Chip Eng Seng unit to acquire two properties in South Perth via joint venture

CHIP Eng Seng Corporation Ltd has agreed to acquire two adjoining properties in South Perth in Australia through a joint venture, with plans to redevelop them into a mixed-use development.

Its newly incorporated wholly owned subsidiary CES South Perth (WA) Pty Ltd entered into a share subscription agreement on Wednesday to subscribe for 7.355 million new shares in CES Sirona Lyall (WA) Pty Ltd, the JV company, for A$7.4 million (S$7.6 million). This represents a 70 per cent stake.

Sirona Lyall Street holds the remaining 30 per cent stake in the JV company.

Concurrent with the share subscription, Sirona Asset Management Pty Ltd exercised the option to purchase two adjoining properties located at 31 Labouchere Road and 24 Lyall Street in South Perth for A$10.9 million. The JV company acquired the properties from Sirona Asset Management for the same price.

The acquisition of the properties by the JV company was completed on Wednesday.

The adjoining properties have a total site area of 2,040 sq m, currently housing three residential style buildings which were leased for commercial office purposes until the recent expiration of the lease. The properties have been vacant since.

CES South Perth and Sirona Lyall Street intend to redevelop the site for a mixed-use development, comprising residential apartments and retail/office suites.

To fund the ongoing capital expenditure of the JV company, CES South Perth and Sirona Lyall Street have each entered into a shareholder loan agreement to provide an interest-free shareholder loan not exceeding A$14.5 million and A$6.2 million respectively.

The availability period for the shareholder loan from CES South Perth is from Nov 22, 2017 to Sept 30, 2019 while the availability period for the shareholder loan from Sirona Lyall Street is from Jan 1, 2019 to Sept 30, 2019.