United Engineers

United Engineers: Proposing plans to divest its mixed-use development UE BizHub East in Changi Business Park for $518m. The group has entered into a conditional put and call option agreement with Viva Industrial Trust Management (VITM), in its capacity as the manager of the proposed Viva Industrial REIT for the sale of the property. Talk in the market is that the proposed Viva Industrial Reit is also acquiring Technopark @ Chai Chee from CapitaLand for about $200m and a property in Tuas from another party. The proposed Reit is said to be backed by Tan Kim Seng, the founder and former chairman of KS Energy. United Engineers, in its announcement yesterday on the proposed divestment of UE BizHub East, said that upon completion of the proposed divestment, UED is expected to realise an estimated net divestment gain of $86.7m and also has the option to subscribe for 5% of the stapled securities. The group is also granted the right to subscribe for a 10% stake in each of VITM and Viva Asset Management, the trustee-manager of the business trust. Upon completion of the proposed divestment, UED will be appointed as the property manager to operate, manage, maintain and market the business park and retail spaces for a term of five years. Currently, the business park buildings are 73% leased out and house corporate tenants such as Cisco Systems (USA) and BT Singapore. In addition, 90% of the retail space has been leased out to tenants including FairPrice Xtra@Changi Business Park and Fitness First.