Roxy-Pacific, Tong Eng ink agreement to sell 117 Clarence Street for A$153 million

ROXY-PACIFIC Holdings and Tong Eng Group has entered a definitive sale and purchase agreement to sell 117 Clarence Street in Sydney for A$153 million (S$154 million) to an Australian domiciled institutional investor.

The agreement was made between Roxy-Pacific and Tong Eng's 50-50 joint venture company Feature-Roxy as well as ICPF Nominees, the trustee for Clarence Street Precinct Trust, the nominated entity for the purchaser.

The two had acquired the 14-storey freehold commercial building, in February 2016 for A$81 million.

The sale of 117 Clarence Street is expected to contribute positively to Roxy-Pacific's financial performance in the financial year ending Dec 31, 2018.

Last year, Roxy-Pacific had divested its 100 per cent-owned Grade A office building, 59 Goulburn Street, another commercial investment and its first in Sydney, for A$158 million after first acquiring it for A$90.2 million in July 2014.

"We entered the Sydney commercial market relatively early, seeing good potential for us to capitalise on the favourable market cycle. The divestment of 117 Clarence Street closely follows the sale of 59 Goulburn Street, both prime commercial buildings in Sydney had contributed healthy recurring income before they were divested at a good price," Teo Hong Lim, executive chairman and chief executive of Roxy-Pacific said. "We hope to replicate this model and extend our investment track record in the near future, recycling the capital from the sale of 117 Clarence Street into other yield-accretive investments to enhance shareholder value."

Tong Eng Group's group managing director Teo Tong Lim said, "We continue to view the Australian property investment market as an attractive capital market, driven by a stable economy and well regulated business environment. The group intends to continue to grow its presence and investment portfolio in Australia."

Roxy-Pacific also acquired Grade-A commercial buildings in New Zealand, namely 205 Queen Street and the NZI Centre in Auckland, after divesting 59 Goulburn Street, and both operating assets have commenced positive recurring contributions to the Group.

As for Tong Eng Group, its first move into Australia was its purchase of the Harley Davidson building at 111-125 A'Beckett St, Melbourne in April 2015 for A$38 million, which it sold for A$61 million in July 2017. Following that, the group and Mr Teo Tong Lim's private family office vehicle has acquired other Melbourne office assets such as the Grade A office building at 5 Queens Road, 8 Lakeside Drive, Burwood and 312 St Kilda Road in its second Australian joint venture with Roxy-Pacific.

Roxy-Pacific shares closed on Monday at S$0.495, one cent, or 1.98 per cent, lower before the announcement was made.