The developer will book S$260.7m gain on completion of the divestment
Valuation: CapitaLand's AIG Tower deal values the 999-year leasehold asset, which was completed in 2005, at HK$8.1 billion CAPITALAND has sold its entire 45 per cent effective stake in AIG Tower in Hong Kong in a deal that values the asset at HK$8.1 billion (S$1.6 billion).
Upon completion of the divestment - due on or around Nov 30, 2007 - CapitaLand will recognise a gain of about S$260.7 million in its group consolidated accounts.
The HK$8.1 billion valuation reflects a price of HK$22,042 per square foot (psf) based on AIG Tower's net lettable area of 366,072 square feet. The Grade A office building at No 1 Connaught Road, Central has 999-year leasehold tenure and was completed in 2005. It was developed on the former Furama Hotel site that the former Pidemco Land bought a stake in from Lai Sun Group in 2000.
Pidemco, which later merged with DBS Land to form CapitaLand, subsequently sold half of its stake in the site to American International Assurance Company (AIA).
AIA is also the party that is buying CapitaLand's 45 per cent effective stake in the building under the latest deal announced yesterday. This will boost AIA's stake in the property to 90 per cent with Lai Sun holding the remaining 10 per cent.
Major tenants in the building, which is fully leased, include AIA, Bank of Tokyo-Mitsubishi, Royal Bank of Scotland and Wachovia Bank.
CapitaLand has also been divesting some of its Singapore office assets. Late last month, it sold its 50 per cent stake in Chevron House along Raffles Place in a deal that valued the asset at $730 million, or $2,780 psf of net lettable area.
Earlier last month, CapitaLand also paid $590.3 million for the remaining 50 per cent stake in Eureka Office Fund, which owns One George Street. This valued the award-winning office block at $1.2 billion, or about $2,700 psf.
In March, CapitaLand divested its effective 90.04 per cent stake in Temasek Tower, which was sold for $1.04 billion or $1,550 psf.
During the group's first-half results briefing on July 31, CapitaLand Group president and CEO Liew Mun Leong stressed that the Singapore office sector will remain 'a core holding' to the group but that it will restructure its portfolio by divesting some existing office assets and investing in new developments.
He cited as an example of the latter the group's bid for the former NCO Club and Beach Road Camp grounds. Last week, the Urban Redevelopment Authority awarded the site to a consortium led by City Developments.
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