PPS not a panacea for every CDL high-end residential project

BT recently reported that Singapore-listed City Developments Ltd (CDL) may be at the preliminary stages of exploring the possibility of carrying out a third profit participation securities (PPS) exercise - this time for a portfolio of 48 apartments in three of the property developer's completed projects in Singapore's Core Central Region.

It is interesting to look at the merits of this latest exercise but one needs to be clear from the outset that the PPS scheme is not necessary suitable or a panacea for every CDL high-end residential project. The reason lies in the Qualifying Certificate (QC) rules.

The 48 units - at Cliveden at Grange, St Regis Residences Singapore and One Shenton - are said to have a total portfolio size of around S$350 million. The units are mostly leased. A PPS deal, if it materialises, would help CDL recycle some capital by using the proceeds for overseas expansion, for instance.