CityDev teams up with Keppel Land unit in $1.1b Singapore office venture

The joint entity will acquire three CityDev properties.

City Developments has inked an agreement with Alpha Investment Partners, a subsidiary of Keppel Land, to create a joint investment platform under its second Profit Participation Securities (PPS) transaction.

The joint investment entity will acquire three of CityDev's prime office assets for $1.1 billion. The three properties are Central Mall (Office Tower), 7&9 Tampines Grande, and Manulife Centre, which will be acquired for $218m, $336m, and $487.5m, respectively.

Alpha will fund 60% of the portfolio, while CDL will finance the remaining 40%. The total aggregated value of the securities issued in the PPS transaction is $333.5m. OCBC and DBS will provide $750.1m in senior loan facilities to the joint entity.

“This new initiative allows us to recycle capital for our growth plans. In line with CDL’s long-term investment perspective, we are committed to realising the capital appreciation potential of our real estate assets. By partnering our co-investor Alpha in this new PPS platform, we continue to remain a substantial investor in these prime assets,” said CDL Executive Chairman Mr Kwek Leng Beng.

Investors in the PPS transaction will, in addition to a participation in asset divestment, be entitled to a fully secured fixed coupon payout of 5% interest per annum for a period of five years, in relation to a component of the PPS transaction involving the subscription of bonds.

This funds management initiative is CDL’s second PPS. Last year, it partnered with Blackstone’s Tactical Opportunities Fund and CIMB Bank Berhad, Labuan Offshore Branch for the S$1.5 billion PPS that invests in the cashflows of CDL’s upscale properties in Sentosa Cove, called the Quayside Collection.