United Engineers to sell UE BizHub EAST for $518m

UED expected to milk $86.7m from divestment.

In a release, United Engineers Limited announced proposed plans to divest mixed-used development UE BizHub EAST in Changi Business Park for $518 million.

United Engineers Developments Pte Ltd, a wholly owned subsidiary of the Group, has entered into a conditional put and call option agreement with Viva Industrial Trust Management Pte. Ltd. in its capacity as the manager of the proposed Viva Industrial Real Estate Investment Trust, for the sale of UE BizHub EAST by UED to, and thepurchase of UE BizHub EAST from UED by, the trustee of the REIT.

“The proposed divestment of UE BizHub EAST is part of the Group’s on-going strategy to unlock value from its various investments in properties including build-to-suit projects.

Through UE BizHub EAST, the Group has demonstrated its ability to design, build and manage a property asset, and the proposed divestment to a real estate investment trust bears testimony to its strong property development track record and asset management capabilities,” said Mr Jackson Yap, the Group’s Managing Director and Chief Executive Officer.

UE BizHub EAST comprises two adjoining business park buildings, the 251-room hotel Park Avenue Changi and convention centre with retail spaces. Together, they amount to 634,000 square feet of net floor area.

UE BizHub EAST has a leasehold period of 30 years commencing from 1 February 2008 with an option to extend for another 30 years. Currently, the business park buildings are 73% leased out and house corporate tenants such as CISCO Systems (USA) and BT Singapore.

In addition, 90% of the retail space has been leased out to retail tenants including FairPrice Xtra@Changi Business Park and Fitness First, among others.

Upon completion of the proposed divestment, UED is expected to realise an estimated net divestment gain after tax of $86.7 million.