Far East Hospitality Trust To Divest Central Square For S$313.2 Million (US$229 Million)
December 3, 2021 – Far East Hospitality Trust has entered into a put and call option agreement with CDL Constellation Pte. Ltd., a wholly-owned subsidiary of City Developments Limited, to divest its interest in Central Square, for S$313.2 million (US$229 million) plus a potential incentive fee of up to S$18 million (US$13.14 million).
Central Square is a commercial and residential development at 20 Havelock Road which comprises a serviced residence and commercial spaces including offices and retail units. Far East H-REIT currently holds the leasehold interest of a remaining term of approximately 70.7 years in Central Square.
This divestment comes after efforts by the Managers over the last few years in working closely with CDL to obtain an outline permission from the Urban Redevelopment Authority (URA) for the Central Square/Central Mall precinct under its Strategic Development Incentive Scheme.
With that, Central Square could potentially be redeveloped up to maximum gross floor area (GFA) of 31,758 square meters (up from the current GFA of 17,858 square meters, or an increase 78%), and to a height of 20 storeys (from 7 storeys).
Following the grant of URA’s outline permission, the Managers carefully evaluated all options, including undertaking redevelopment of the site, and concluded that it will be in the best interest of Stapled Securityholders to divest Central Square. This is due to several considerations, including the long gestation period, and that the 10% development limit applicable to S-REITs will be exceeded should Far East H-REIT undertake the redevelopment.
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