IOIProp paying ‘high but reasonable' price
PETALING JAYA: IOI Properties Group Bhd (IOIProp) is paying a 'seemingly high but reasonable' price to take full ownership of Singapore's premium South Beach commercial properties, according to a property consultant.
It was announced yesterday that IOIProp would be acquiring the remaining 50.1% stake in Scottsdale Properties Pte Ltd for S$834.22mil or RM2.75bil.
However, the fact that the landmark deal would be partly financed by bank borrowings has garnered additional attention, given IOIProp' already high gearing position.
As of the third quarter of financial year 2025, IOIProp sat on total borrowings of RM19.4bil, with a higher net gearing of 0.75 times.
In a filing with Bursa Malaysia, IOIProp said it would acquire Singapore-listed City Developments Ltd's (CDL) 50.1% stake in Scottsdale – held via Ascent View Holdings Pte Ltd.
With this, its equity interest will rise to 100%.
Scottsdale is the holding company of South Beach Consortium Pte Ltd, which owns the South Beach commercial properties. Meanwhile, CDL is linked to Hong Leong Group Singapore.
The South Beach commercial properties consisted of a 34-storey South Beach Tower offering 508,869 sq ft of Grade-A office space, South Beach Avenue with 30,797 sq ft of retail space and a 634-room JW Marriott Hotel Singapore South Beach.
Zerin Properties chief executive officer Previn Singhe said while the price may seem high in current market conditions, one must factor in the strategic location, premium tenant mix, and limited supply of such integrated developments.
'It may also signal IOI Properties's optimism in the resilience of Singapore's prime real estate market.
'From a financial standpoint, the acquisition price of S$834.22mil appears reasonable for a landmark asset with Grade A offices, a luxury hotel, residences, and retail, especially considering the yield compression and flight to quality in Singapore's commercial sector,' he told StarBiz.
The acquisition is based on an agreed property value of S$2.75bil on a 100% interest basis, which represents a 3% premium over the latest valuation of S$2.67bil as of Dec 31, 2024.
Previn said IOIProp's acquisition represents a 'bold and strategic' move that reflected confidence in the long-term fundamentals of Singapore's integrated development market.
'The South Beach commercial properties are a high-profile, mixed-use asset with strong positioning in Singapore, and taking full ownership provides IOI with greater control over asset strategy, branding, and capital decisions.
'This move aligns well with IOI's long-term investment horizon and its vision to build a strong overseas recurring income base,' he said.
Previn noted that it was a well-calibrated deal, where CDL exits with capital freed for reinvestment, while IOIProp solidifies its footprint with full control of a trophy asset.
'It is a win-win, and a great example of a mature, cross-border transaction between two seasoned developers,' he said.
This was concurred by Olive Tree Property Consultants chief executive officer Samuel Tan and executive director Tan Wee Tiam, who viewed the transaction 'positively'.
'This is more so as the two nations are working closely under the Johor-Singapore Special Economic Zone arrangement.
'By increasing its stake in the South Beach commercial properties, IOIProp solidifies its footprint in Singapore's prime real estate sector. The South Beach commercial properties will provide IOIProp with a steady stream of cash flow,' they said in a joint reply to StarBiz.
Meanwhile, Rakuten Trade head of equity sales Vincent Lau described the acquisition as a 'fair' deal.
'This acquisition is expected to strengthen IOIProp's profile, especially in a market like Singapore that is doing well on an international scale. Also, land is scarce in Singapore. Hence, having premium, income-generating assets over there is strategic,' he said.
In a statement, IOIProp group chief executive officer Lee Yeow Seng said the acquisition of the 100% equity stake in the South Beach development marked a significant strategic expansion for IOIProp in Singapore.
'Combined with the IOI Central Boulevard Towers and the W Singapore –Marina View hotel, this acquisition will elevate the group's profile as one of the major landlords of premium office space and a prominent player in the hospitality industry within the Republic,' he said.
Moreover, CDL executive chairman Kwek Leng Beng said the 'strategic' divestment enables CDL to realise exceptional value, while entrusting the ownership to a partner that knows South Beach well, marking a natural evolution in its successful partnership.
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