City Developments Exits Singapore Condos to Raise S$978 Million

(Bloomberg) -- City Developments Ltd., Singapore’s second-largest developer, is exiting its equity stake in a 156-unit luxury condominium project in the city-state in a move that will free up S$977.6 million ($702 million), as it seeks to expand its fund management business.

City Developments will sell shares in the company that owns ‘Nouvel 18’ to Singapore high net worth investors, the company said in a statement Friday. The developer is structuring the deal as a so-called profit-participation security, which involves the sale of S$102 million in equity and the remainder in senior loans and notes.

The condominium is valued at S$965.4 million, or S$2,750 a square foot, the company said. The structure of the transaction will allow the buyers to get a preferred 5 percent annual internal rate of return and any gains beyond that.

The transaction is City Developments’ third profit-participation security as it seeks to expand its fund management platform to S$5 billion within five years. In 2014, it partnered with Blackstone Group LP and CIMB Bank Bhd for a S$1.5 billion security that invested in the cash flows of the developer’s upscale properties in Sentosa Cove. Last year, the developer concluded a second such deal in a joint investment with Alpha Investment Partners Ltd. for a S$1.1 billion office portfolio, the company said.

The deal is “in line with our strategy to grow our funds management business,” City Developments’ Executive Chairman Kwek Leng Beng said. “It is also our first funds management platform where the asset is a purely high-end residential project.”