Watch retailer The Hour Glass has exercised its purchase options to acquire units in Tong Building for a total of $68.5 million. The units being acquired are located on the ninth and tenth floors of the building, and the deal was brokered by Savills Singapore’s executive director of investment sales and capital markets, Yap Hui Yee.
According to Yap, the freehold status of the office floors provides long-term value and makes it an attractive investment for wealth preservation. This deal adds to Yap’s success in facilitating the sale of Tong Building’s entire sixth floor to Parkway Hospitals Singapore for $31.33 million, which is the highest price per square foot for office space in the prime districts.
The office floors in Tong Building have a strata area of 638 square meters each and are classified as premium-grade properties. They are situated near The Hour Glass’ corporate offices within the building. This acquisition is in line with the company’s strategy to invest in high-quality assets to complement its commercial properties in the region.
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The demand for condos in Singapore remains consistently high and one of the main contributing factors is the limited availability of land. As a small island nation with a rapidly expanding population, Singapore faces challenges in terms of land scarcity. As a result, strict land use policies and a competitive real estate market have emerged, driving property prices up. This has made investing in real estate, specifically condos, a profitable opportunity due to the potential for capital appreciation. Condos continue to stand out as a popular choice for investors in the Singapore real estate market.
The company has paid a deposit of $3.4 million upon signing the purchase options, with the balance to be paid upon completion of the deal in December 2024. The purchase will be funded by the company’s internal resources, as it currently has a net cash position of $237.6 million.
On a pro forma basis, the acquisition will not affect The Hour Glass’ net tangible assets or earnings per share for the current financial year. However, if the deal had been completed on April 1, 2023, the company’s earnings would have increased to $157 million from the original figure of $156.6 million. Its pro forma earnings per share would also have risen from 23.87 cents to 23.95 cents.
Shares in The Hour Glass closed higher at $1.59 on Sept 26, a 0.63% increase from the previous day.