Listed developer UOL and its subsidiary, United Industrial Corp (UIC), have agreed to pay S$675.3 million ($499.26 million) to take 100 percent ownership of the Marina Square shopping centre and the Marina Mandarin hotel in Singapore.
The pair of companies controlled by Singaporean tycoon Wee Cho Yaw are buying out a combined 24.27 percent stake in the Marina Square mall from OUE, formerly an affiliate of UOL, and two privately held companies,. The deal also involves the holding company for the retail centre agreeing to acquire OUE’s 25 percent holding in the Marina Mandarin Hotel, according to announcements to the stock exchange by companies involved.
UOL said in its statement that the acquisition would help the group to increase its net tangible assets from over S$9.525 billion to approximately S$9.532 billion. The company also expects the deal to boost its pro forma profit after tax and minority interests from S$433.7 million to S$437.4 million.
Marina Square Mall Sells for S$2,857 Per Square Foot
UIC is acquiring a 10 percent stake in Marina Square from OUE, with another 10.27 being acquired from Finnegan Investments Ltd and Mackmoor Pte Ltd giving up a 4 percent holding. The combined 24.27 stake is costing UIC a total of over S$485.3 million, which values the 1985 vintage retail complex at just under S$2 billion.
As the first major project to be completed on Singapore’s Marina Bay land reclamation area Marina Square, which is dwarfed by the Suntec City complex across the road, has fought repeated tenant turnover in recent years through a series of renovations over the last decade. The complex now includes a Pororo Park children’s playground, a Marks and Spencer department store and a Zara store among its largest tenants.
The transaction values the 700,000 square foot (65,032 square metre) centre at approximately S$2,857.
Hotel Sells for S$1,322 Per Room
In the hotel transaction, Marina Centre Holdings Limited, the holding company for Marina Square now fully controlled by the UOL Group, is acquiring OUE’s 25 percent stake in the vehicle which owns the five star property for S$190 million, according to the announcement.
The deal values the hotel, which carries the Mandarin Oriental Hotels branding, at nearly S$1,322 per room, with UOL Group having 100 percent ownership in the property following completion of the transaction. According to OUE, the net asset value of its stake in Marina Square was S$52 million at the end of December 2018, with the Marina Mandarin holding worth S$154 million.
As part of the deal, an OUE subsidiary has also agreed to terminate the hotel management agreement under which it had operated the Marina Mandarin on or before 31 December 2019, assuming completion of the sale and purchase by that date.
In comments to the media cited in Singapore’s Business Times, Liam Wee Sin CEO of UOL Group indicated that the transaction “will also give us an opportunity to rebrand and rename the 575-room hotel”.
OUE Group in REIT Buyout
OUE’s agreement to sell its interests in the complex was announced just one week after the property group proposed a merger of OUE Commercial REIT and OUE Hospitality Trust, both REIT controlled by the group, to create a new S$2.83 billion trust.
The proposal involves OUE Group offering S$1.37 billion in cash and units in OUE Commercial REIT to OUE Hospitality Trust security holders to agree to the transaction.
Wee Cho Yaw, the chairman of UOL, also chairs Singapore’s United Overseas Bank (UOB). The bank, which was founded by Wee’s father Wee Kheng Chiang, was the majority shareholder in OUE until Singapore regulations restricting the scope of bank’s non-financial businesses pushed the Wee family to sell their OUE stake to Indonesia’s Riady family for S$989.9 million in 2006.