LHN unit Coliwoo buys GSM Building for S$80 million, matching valuation

COLIWOO (TK), an indirect wholly owned subsidiary of Singapore-listed LHN : 41O 0%, will acquire the strata-titled GSM Building at Middle Road for S$80 million excluding the goods and services tax (GST), the company said on Friday (Feb 10). 

The amount, less S$100,000 as a tender fee, is expected to be paid through internal sources of funding and bank borrowings, said LHN, which has businesses in property, facilities management and logistics.

LHN will retain the existing commercial usage of the first and second levels of the building, and convert the third to sixth levels of the property into serviced apartments. LHN said it will submit an application to the Urban Redevelopment Authority for the change of the use of these levels “as soon as possible”. 

LHN noted that this acquisition will expand its portfolio of residential and commercial properties under its space optimisation business in Singapore.

The acquisition will also increase the brand value of Coliwoo, provide potential capital appreciation to the group, and give it additional opportunities to generate revenue, LHN added.

GSM Building has a total land area of 1,115.1 square metres, with a tenure of 99 years that started from May 2, 1978. As at Feb 10, the property comprises 33 units – of which 13 are self-occupied and 20 are rented out – as well as common property. The acquisition refers to the en bloc acquisition of all the strata units and the common property at the GSM property.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

The S$80 million consideration will be distributed among the GSM vendors according to an “apportionment ratio” that was in the terms of the collective sale agreement.

The amount was determined through a public tender, and was arrived at after taking into consideration the indicative valuation performed by independent valuer Colliers International. Colliers had valued the property at S$80 million as at Feb 1, the group said.

Other factors that were taken into account included the potential of the GSM property, as well as the value and prevailing market prices of properties “of a similar nature” in the vicinity.

Fragrance Limited is a controlling shareholder of LHN, with a stake of about 54 per cent. LHN had obtained written approval from Fragrance before holding a general meeting for the acquisition. Hence, LHN will not convene a shareholders’ meeting to approve the acquisition, the company said.

A circular containing further details of the acquisition, among other things, is expected to be despatched to shareholders on or before Mar 3, the company said.

Shares of LHN ended Friday at S$0.30, up 1.7 per cent or S$0.005. Shares of LHN Logistics, meanwhile, fell 9 per cent or S$0.014 on Friday to close at S$0.142 on a cum-dividend basis.