Raffles Medical splurged $54.8m on Taman Warna property

5-storey commercial building project underway.

According to OSK, Raffles Medical has announced the acquisition of a property at 100 Taman Warna, located at the junction of Taman Warna and Holland Avenue and within the Holland Village enclave, for a purchase consideration of SGD54.8m.

Here's more:

The 99-leasehold site sits on a land area of 1,942sqm and is adjacent to the Holland Village MRT Station. Raffles Medical intends to re- develop the existing property into a 5-storey commercial building with a gross floor area of 67,720 sf.

On completion, it will lease 2 storeys of the revamped building for its outpatient medical and specialist clinics, while leasing out the remaining space to DBS Bank and other retail tenants.

With all-in development cost at SGD65m, the acquisition is reasonably priced at S$1036 psf ppr, enabling the group to secure its own medical premises on attractive terms while generating rental income from the excess space. Raffles Medical is increasingly spreading its wings into overseas markets.

In China, it has secured joint venture agreements to develop 2 hospitals this year, the first in Shenzhen to develop a private hospital with the China Merchant Group, and the second one in Shanghai with the Shanghai government to develop an international hospital. It owns a majority stake of 70% in both projects, which are expected to cost a total development cost of SGD400m.

Its Singapore operation, meanwhile, continues to grow steadily, underpinned by operating leverage from its hospital operation. We expect robust healthcare demand in Singapore to translate into continuing earnings growth for the group. Maintain Neutral with TP of SGD3.30 on valuation grounds.