United Industrial Corporation

United Industrial Corporation (UIC) yesterday announced it had inked a deal to buy UIC Building at Shenton Way under a collective sale that prices the property at $600 million, or $870 per square foot of potential gross floor area inclusive of development charge and differential premium to top up the site’s lease to 99 years.

The mainboard-listed company said subsidiary proprietors of the building who own at least 80 per cent of share values have accepted UIC’s offer to purchase the property yesterday. The subsidiary proprietors include UIC and its fully owned unit, UIC Development (Pte) Ltd, which together hold 78.8 per cent of share values in the property.

Analysts note the net real acquisition cost to UIC for purchasing the 21.2 per cent of the property that it does not already own works out to about $127 million.

CB Richard Ellis brokered the deal.

The collective sale is subject to approval from the Strata Titles Board and the obtaining of a Qualifying Certificate from the Controller of Residential Property, if applicable.

UIC is said to be planning a twin-tower residential development on the site.

‘But looking at the way office values are shooting up, I wouldn’t be surprised if they changed their minds and redeveloped the site into a new office development instead,’ said a market watcher.

According to a BT report earlier this week which said UIC was poised to buy the rest of the building that it does not already own, the building had attracted three bids - from UIC, City Developments and Wing Tai in an expression of interest exercise which closed on Feb 8.

Analysts reckon that UIC would be in a better position to pay a higher price to the other owners as, unlike rival developers, its outlay will be lower since it already owns 78.8 per cent of the building.

Under Master Plan 2003, the 72,960 sq ft site is zoned for commercial use with an 11.2+ plot ratio and qualifies for a 10 per cent bonus plot ratio. The plot has a 35-storey height limit.

The maximum potential gross floor area of the site works out to 898,867 sq ft inclusive of the bonus plot ratio.

A full-residential redevelopment scheme could result in about 600 units averaging 1,500 sq ft being built on the site, or 750 apartments assuming a smaller average unit size of 1,200 sq ft.

Of course, any redevelopment scheme will have to be approved by the authorities.

Source: The Business Times, 14 April 2007