PETALING JAYA: Sime Darby Bhd is in talks with US-based private equity fund Blackstone Group to sell a majority interest in three Singapore properties for S$300mil (RM870mil).
According to a report by Singapore’s The Business Times, the deal is for the proposed properties of Sime Darby Centre at 896 Dunearn Road; Sime Darby Enterprise Centre, a light industrial building along Jalan Kilang off Jalan Bukit Merah; and Sime Darby Business Centre at 315 Alexandra Road (next to IKEA).
Blackstone, which is looking to acquire 75% of the properties, would be income-generating as Sime Darby entities occupying space there could be expected to lease back the space upon completion of the deal, said the newspaper.
Of these, the big-ticket item will be the Sime Darby Centre – an office and retail development on freehold and 999-year leasehold land parcels zoned for commercial use and with an 1.8 plot ratio (ratio of maximum gross floor area to land area).
The newspaper also said that part of this property used to house a BMW showroom. Today, some of Sime Darby’s Singapore offices are still located there, but the retail-and-office building also has third-party tenants such as Scanteak, Cold Storage and ToTT Cooking Studio.
The other two properties are light industrial developments sitting on Business 1-zoned sites with 2.5 plot ratios; they are on sites with a balance lease of around 40 years.
Sime Darby’s other properties on the island include 303 Alexandra Road, also known as Sime Darby Performance Centre and where the main BMW showroom for new cars is located, and 280 Kampong Arang Road in the Mountbatten/Tanjong Rhu area, housing a showroom for second-hand BMWs. Sources said the combined value of these five assets could exceed S$500mil.
Singapore Business Times said one property in the deal, the one beside IKEA in Alexandra Road, also has a second-hand BMW showroom. Sime Darby unit Performance Motors distributes BMWs.
The move to dispose of the properties is part of Sime Darby’s aim to pare down debt.
In February, during the company’s second-quarter results announcement, Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh said the conglomerate was targeting to raise RM1.8bil by selling or leasing back the company’s assets in Singapore and Australia.
He said Sime Darby expected the completion of the asset monetisation plan by the end of March, noting that the company had identified 13 assets in Australia and three in Singapore for the planned asset monetisation.
Sime Darby is targeting to reduce its gearing level to 0.54 times by the end of the financial year ending June 30 from 0.61 times as at end-2015 through asset monetisation and an RM3bil perpetual sukuk programme.
