$1.99b loan for Farrer Rd condo

July 18, 2008
$1.99b loan for Farrer Rd condo
It's S'pore's biggest syndicated loan for a residential project, says
CapitaLand
By LYNETTE KHOO

THE en-bloc purchase of Farrer Court site - which has made many of
the sellers millionaires - has achieved many superlatives, the latest
being the $1.996 billion loan raised by the CapitaLand-led consortium
that is re-developing the land into a high-rise condominium.

The loan involving 10 local and international banks to fund the
acquisition of the Farrer Court site and its redevelopment is the
largest syndicated residential project loan ever arranged in
Singapore, said CapitaLand's president and CEO Liew Mun Leong
yesterday. He was speaking at the loan-signing ceremony at the Four
Seasons Hotel.

This loan comprises a $1.362 billion term loan and a $500 million
revolving credit facility with a tenor of five years, and $133.93
million bank guarantee facilities with a six-year tenor. A joint
statement by the consortium partners said the loan will be used to
partially refinance the acquisition costs and to part-finance the
construction and development.

The consortium, Morganite Pte Ltd - whose partners are CapitaLand
Residential (with a 35 per cent stake), Ong Beng Seng-controlled
Hotel Properties Ltd (22.5 per cent), Morgan Stanley Real Estate
Special Situations Fund III LP (22.5 per cent) and US-based Wachovia
Development Corporation (20 per cent) - bought the site in June last
year for $1.3388 billion, making it the largest collective sale
transaction in Singapore. The transaction was completed in March this
year.

The privatised HUDC estate of area 77,898 sq m (838,488 sq ft) will
be re-developed into 36-storey condominium consisting of 1,500 homes.

This is the only private residential site in the Farrer Road and
Holland Road area to be accorded a high plot ratio of 2.8 and a
maximum height of 36 storeys.

'The project will cost us about $3 billion, including land price,'
said Mr Liew. This $3 billion tag makes it the largest value
residential project in Singapore.

'It's during such difficult times that developers, businesses and
partners can pool together and seek partnership strengths with
healthy financial standing to exploit opportunities,' Mr Liew added.
Despite the weakness seen in new home purchases this year, Mr Liew
believes that the demand here remains strong.

He is hence confident of attracting the right buyers for this project
given its design by renowned architect Zaha Hadid and its good
District 10 location, as well as support from the 'blue chip'
partners.

'The demand is still holding (up) and there are still people buying,'
Mr Liew said. 'If you look at people buying Nassim Park for over
$3,000...and that's exceeding pre-Asian crisis (levels).'

Speaking on the sidelines, Hotel Properties executive director
Christopher Lim concurred that current market weakness points to the
issue of timing rather than a fall in demand.

'The demand is there but people are just waiting,' Mr Lim said. 'If
they believe that price is not going to drop, they will come back to
the market again.'

The 99-year leasehold project is slated to be launched in the first
half of 2009 and its pricing will be determined at that time. Its
breakeven pricing is in the region of $1,350 to $1,450 per square
foot.

Mr Liew added that the group is ready to hold back the launch to
achieve a desirable pricing as profitability remains the key focus
for all its projects. 'We are a company that can hold on,' he
said. 'Our balance sheet is not under pressure.'

The mandated lead arrangers and bookrunners of the loan are DBS Bank,
UOB Asia, Standard Chartered Bank, OCBC and Royal Bank of Scotland
plc.