Chip Eng Seng unit to sell 2 shophouses in Tanjong Pagar for S$10.7m

A SUBSIDIARY of property developer Chip Eng Seng Corporation is set to sell two conservation shophouses along Tanjong Pagar Road and three units of shophouses along Geylang Road, the company said in an exchange filing on Wednesday.

CES Capital Holdings entered into a sale and purchase agreement to sell its properties at 84/A/B and 86/A/B Tanjong Pagar Road occupying an aggregate land area of about 1,653 square feet (sq ft), the company said. The purchase price is nearly S$10.7 million.

It also granted an option to purchase for three adjoining units of 2.5-storey shophouses with a 4-storey rear extension at 115 Geylang Road occupying about 3,290 sq ft, Chip Eng Seng said. The purchase price is S$13.5 million, of which a potential purchaser has paid a one per cent option fee.

The Tanjong Pagar properties and the Geylang Road property were acquired by Chip Eng Seng in 1988 and 1996 respectively, the company said, adding that they have been held as investment properties.

It said while these shophouse properties have been generating a stable stream of recurring rental income, they do not contribute significantly to the its revenue and profitability on the whole.

"The proposed disposals are thus in line with the group's asset management strategy to divest non-strategic or non-core assets or assets which do not contribute significantly to its revenue and profitability," Chip Eng Seng said.

This will allow the company to recycle the net proceeds for its working capital or to pursue opportunities which have "better upside potential" in terms of yield or capital appreciation, the company said.

It added that it is actively seeking offers for its remaining shophouse property in Singapore.

These proposed transactions are not expected to have significant impact on the net tangible assets and earnings per share of the company for the current financial year ending Dec 31.

Chip Eng Seng shares closed flat at 50 Singapore cents on Wednesday.