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CDL, US group to buy 44 units of Grange Road condo

PROPERTY giant City Developments (CDL) has teamed up with United States financial services group Wachovia to buy 44 homes in CDL’s freehold Grange Road project for $432.4 million.

Industry analysts suggest CDL might be preparing to list a real estate investment trust (Reit) using the properties. Knight Frank executive director Peter Ow said: ‘The only reason I can think of for this deal is so that they can put the apartments in a Reit in the future.’

CDL, however, declined to say if a Reit was in the pipeline, but it acknowledged it was studying this as well as other business models.

Under the deal, which works out to an average price of $3,750 per sq ft (psf), Wachovia’s real estate arm, Wachovia Development, will take a 60 per cent stake in the joint-venture company.

According to CDL, there are plans to rent out the 44 three- and four-bedroom apartments and penthouses – which take up two of the four towers at Cliveden at Grange – as well as possibly selling them off later if prices rise.

CDL executive chairman Kwek Leng Beng said yesterday: ‘The development has seen strong foreign interest from both individual buyers and retail investors since its launch… The deal is in line with our business strategy of leveraging on the capital appreciation potential of our developments.’

He had earlier indicated that CDL was considering keeping two blocks of homes at Cliveden instead of selling them off in a rush.

The deal could also mark the start of CDL’s preparation for a residential Reit, property analysts said.

The venture would mean that there are now just 24 units left for sale at Cliveden, which was launched for sale in July.

A total of 42 units were sold at an average price of $3,690 psf before the joint venture was announced yesterday. Many of the buyers are foreigners from Britain, Australia, Hong Kong, China, Taiwan and Indonesia, among other centres.

Wachovia is not new to the local real estate scene. It is also teaming up with CapitaLand to redevelop Char Yong Gardens and Farrer Court.

Mr Ow said the deal was positive for CDL due to the limited upside now for luxury homes. Putting the homes in a Reit, he said, would allow CDL to keep the apartments over a longer period of time, say three to seven years, and ride out any possible drop in prices in the near future.


Source: The Straits Times 6 Nov 07

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