$1.99b Loan For Farrer Rd Condo

Source : The Business Times, July 18, 2008

It's S'pore's biggest syndicated loan for a residential project, says CapitaLand

THE en-bloc purchase of Farrer Court site - which has made many of the sellers millionaires - has achieved many superlatives, the latest being the $1.996 billion loan raised by the CapitaLand-led consortium that is re-developing the land into a high-rise condominium.

Making waves: Ms Patricia Chia, CEO, CapitaLand Residential S'pore, Mr Liew (centre) and Mr Ong. The Farrer Rd condo will have 1,500 homes in 36-storey blocks

The loan involving 10 local and international banks to fund the acquisition of the Farrer Court site and its redevelopment is the largest syndicated residential project loan ever arranged in Singapore, said CapitaLand's president and CEO Liew Mun Leong yesterday. He was speaking at the loan-signing ceremony at the Four Seasons Hotel.

This loan comprises a $1.362 billion term loan and a $500 million revolving credit facility with a tenor of five years, and $133.93 million bank guarantee facilities with a six-year tenor. A joint statement by the consortium partners said the loan will be used to partially refinance the acquisition costs and to part-finance the construction and development.

The consortium, Morganite Pte Ltd - whose partners are CapitaLand Residential (with a 35 per cent stake), Ong Beng Seng-controlled Hotel Properties Ltd (22.5 per cent), Morgan Stanley Real Estate Special Situations Fund III LP (22.5 per cent) and US-based Wachovia Development Corporation (20 per cent) - bought the site in June last year for $1.3388 billion, making it the largest collective sale transaction in Singapore. The transaction was completed in March this year.

The privatised HUDC estate of area 77,898 sq m (838,488 sq ft) will be re-developed into 36-storey condominium consisting of 1,500 homes.

This is the only private residential site in the Farrer Road and Holland Road area to be accorded a high plot ratio of 2.8 and a maximum height of 36 storeys.

'The project will cost us about $3 billion, including land price,' said Mr Liew. This $3 billion tag makes it the largest value residential project in Singapore.

'It's during such difficult times that developers, businesses and partners can pool together and seek partnership strengths with healthy financial standing to exploit opportunities,' Mr Liew added. Despite the weakness seen in new home purchases this year, Mr Liew believes that the demand here remains strong.

He is hence confident of attracting the right buyers for this project given its design by renowned architect Zaha Hadid and its good District 10 location, as well as support from the 'blue chip' partners.

'The demand is still holding (up) and there are still people buying,' Mr Liew said. 'If you look at people buying Nassim Park for over $3,000...and that's exceeding pre-Asian crisis (levels).'

Speaking on the sidelines, Hotel Properties executive director Christopher Lim concurred that current market weakness points to the issue of timing rather than a fall in demand.

'The demand is there but people are just waiting,' Mr Lim said. 'If they believe that price is not going to drop, they will come back to the market again.'

The 99-year leasehold project is slated to be launched in the first half of 2009 and its pricing will be determined at that time. Its breakeven pricing is in the region of $1,350 to $1,450 per square foot.

Mr Liew added that the group is ready to hold back the launch to achieve a desirable pricing as profitability remains the key focus for all its projects. 'We are a company that can hold on,' he said. 'Our balance sheet is not under pressure.'

The mandated lead arrangers and bookrunners of the loan are DBS Bank, UOB Asia, Standard Chartered Bank, OCBC and Royal Bank of Scotland plc.