Property and construction firm Chip Eng Seng Corporation has acquired a land parcel in Melbourne for about A$20.2 million (S$25.8 million).
The amount for the deal is considerable when compared to the company’s 2009 net profit worth of $75.3 million.
The 20,000-sq-ft land site is located at Mackenzie Street, in the eastern part of the central business district in Melbourne. Chip Eng Seng plans to develop a 32-storey residential tower on the site, with 350 apartment units and several other amenities and shops.
The new development is the company’s third project in Australia. It earlier completed a residential project and a commercial building in Adelaide.
“With the stabilising world economy, we believe that this is an opportune time for us to expand our development property portfolio,” said Lim Tiam Seng, executive chairman of Chip Eng Seng.
“Melbourne represents a great opportunity as the city is currently experiencing a shortage in supply even as the population continues to increase.”
The company doesn’t expect the land sale in Melbourne to have any impact on its earnings per share and net tangible assets for 2010, as it will fund the site acquisition through bank borrowings and internal funds.
As of end-2009, Chip Eng Seng had about $76.1 million worth of cash and cash equivalents and a 0.15 net debt to equity ratio.
Mr. Lim expects that the company’s cash position will be strengthened further when its joint development projects – City Vista Residences near Cairnhill and The Parc Condominium in the West Coast area – receive their temporary occupation permits in 2010.
“This puts us in an excellent position to pursue opportunities in Singapore and the region, as well as allow us to tender competitively for construction projects,” said Mr. Lim.
The most recent property release of the company was the Oasis@Elias in Pasir Ris.