HMI unit StarMed buys more units in Farrer Square

HEALTH Management International (HMI) unit StarMed@Farrer Square has entered into agreements to buy additional units in Farrer Square for S$36.7 million, HMI announced on Monday after the market closed.

The agreement with RB Capital Group is for additional units with an aggregate area of 10,602 square feet, of which 3,897 square feet is currently being used by StarMed's day-surgery and multi-disciplinary medical centre StarMed Specialist Centre under a rental agreement.

To fund the purchase price, HMI will make additional investments in StarMed and increase its ownership from 62.5 per cent to 70 per cent. The purchase price is expected to be up to 90 per cent funded by a mortgage term loan. Completion and delivery of possession of these units are expected to take place around end-2018.

Negotiated on an arm's length basis, the purchase price reflects a discount to the reported valuations of the units, given the transaction was negotiated on an en-bloc basis.

StarMed has also entered into a put and call option agreement in respect of certain other units on different levels at Farrer Square with an aggregate area of 7,061 sq ft, for an aggregate purchase price of S$24.3 million. The put and call options are exercisable around end-2020, subject to the fulfilment of certain customary conditions precedent.

StarMed has also entered into a naming rights agreement for the building, a licence agreement for the use of certain parts of common property, and a right of first refusal agreement with the seller in respect of an additional unit at Farrer Square.

HMI said that the deal offers the StarMed Specialist Centre an opportunity to expand its footprint with an increase in clinical service and other areas. Naming and signage rights will also help to increase the visibility of the centre, while the put and call option agreement allows StarMed to lock in its future expansion space at an agreed price.

The deal is not expected to have significant impact on the net tangible assets or earnings per share of HMI and its subsidiaries for the current financial year ending June 30, 2019.