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PPS transaction for CDL Nouvel 18

Singapore Property developer City Developments Limited is currently in the process of sorting out a Profit Participation Securities scheme that covers its Nouvel 18 Condo. According to a report in The Business Times that was cited by the financial services company Credit Suisse, the scheme is estimated to be worth $965 million.

The PPS is a floating rate note with its coupons directly linked to the issuer’s profits.

All this comes in the wake of the City Development Limited buying the 50 percent stake of Wing Tai in the Summervale Properties. “Summervale Properties is the developer of Novel 18, the luxurious condo along Anderson road,” noted the credit Suisse.

The $410.96 million acquisition brings the company’s total stake to 100 percent. The purchase of the stake was funded directly through internal resources of the company.

“ We strongly believe that the impending qualifying certificate deadline that is due by the end of November this current year is what prompted Wing Tai to sell part of its stake”, explained Credit Suisse.

The project with 156 units obtained its T.O.P back in November 2014, but it is not launched yet.

Credit Suisse explained that foreign developers who fail to complete the units on time and sell them within a period of 2 years maximum from the T.O.P date will be obliged to duly pay the QC extension fee at the rates of 8 percent, 16 percent and 24 percent respectively on the cost of land. The rates will apply on a pro-rated basis on the percentage of the units that are not sold for the first and the subsequent years.

“At a cost of $2,343 psf, City Development Limited will still be in a good position to comfortably make a 15 % margin rate,” the financial services company explained.

The financial services company also strongly believes that the acquisition of the stake offers City Development Limited more options as it approaches QC deadline.

“With a potential public launch or bulk sale, CDL will also be in a good position to make good the value of the project through capital markets transactions. How this will be achieved will most likely be through its stable and growing funds and which is structured as its PPS transactions variant,” Credit Suisse said.

“CDL appointed JLL to look for potential and willing investors for its upcoming phase 3 PPS platform that will involve a portfolio of three residential projects, having a total of 48 units at an estimated value of $350 million,” reported the Business Times back in May.

Read on some of CDL’s developments include: The Venue Residences, Coco Palms and Forest Woods Condo.

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