hi dreamybear,
More details has been provided in the circular for the EGM to seek shareholders's approval for the redevelopment.
https://links.sgx.com/FileOpen/PMD-Circu...eID=782091
With more details, it is able to shine more light:
(1) Back in 2018 when the property was peddled for sale for 35mil, there were no takers. The circular has revealed there was an offer but it was not accepted. Nonetheless, when, who and how much the offer was, was not revealed.
(2) Redevelopment of existing property (61k sqft) at B1 industrial usage will increase to ~70k sqft. A few examples of food production freehold strata unit sales were given in the circular - FoodVision@Mandai, FoodFab@Mandai, FoodConcept@Pandan (all 3 are B2 Industrial) and Mactaggart Foodlink (B1 Industrial).
(3) B2 Industrial has wider usage and hence selling for more than B1 Industrial. Estimation of gross proceeds (based on current prices):
If kept at B1 Industrial:
- Based on Mactaggart Foodlink's asking prices on commercialguru --> we are seeing ~2700sqft (median size) + 3.4mil median asking price.
- 70k sqft will yield = (70000/2700) = 25units*3.4mil = 85mil gross proceeds
- Assume 3% frictional costs, 0.97*85mil/35.8mil shares =
2.30sgd/share
If converted to B2 Industrial:
- Based on circular's transacted prices for FoodVision@Mandai, FoodFab@Mandai, FoodConcept@Pandan --> we are seeing ~2000sqft (median size) + 3.2mil median sales price.
- 70k sqft will yield = (70000/2000)=35units*3.2mil = 112mil gross proceeds
- Assume 3% frictional costs, 0.97*112mil/35.8mil shares =
3sgd/share
So despite the above rudimentary calculations, it is quite clear sticking to B1 Industrial is probably not worth the trouble? The value accretion is getting the approval and redevelop it into a B2 Industrial property.
(4) Chairman Chen is trying his luck at been a developer now. He could have sold it to Lian Beng to save some trouble (in return for less potential profit). Personally I have mixed feelings about it but you can't deny a 76year old's passion, isn't it?
(5) Mactaggart Foodlink (former Khong Guan Industrial Building) was developed by SLB Development (subsidiary of Lian Beng) and looks to be very similar in terms of size and location to 7/9 Harrison Road. So here are some details of their sales progress:
SLB has also launched Mactaggart Foodlink, an industrial development project, in May 2018. Sales status of Mactaggart Foodlink is 60.7% as at 30 June 2018. Sales Status as of 31 May 2021: 100%. Project Status: TOP on 30 March 2021
From The Edgeprop transaction data, almost all the strata units were sold by end 2019. So one could cautiously be optimistic that it could be fully sold before the redevelopment TOP in ~2years after it starts construction.
https://www.edgeprop.sg/industrial/mactaggart-foodlink