The family behind Singapore’s Lian Beng Group is on the move with two generations of the Ong clan announcing deals this past week, including an S$49.25 million ($35.67 million) purchase near Paya Lebar revealed on Friday.
Singapore-listed Lian Beng told the bourse on Friday that it has agreed to buy a unit of SGX-listed snack producer Food Empire Holdings, which holds a freehold 11-storey industrial building at 31 Harrison Road in District 13 – a property which sits just behind the Lian Beng Building – headquarters for the developer helmed by tycoon Ong Pang Aik.
“We believe one of the buyer’s options in the mid to long term may involve combining the Food Empire Building site with their own HQ, which is located just next to it, for a more comprehensive redevelopment,” said Shaun Poh, capital markets head for Singapore at Cushman & Wakefield which brokered the deal. “It could well be a larger corporate building with the latest specifications for the entire Lian Beng group of companies, or potentially the combined plot may be redeveloped, subject to planning approval, into a multi-user food factory to cater to the rising demand for such space which is extremely scarce in todays’ market.”
The announcement of the Paya Lebar deal comes just a day after SLB Development – a wholly owned subsidiary of Lian Beng chaired by Ong Pang Aik’s son Matthew Ong – disclosed $46 million in acquisitions including a pair of commercial buildings in Singapore and another office block in Melbourne.
Specialities of the House
“The group views the proposed acquisition as a good opportunity to participate in a strategic investment of the property, where the group can derive rental returns which will be added to the earnings of the group,” Lian Beng said.
Based on independent calculations, the company chaired by tycoon Ong Pang Aik is paying around S$10,241 per square metre for the 4,809 square metre (51,763 square foot) structure, which is currently fully occupied.
Poh said Food Empire occupies more than half of the space as its main office and will lease back that portion once the divestment is completed. Other key tenants in the building include listed food tech firm Oceanus and fintech player SCash.
The buyer is planning to keep its new prize as an investment property before proceeding with a redevelopment project within 5 to 10 years time, Poh said.
Building a large food factory on the site would add to Lian Beng’s food-related industrial assets within the district, including its 5-storey Mactaggart Food Factory at 20 Mactaggart Road – a few blocks away from Food Empire.
“Lian Beng Group has always been on the lookout for freehold industrial assets or opportunities especially if you can convert it to food-related buildings, it will be very popular,” Poh said.
Picking up headquarters of food and beverage companies is not new for Lian Beng, after the firm last year led a consortium of investors which snapped up the headquarters of bakery chain Breadtalk near Paya Lebar for S$118 million.
While the home-grown construction group has experience in purchasing and redeveloping industrial assets into food factories, Poh said another option for Lian Beng is to build a larger headquarters on the combined plots and lease out a portion of the space to corporate occupiers.
Taking this route would grow the firm’s existing investment property portfolio in the city, which includes the 12-storey Wilkie Edge mixed-use development in Rochor district, as well as the 5-floor Broadway Plaza commercial building in Ang Mo Kio.
The building sits at the junction of Playfair road and Harrison road in Macpherson, which is within Singapore’s central east region near Paya Lebar – where a series of projects changed hands over the past year including Sun Venture buying a stake in the Westgate Tower office building in June 2021. Two months earlier Australia’s Lendlease had set up a JV to redevelop a pair of commercial buildings in Paya Lebar less than three kilometres (1.7 miles) south of the Food Empire building.
For the seller, Food Empire is realising an estimated S$20.54 million gain from disposing of what it considers to be a non-core asset, while using the sale proceeds to “ explore strategic and commercial business opportunities.”
Poh said demand for freehold industrial properties in Singapore remains strong with transaction volumes primarily restricted by the limited pool of available assets and indicated that pricing for such properties may inch higher this year.
“We expect more deals to be done in the next 6 months with expected increase in capital value for freehold industrial assets in view of scarcity, especially industrial properties that are strategically and conveniently located, such as the areas around Harrison Road/Playfair Road,” he added.
Family Buying Spree
Lian Beng’s Friday announcement of its Food Empire building acquisition came just one day after SLB Development picked up two four-storey commercial properties at 30 and 31 North Canal Road near Singapore’s Clarke Quay for S$14 million.
In the same notice to the Singapore exchange SLB announced that its joint venture with Hong Kong-based Weave Living had completed the purchase of the Hotel Clover in Singapore’s Bugis area for S$75 million.
In the same announcement, SLB also revealed an agreement to purchase a 12-storey office building at 225 King Street in the Flagstaff precinct of downtown Melbourne for A$35.5 million ($25.5 million).