IOI Properties Group Bhd
Neutral. Target price: RM2.47
board of directors has received a letter of proposal from Group CEO and substantial shareholder Lee Yeow Seng to participate in the joint development of Shenton House in Singapore. Lee, via his private company Shenton 101, successfully bid for Shenton House with a consideration of S$538 million (RM1.87 billion) in Nov 2023.
The property is located in Singapore’s central business district (CBD), which spans 3,377 sqm and is zoned as “commercial” with a gross plot ratio (GPR) of 11.2. The current land lease of Shenton House has approximately 44 years left, with the potential to be extended to a fresh 99-year lease. Furthermore, according to Singapore’s CBD incentive scheme, Shenton House is eligible for a 25% bonus GFA which can be redeveloped into a mixed-use commercial project with residential redevelopment or a hotel at a GPR of 14.
As such, Shenton House is earmarked for redevelopment into a fresh 99-year leasehold commercial development. The current additional existing capital commitment (excluding development costs) is S$476 million, including a land betterment premium, lease top-up premium, and transaction expenses. The proposal is valid for four months and may be extended by another two months. Lee and his brother Datuk Lee Yeow Chor have abstained from voting on the proposal.
The total cost of S$1.014 billion (S$538 million + S$476 million) works out to S$1,900psf per plot ratio – which is considered reasonable when compared to S$1,700psf per plot ratio for the Central Boulevard land acquired by IOIPG in 2016.
NEUTRAL with new RM2.47 TP.