PIL Building fails to get URA nod to tap CBD Incentive Scheme because of its site area
ATTEMPTS to sell two office towers – ABI Plaza in Tanjong Pagar and PIL Building in Cecil Street – have hit a snag.
In the case of ABI Plaza, a private fund managed by CapitaLand that was doing exclusive due diligence with a view to buying the 12-storey freehold block did not enter into a deal when the exclusivity period ended last Friday .
BT understands that the fund had sought an extension of the due diligence period but the building’s owner – listed MYP, which is controlled by the family of Indonesian tycoon Tahir – is not keen.
Agents are understood to be trying to interest replacement buyers.
When the expression of interest (EOI) exercise for ABI Plaza closed on July 30, only a few parties were said to have made submissions, all below S$200 million. The property was put on the market in June with a guide price of above S$280 million.
The private fund managed by CapitaLand later emerged as a potential buyer at a price of slightly more than S$200 million and entered into the exclusive due diligence.
Over at Cecil Street, the PIL Building has also sustained a dent in its appeal to some potential buyers.
Word on the grapevine is that the Urban Redevelopment Authority (URA) has turned down an application for the property to tap the CBD Incentive Scheme as the building’s site area of 1,812 sq m (19,504 sq ft) does not meet the minimum plot-size requirement of 2,000 sq m for a non-corner site in the Cecil Street locale to benefit from the scheme.
Had PIL Building been approved for redevelopment under the CBD Incentive Scheme, it would have enjoyed a 25-30 per cent uplift beyond the 11.2 plot ratio (ratio of maximum gross floor area to site area) for the commercial-zoned site under the URA’s Master Plan 2019.
The EOI for PIL Building closed on July 17, receiving interest from eight parties – though none was said to have come close to the S$350 million guide price (about S$3,265 per sq ft based on the existing net lettable area of nearly 107,200 sq ft).
Some of these parties were recently invited to enter the second round and sharpen their pricing and make their best offers. Submissions are expected to close in the first half of October.
The grapevine has it that although URA did not approve PIL Building for the CBD Incentive Scheme, it has granted outline approval for three schemes, all of them with 11.2 plot ratio: full commercial; commercial and residential; or residential with commercial at first storey.
Even without the CBD Incentive Scheme, the property stands to benefit from substantial intensification.
The existing gross floor area (GFA) of 147,315 sq ft can be increased by 48 per cent or slightly more than 71,000 sq ft before it reaches the allowable 218,447 sq ft – based on the 11.2 plot ratio.
PIL Building was completed nearly four decades ago and substantially revamped in 2011.
The 17-storey property stands on three plots of land totalling 1,812 sq m. The biggest plot of nearly 1,392 sq metres has freehold tenure. It is flanked by two smaller land strips of about 142 sq m and 278 sq m on 99-year leasehold tenures starting from May 1977, reflecting balance terms of almost 56 years.
Based on a full commercial scheme, about S$73 million would be payable to the state in development charge/differential premium for the rights to tap the 71,000 sq ft unutilised GFA, according to some analysts’ calculations. This does not include the lease extension premium that would be payable if the authorities agree to top up the leases for the two smaller plots to 99 years.
PIL Building is held by PIL Realty, a fully-owned subsidiary of PIL Enterprises, which in turn is wholly-owned by PIL Holdings. PIL Holdings is also the sole owner of the container shipping line Pacific International Lines (PIL).
Earlier this month, PIL’s founding chairman, Teo Woon Tiong (alias Chang Yun Chung or YC Chang), died at the age of 102 years, about two years after stepping down from the company’s board and passing the baton to his son, Teo Siong Seng (better known as SS Teo).
The world’s 10th largest container shipping line, PIL is being rescued by a consortium led by Temasek Holdings unit Heliconia Capital Management.
Unlike PIL Building, ABI Plaza meets the minimum site area requirement of 1,000 sq m specified under the CBD Incentive Scheme for the Anson Road locale.
By Kalpana Rashiwala, Business Time/ 24-Sep-2020