CDL continues to offload assets into its profit participation securities scheme

It will lock in S$18.2m profits from the latest sale.

City Development (CDL) has recently unlocked the value of Nouvel 18 through its third profit participation securities (PPS) platform. CIMB tagged the deal 'accretive' with positive medium-term spillover benefits.

CIMB noted that the deal is positive for CDL as it would unlock capital to be redeployed into other developments and minimise potential penalty leakages as well as expand the group’s fund management platform with S$3.5bn funds under management.

CIMB estimates CDL to recognise a S$27.3m (3 Scts) boost to book NTA and S$18.2m (2 Scts) gain to bottomline in FY16.

Gearing is also likely to dip from 27% to 19% when the transaction is completed, it added.

Valued at S$977.6m (inclusive of S$12.2m in associated expenses), the structure comprises S$102m of PPS, S$579m of senior loans and S$296m of notes due in 2021-2023.

CDL will hold S$140m of the notes (14.3%) due in 2023.

The PPS will be issued to a special purpose vehicle (SPV), Green 18, whose shareholders are high net worth Singaporeans and companies owned by Singapore citizens.

The deal effectively prices Nouvel 18 at S$965.4m or S$2,750psf. Green 18 will enjoy a preferred 5% annual IRR and further upside, less any incentive fees payable.

CDL's wholly-owned subsidiary Trentwell Management will be appointed as exclusive asset manager and marketing agent for five years (with an option to extend to seven years) to manage, lease, market and sell the units at Nouvel 18.