Chip Eng Seng unit to sell property at 69 Ubi Crescent for S$28m

PROPERTY player Chip Eng Seng announced on Friday (Dec 17) that its wholly owned subsidiary CES Capital Holdings has entered into an agreement to sell its property at 69 Ubi Crescent for S$28 million. 

CES Capital, which owns 100 per cent of the issued ordinary shares in Evervit Development, the holding company of the Ubi Crescent property, will be selling all of its shares to Merlions Two (BVI).

While the property at Ubi Crescent has been generating a stable stream of recurring rental income, it does not contribute significantly to the group’s revenue and profitability on the whole, said Chip Eng Seng in a bourse filing. 

The proposed transaction is therefore in line with the group’s asset management strategy to divest such non-strategic or non-core assets, it added.

The net proceeds from the transaction will be used for working capital purposes and to pursue opportunities which have better upside potential in terms of yield and/or capital appreciation. 

The property at Ubi Crescent is a 6-storey light industrial building with a basement carpark, occupying an aggregate land area of approximately 35,562 square feet.

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It was built and completed by the group in 2000, and has been held by the group as an investment property. It is also held on a leasehold basis, and the remaining tenure of the head lease is about 35 years. As at Dec 17, the property is 96 per cent tenanted.

The purchase price was arrived at on a willing-buyer willing-seller basis following arm's length negotiations.

The purchaser had taken into consideration the net asset value of Evervit Development, the market value of the property and the outstanding amount of the shareholder’s loan provided by Chip Eng Seng to Evervit Development.

Other commercial factors such as the location of the property, the remaining tenure of the head lease and tenancy arrangements were also considered. 

Based on the latest unaudited management accounts, the net asset value of of Evervit Development is about S$12.97 million.

The purchase price is higher than the valuation of the property assessed as at Dec 31, 2020 by independent valuers appointed by the group.

The transaction is not expected to have a material impact on the net tangible assets and earnings per share of Chip Eng Seng for the current financial year ending Dec 31 or the next financial year ending Dec 31, 2022.

Shares of Chip Eng Seng ended Friday at S$0.41, down S$0.005 or 1.2 per cent.