets.
The structure of the deal has allowed CDL to book a higher price than what it could have achieved from an outright sale. With the deal promptly completed on Dec 22, the transaction will also provide a much-needed boost of over S$200 million to the group's FY2015 bottom line amid tepid property market conditions. Morever, CDL can recycle capital released from the transaction to more lucrative property acquisitions overseas.
To what extent can this structure be replicated by CDL, as well as other vendors?
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