PPS3 to be priced ‘much higher than S$2,300 psf’

CITY Developments Ltd (CDL) has said that the anticipated pricing for a potential residential profit participation securities (PPS) transaction will be “much higher” than the S$2,300 per square foot (psf) cited in a report in The Business Times on Friday, “given the intrinsic value of our assets”.

Responding to the report, the property developer added that it would make further announcements if and when a deal on this subject materialises.

BT had reported on Friday that CDL was said to be attempting its third PPS structure, this time involving 48 apartments in three completed top-end condo projects, with a total portfolio size of about S$350 million.

The price works out to around S$2,300 psf on strata area on a portfolio basis, the report said.

PPS are fixed-term instruments that provide investors both yield and capital-gains play.

The 48 apartments being bundled for what is potentially CDL’s next PPS deal comprise:

22 units at Cliveden at Grange, a freehold project completed in 2011; 12 units at St Regis Residences, a 999-year leasehold condo built in 2008; and 14 units at One Shenton, which was completed in 2011 on a site with 99-year leasehold tenure that started in October 2005.

Cliveden at Grange and One Shenton were developed by fully-owned subsidiaries of CDL. The property developer has a one-third share in a joint venture that developed St Regis Residences (the other shareholders being Hong Leong Holdings and TID). The three projects are not subject to Qualifying Certificate rules.

CDL said that, like all real estate companies operating in the current climate, it continuously evaluates numerous alternatives for preserving value.

It said: “Whilst the company is constantly reviewing ways to optimise its portfolio and recycle capital, CDL wishes to clarify that this potential project is one of several PPS structures that the company is exploring and is at a very preliminary stage.

“No definitive agreements have been entered into and there is no assurance that this potential PPS project will materialise in the near-term.

“There is also no certainty at this preliminary stage on the final salient terms for this potential PPS project.”