Mainboard-listed Sheng Siong Group OV8 has entered into a conditional sale and purchase agreement to acquire Jelita Property for some $50.2 million.
According to a Sept 27 bourse filing, Jelita Property owns eight strata units at 2 First Street, also known as Siglap V; and the leasehold interest of 78 years from Oct 1, 1992 of a unit at 181 Toa Payoh Lorong 4.
Sheng Siong has proposed to acquire both properties and also for the current vendor to take a lease in all eight strata units at Siglap V in a leaseback agreement.
As part of the agreement, Sheng Siong will first pay a deposit of 10% of the net asset value of the target company, or $5.02 million. The parties say the acquisition will be complete on Oct 30, during which Sheng Siong will pay the remaining 90% to Jelita Property.
The payment of the consideration will be financed through the company’s “internally generated funds”.
Jelita Property is a private limited company incorporated in Singapore on May 4, 1961.
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DFI Retail Group had put the two properties — its last two in Singapore — up for sale in April via exclusive marketing agent JLL. DFI had set guide prices of $32 million and $16.5 million for Siglap V and the Toa Payoh unit respectively. That translated to approximately $3,012 psf for Siglap V and $1,696 psf for the Toa Payoh unit.
Sheng Siong’s consideration is $1.7 million above the combined guide price of some $48.5 million from April.
According to JLL, the eight retail units occupy a combined strata area of about 10,624 sq ft. The units, located on the ground floor, are leased to CS Fresh and Guardian. The 24-hour grocery retailer, CS Fresh, operates out of almost 90% of the space (9,418 sq ft), spanning across seven of the eight amalgamated units. Guardian occupies the remaining unit of 1,206 sq ft.
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A DFI spokesperson had said back in April: “To further concentrate on our expertise in operating high-quality supermarkets, we have decided to divest the Siglap V space. We’ll operate on a leaseback arrangement, allowing CS Fresh and Guardian to continue serving our loyal customers in the area.”
The other asset is situated on the ground floor of a full commercial HDB block located at 181 Lorong 4 Toa Payoh. With a remaining tenure of about 47 years, the full 9,731 sq ft unit is currently occupied by Giant Supermarket.
Giant announced earlier this month that it would close that outlet within September. Giant closed nine stores in six months this year, leaving the chain with 45 outlets here as at September.
Sheng Siong’s shareholders had pressed management on their view on mergers and acquisitions ahead of its annual general meeting in April. They stated, based on the company’s latest annual report, that the supermarket chain had some $324 million in cash as at end-2023.
In a written response, Sheng Siong said it was “reserving cash as its war chest for various opportunities”, such as potential acquisitions of stores, warehousing and tech investments. ”It takes time to nurture these opportunities, and we think it is more strategic that Sheng Siong focuses more on organic growth — expanding our network of stores, improving customer service and exploring ways to attract new customers.”
Sheng Siong had acquired a commercial property at 118 Aljunied Avenue 2 from Jelita Property for some $29.5 million in 2019.
Shares in Sheng Siong closed 1 cent lower, or 0.66% down, at $1.50 on Sept 27.
