Raffles Education has finally sold its property at 51 Merchant Road for $121.8 million, below its market valuation of $152.7 million.
Nonetheless, this deal will still allow the company to recognise net proceeds of $121.3 million, plus a gain on disposal of some $53 million, given that the property is carried on its books at $68.3 million.
The company had put 51 Merchant Road, dubbed Raffles Education Square, as far back in 2021, for $200 million.
The transacted price is equal to 10.7% of its NAV and nearly 80% of its market value.
The property, which has a 99-year lease expiring on May 14 2092, consists of a main 4-storey commercial building with two levels of basement carpark annexed to two rows of conserved buildings.
The property has a land area of 2,570.5 sqm and a gross floor area of 6,606.43 sqm.
See also: Reclaims Global to acquire freehold commercial property at 291 Serangoon Road for $38.8 mil
Raffles Education, in its SGX filing, did not specify the identity of the buyer, other than that it is a company in the business of letting of self-owned or leased real estate property such as office/exhibition space, shopping mall and self-storage facilities.
According to Raffles Education, the buyer has no links to its directors or substantial shareholders and their respective associates.
On a pro forma basis, assuming the transaction was completed on July 1, its NTA per share would be 42.96 cents, up from 39.15 cents, and EPS 4.77 cents, from 0.55 cents.
See also: Pair of 999-year retail units at Peninsula Plaza with prime escalator frontage up for sale
According to Raffles Education, selling this property is a "decisive move" to optimise its balance sheet and capital structure.
Proceeds from the sale will help pay down a debt load and reduce its interest costs, incurred when buying this property.
"The released capital will be strategically redeployed to bolster working capital and fund higher-yielding initiatives, transforming a non-income-generating asset into flexible liquidity to drive operational priorities and strategic growth," the company says.
Raffles Education shares closed at 12 cents on Dec 1, up 6.36% for the day, extending a gain of 192.5% year to date.
