High Street Centre sale for S$678 million fails

Delay in fund remittance process leads to buyer, a private equity fund, missing deadline for deposit payment.

Oct 4, 2024

High Street Centre's collective sale fell through after the buyer failed to pay the initial deposit of S$6.78 million (1 percent of the S$678 million deal) because its funds were still in remittance.

According to marketing agent Cushman & Wakefield, the buyer made "every effort to expedite their movement of funds to Singapore," but the collective sale exercise had a hard deadline of October 2 to meet.

The buyer was a private equity fund comprised of high-net-worth investors from the United States, Europe, and India making its first acquisition in Singapore. The purchase was made by the group through Transformation Development (TD), an exempt private company that designs and consults on infrastructure.

Because the group lacked the funds to pay for the stamp duty of approximately S$33.9 million by October 2, as well as the remaining deposit of S$5.58 million, the High Street Centre collective sale committee was unable to file its application to the Strata Titles Board by the deadline.

"(This was) despite the fact that our solicitors had ensured that we were able and ready to do the transaction even if the funds arrived at the last minute," said Christina Sim, Cushman & Wakefield's senior director of capital markets.

She added that the funds were expected to arrive between now and Oct. 9. Previously, the delay was attributed to regulatory checks. "Once the purchasers' bankers manage to satisfy regulatory measures, the monies will be remitted, and all requisite payments will be up to date," the consultants had previously stated.

TD is said to have forfeited approximately S$1.2 million of its deposit for the en bloc transaction.

The owners of the 99-year leasehold development accepted only its offer for a collective sale.

The 1% deposit was originally due on July 31, but was postponed because the buyer was subject to "heightened regulatory vigilance on fund movements," according to Cushman & Wakefield in an earlier letter dated August 7.

The buyer was still "committed to completing this deal," even if it would take longer than expected, the consultancy said. A deposit of S$200,000 was initially made as a "show of sincerity."

However, Sim stated that the High Street Centre collective sale is far from over. While the team may "need a breather" from this job, they have also learnt the importance of accounting when dealing with fund remittances.

According to private bankers, the process of remitting funds can sometimes take three to six months.

The High Street Centre collective sale attempt followed several previous unsuccessful attempts.

The commercial development was first put up for sale in June 2020, with a S$800 million reserve price. The tender was reopened in October 2023 at S$748 million, 6.5% less than the previous attempt, but no bids met the reserve price.

The reserve price remained at S$748 million in the most recent attempt, but Cushman & Wakefield stated that plans were underway to reduce the price to less than S$700 million. This was finally accomplished in early August, with the price reduced to S$678 million after the tender closed and the required 80% mandate was met.

As of August 23, more than 85% of unit owners supported the move.

High Street Centre, located at One North Bridge Road, sits on a 60,298 square foot (sq ft) site with an allowable gross plot ratio of 7.72. The 30-story mixed-use development contains approximately 430 strata-titled units, including offices, retail spaces, and residential apartments.

Sim stated in a previous press release that High Street Centre is the only commercial opportunity that allows for the incorporation of a hotel or serviced apartment component.

The firm also stated that the Urban Redevelopment Authority will support the commercial development of at least 60% of the site's gross floor area of 466,085 square feet. This could include a mix of office and retail space, as well as food and beverage outlets.

40 percent may be set aside for the redevelopment of a hotel with no more than 450 rooms, or for residential or serviced apartment use.

The lower price tag of S$678 million works out to around S$1,960 per square foot per plot ratio (psf ppr) if the buyer uses the 40% quantum for residential use, or about S$2,080 psf ppr if it is used for hotel purposes. The land rate includes a land improvement charge and a premium to renew the lease for another 99 years.