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Hougang Plaza Redevelopment

OXLEY Holdings, fresh from its purchase of McDonald’s Place, has snapped up Hougang Plaza for $119.1 million from CapitaMall Trust (CMT).

In a statement issued to the Singapore Exchange yesterday, CMT said that it has sold the three-storey shopping mall (Hougang Plaza) located in Hougang Central to Oxley Bloom, a fully-owned subsidiary of Oxley Holdings. Oxley Bloom will pay for the acquisition in cash, which it said will come through a combination of internal resources and external borrowings.

Oxley Holdings said it intends to enter into a formal agreement with Lian Beng Land which will see the latter become a joint venture partner in redeveloping Hougang Plaza. Lian Beng will do so by taking up a 50 per cent stake in Oxley Bloom.

The acquisition price of Hougang Plaza is more than three times the market valuation of the property, which was put at $34 million as at Dec 31, 2011, by Knight Frank. The book value of the property is also $34 million.

When contacted, Oxley Holdings said that it plans to turn the current shopping mall (Hougang Plaza) – which currently has a net lettable area of 75,353 square feet, and a land area of approximately 57,047 square feet – into a mixed residential cum commercial development. This is subject to approval from the Urban Redevelopment Authority.

Hougang Plaza has a leasehold tenure of 99 years, with effect from March 1, 1991.

In April, Oxley Holdings bought the iconic McDonald’s Place at King Albert Park for $150 million. The freehold, 5,534.8 square metre site that the two-storey commercial building sits on is zoned for commercial and residential use.

Ashish Manchharam, head of investments in South East Asia at Jones Lang LaSalle, which acted as property consultant to CMT for the Hougang Plaza deal, said: “Hougang Plaza received strong interest from the market. A new development on the site is expected to be well received given the location, which is walking distance to the Hougang MRT station and within proximity to amenities.”

CMT expects to realise a net gain of about $83.3 million from the sale of Hougang Plaza, after taking into account the divestment fee and divestment-related expenses.

“The net sale proceeds of approximately $117.8 million will provide CMT with greater financial flexibility to pursue possible acquisition opportunities and/or to repay debt,” it said in a statement.

CMT added that the sale of Hougang Plaza is not expected to have any material effect on the net asset value and distribution per unit for FY2011.

Oxley Holdings said its purchase of Hougang Plaza is not expected to have a material impact on the earnings per share or net tangible assets per share of the company for the current financial year ending June 2012.