| Roxy-Pacific Holdings and Tong Eng Group jointly announced that their joint venture has entered into a definitive sale and purchase agreement to sell freehold property, 117 Clarence Street, in Sydney to ICPF Nominees Pty Ltd as trustee for Clarence Street Precinct Trust. The consideration of A$153 million (~S$154 million) represents an 89% gain in two years.  Executive chairman Teo Hong Lim. NextInsight file photoRoxy-Pacific and Tong Eng Group had acquired the 14-storey commercial building, 117 Clarence Street, in February 2016 for A$81 million through a 50-50 JV company, Feature-Roxy Pty Ltd. Mr Teo Hong Lim, Executive Chairman and CEO of Roxy-Pacific, said, “We entered the Sydney commercial market relatively early, seeing good potential for us to capitalise on the favourable market cycle. The divestment of 117 Clarence Street closely follows the sale of 59 Goulburn Street. "Both prime commercial buildings in Sydney had contributed healthy recurring income before they were divested at a good price. We hope to replicate this model and extend our investment track record in the near future, recycling the capital from the sale of 117 Clarence Street into other yield-accretive investments to enhance shareholder value.” |
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Stock price |
49.5 c |
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52-week range |
45 – 55 c |
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PE (ttm) |
21 |
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Market cap |
S$636 m |
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Shares outstanding |
1.31 b |
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Dividend |
1.85% |
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1-year return |
2.6% |
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Source: Bloomberg |
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Roxy-Pacific’s first commercial investment in Sydney – its 100%-owned Grade-A office building, 59 Goulburn Street – was acquired for A$90.2 million in July 2014 and sold in 2017 for A$158 million.
Shortly after the divestment of 59 Goulburn Street, Roxy-Pacific made its maiden entry into New Zealand with the acquisitions of Grade-A commercial towers at 205 Queen Street and the NZI Centre in Auckland.
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Roxy Pacific |
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Stock price: |
Target price: |
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Source: DBS Vickers |
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Both operating assets have commenced recurring contributions to the Group.
The sale of 117 Clarence Street is expected to contribute positively to Roxy-Pacific’s financial performance in the financial year ending December 31, 2018.
| Tong Eng Group's Group MD Teo Tong Lim said, "We are very satisfied with the sale of 117 Clarence Street in the Sydney CBD, which reflects an exceptional return on investment for the Group. This continues to showcase the strong interest in well-positioned commercial assets in Sydney and Melbourne. "We continue to view the Australian property investment market as an attractive capital market, driven by a stable economy and well regulated business environment. The Group intends to continue to grow its presence and investment portfolio in Australia." Tong Eng Group's first foray into Australia was the acquisition of the Harley Davidson building at 111-125 A'Beckett St, Melbourne in April 2015 for A$38 million and subsequently sold for A$61 million in July 2017. Roxy-Pacific and Mr Teo's private family office vehicle subsequently acquired other Melbourne office assets such as the Grade A office building at 5 Queens Road, 8 Lakeside Drive, Burwood and 312 St Kilda Road in its second Australian joint venture with Roxy-Pacific. |