Lum Chang joint venture to sell part of stake in UK freehold land for £28.14m

LUM Chang Holdings' joint venture company Kelaty Propco (KPL) has entered into a sale and purchase agreement with Kelaty House Wembley to sell part of its interest in a freehold site in London for £28.14 million (S$49.25 million).

The land at Wembley consists of a serviced residence component and a student accommodation component, both of which are being developed. The sale pertains to the student accommodation component; KPL will continue to own interest in the serviced residence component and develop it, with a view of deriving recurring income from it.

The carrying value of the student accommodation component is S$36.63 million, whch includes the residual land value of S$30.98 million as last valued by Knight Frank as at June 30 this year.

"If the transaction is completed by a development funder nominated by (Kelaty House) the initial consideration will be revised to £28.86 million," Lum Chang said in filing with the Singapore Exchange.

Based on the carrying value and the initial consideration price, the group's share of the gain after transaction costs is S$8.16 million; it works out to S$9.04 million if the deal is completed based on the revised price. The gain on disposal will be reported in the financial year ended June 30, 2019.

Lum Chang highlighted that the deal is an opportunity for the company to realise a significant portion of its investment in the land. Its share of the proceeds will be used to partly fund future investments.

KPL is held by Lum Chang and Sin Heng Chan Private Limited in a 70 per cent: 30 per cent ratio.