Shareholders of the former St James Holdings could reap a bonanza now that it is reinventing itself as a major property player.
Developer Perennial Real Estate Holdings (PREH) completed a $1.56 billion reverse takeover of the nightlife firm last month and is set on raising its net asset value by more than twofold from its current $1.26 billion to $2.62 billion, along with other deals in tow.
The enlarged group will also include a PREH-sponsored vehicle, the Perennial China Retail Trust (PCRT), once it is de-listed.
PREH’s net asset value per share is expected to climb to $2.12, said chief executive Pua Seck Guan in a recent interview with The Straits Times. PREH units have yet to commence trading on the mainboard.
This increase assumes the group completes its acquisition of the Beijing Tongzhou Integrated Development and the remaining 51 per cent stake in Perennial Real Estate as well.
“The potential of the company is great because we’ve created a sizeable platform to deliver long-term growth,” said Mr Pua, pointing to PREH’s China portfolio, which comprises mixed-use developments worth $13.1 billion.
Its Singapore portfolio, which includes Capitol Singapore, Chijmes and TripleOne Somerset, has a gross development value of $3.8 billion.
Shareholders of the former St James Holdings who keep their shares could enjoy ample rewards, especially as PREH completes its ongoing projects in China and Singapore in the coming years.
Even PCRT shareholders who participate in the share swap can expect an upside, given that they are receiving PREH shares at a discount to the net asset value per share of $2.12, said Mr Pua.
“All our projects, which include the two largest high-speed rail commercial hubs in the whole of China, are strategically connected to major transportation nodes,” he noted.
“And that’s the exciting thing – because we have seen how successful such commercial hub projects can be in the likes of other cities, be it Tokyo, Osaka or Hong Kong.”
The group’s integrated development in Chengdu, for instance, is next to the Chengdu East High Speed Railway Station.
It has a gross floor area of 8.2 million sq ft and will boast offices, apartments and retail space when completed.
“When we bought the land about four to five years ago, other developers didn’t quite see its potential,” said Mr Pua.
“Today, as more train lines are added and as the area evolves to become Chengdu’s new central business district, you can see it is bustling with activity.”
Other projects in the pipeline include integrated developments in Xi’an, which is adjacent to the Xi’an North High Speed Railway Station, Beijing’s Tongzhou district and Zhuhai’s Hengqin area.
Mr Pua said the group plans to retain ownership of about 50 to 60 per cent of each China project, while putting the rest up for strata- title sales – as offices, shops, small office home office (Soho) or residential units that will “churn out trading profit and retain liquidity”.
Such a strategy, said market watchers, may fetch high rates in a market packed with potential investors.
But they also cautioned that having more sub-proprietors could make it more difficult for the developer to get consensus on issues such as upgrading.
For Mr Pua, however, the sites bode well for the company’s long-term prospects.
“We’re not keen on selling everything because we believe that, in the coming years, these projects will help build the company’s net asset value.”
Mr Pua said PREH is also considering real estate opportunities outside of China, especially in countries such as Malaysia, Indonesia, Myanmar and even in Africa.
“But we won’t go to a country where we don’t know anyone,” he said. “We will at least leverage on our business partners’ network of relationships and experience before moving into another market.”