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Move comes after Centrepoint trails in bid for adjacent site

OCBC Bank yesterday said it will explore possibilities for its Specialists’ Shopping Centre/Hotel Phoenix property, a day after Centrepoint Properties failed to clinch the former Glutton’s Square site next to Specialists’ Centre.

Centrepoint - in which the bank has an indirect interest of under 10 per cent through Fraser & Neave - emerged as only the fourth highest bidder at Wednesday’s tender for the site. Its price of $356.88 million or $920 psf per plot ratio was 15 per cent below the $421.1 million or $1,085 psf ppr offered by top bidder Far East Organization.

Still, OCBC can hope that Centrepoint manages to clinch another plot that will come on the market later this year. It is on the other side of Specialists’ Centre, which is more than 30 years old. The reserve-list site - part of which is currently used as a carpark - will be made available for application by developers in March and could be launched for tender as early as June.

A spokesman for OCBC yesterday reiterated that the bank intends to hold Specialists’ Centre and the Hotel Phoenix complex for long-term investment.

‘The property is in need of refurbishment and it may be appropriate to do so in conjunction with the new developments at the adjacent plots. We will explore possibilities as we find out more about the upcoming developments on these sites,’ she added.

The bank is not required to divest the freehold Specialists’ Centre/Hotel Phoenix under Monetary Authority of Singapore’s directive for Singapore banks to pare their non-bank businesses by July 17 this year, as the net book value of OCBC’s non-banking property holdings is less than 20 per cent of its shareholder funds.

Property sources say OCBC is not keen to redevelop Specialists Centre/Hotel Phoenix because its existing gross floor area of 443,689 sq ft already exceeds the maximum allowed under Master Plan 2003, by over 20 per cent. Hence, it makes more sense for OCBC to spruce up the existing property.

OCBC holds ‘more than 5 per cent but less than 10 per cent’ in F&N, which fully owns Centrepoint, the OCBC spokesman said.

Had Centrepoint clinched the Glutton’s Square site, BT understands that the original plan within the group was that it could develop its new mall on the site in a manner which will be seamlessly integrated with Specialists’ Centre/Hotel Phoenix.

It remains to be seen if Far East will co-operate with OCBC to tie in the new mall on the Glutton’s Square site with a refurbishment of Specialists’ Centre.

An industry observer said it may have an incentive to do so as the successful tenderer of the Glutton’s Square site will be required to build an underground connection below Hotel Phoenix’s surface carpark linking the new development to a knock-out panel entrance to Somerset MRT Station, say market observers.

In order to do that, Far East will need to seek OCBC’s permission. Of course, there could be further avenues for co-operation. ‘OCBC is already one of Far East’s bankers and who knows, it could also provide a loan for the Glutton’s Square project,’ mused a market watcher.

In any case, it may be in Far East’s interest to co-operate with OCBC, as it may not want its new mall to stand next to a tired-looking building if Specialists’ Centre remains in its current form, he added.

Source : Business Times - 20 Jan 2006