Singapore: IOI Properties to buy Shenton House from its own chief

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IOI Properties Group, the Malaysian listed developer that owns IOI Central Boulevard Towers and Asia Square Tower 2 in Singapore, has agreed to buy Shenton House, an office and retail building from the 1970s on Shenton Way. The seller is its own group chief executive and major shareholder, Lee Yeow Seng. The company announced the conditional agreement to Bursa Malaysia, the Kuala Lumpur stock exchange, on Thursday 1 October 2026, and the trade publication Mingtiandi set out the terms in a report dated 4 October.

The headline price is one Singapore dollar. The real cost is far larger, and the plan that follows is larger again: IOI intends to knock the building down and put up a 35-storey tower of offices and hotel rooms, at an estimated cost of S$973.65 million. Two years ago the same board turned the same building down.

IOI Properties Group announcement to Bursa Malaysia, 1 October 2026; the S$593.3 million is the sum of the advances and borrowings it lists, as Mingtiandi reported on 4 October.

How a one-dollar purchase adds up to S$593 million

IOI is not buying the building directly. Its wholly owned unit Boulevard View is buying Shenton 101, the private Singapore company that owns Shenton House, and Mr Lee is that company's sole shareholder and director, according to the announcement. The single share changes hands for S$1.

Shenton 101 comes with two debts. The first is money Mr Lee lent to his own company to fund the purchase. IOI will repay it in cash. The second is a bank loan of about S$376.23 million as at 31 July 2026, which stays inside Shenton 101 and so lands on IOI's balance sheet once the company becomes a subsidiary.

The size of the first debt is where the press reports part ways. Mingtiandi put the advances at S$217.1 million. EdgeProp Singapore, in its report of 2 October, put them at about S$217.6 million as at 31 July 2026. The company's own announcement gives about S$217.06 million, or RM696.43 million, as at 31 July 2026, which is the figure The Star in Malaysia also used on 5 October. The announcement adds that the amount repaid will be whatever is outstanding on the day of completion, and that this may be higher.

Taking the announcement's two figures, S$217.06 million of advances and S$376.23 million of borrowings come to S$593.29 million. That is the value the deal places on the building, and it matches the S$593.3 million Mingtiandi reported.

The benchmark is an independent valuation. Savills valued Shenton House as a redevelopment site at S$585 million as at 15 August 2026, according to the announcement, after deducting the land betterment charge and the premium for renewing the lease. The deal value is S$8.29 million above that, a difference Mingtiandi worked out at 1.4%. The announcement also gives the building's audited book value at the end of 2025, S$545.78 million.

Mr Lee paid S$538 million. EdgeProp reports that he won the building in a collective sale tender in November 2023, buying in his personal capacity through Shenton 101, and that the purchase completed in June 2024. Mingtiandi describes Shenton 101 as the only bidder. The value in this deal is S$55.29 million above that price, or about 10% more.

Why the board said no in 2024 and yes now

Mr Lee first offered the building to IOI in a letter dated 25 June 2024, the announcement records. EdgeProp reports that he did so to avoid a potential conflict of interest between his private holding and the company he runs. The directors with no interest in the matter announced on 28 August 2024 that they would not take it up.

Mingtiandi reports the reasons given at the time: the group's already large exposure to Singapore, and the money it had committed elsewhere, including the purchase of the Courtyard by Marriott hotel in Penang and the construction of IOI Central Boulevard Towers. IOI then signed agreements to manage Shenton House and its redevelopment for fees, without owning any of it, EdgeProp notes.

This time the proposal came back at Mr Lee's request, and the company's stated view, as EdgeProp reports it, is that its circumstances and its strategic position have changed since then. IOI Central Boulevard Towers has committed occupancy above 95% and pays for its own debt, according to EdgeProp's account of the announcement. Mingtiandi adds that IOI completed its purchase of the remaining half of the South Beach development in 2025 and acquired Asia Square Tower 2 in the second quarter of 2026. EdgeProp gives the price of that tower as S$2.5 billion, paid to CapitaLand Integrated Commercial Trust.

The announcement makes one more practical point: the office floors planned for the new tower would be about 19,000 sq ft each, against about 30,000 sq ft at Asia Square Tower 2, so the group could offer space to tenants who want a smaller floor.

The safeguards around a deal with the boss

A listed company buying an asset from its own chief executive is a related-party transaction, and the exchange's rules decide who must approve it. Size is the test. The announcement gives the highest applicable ratio as 3.79%, measured against IOI's total assets. EdgeProp and The Star both report that this is below the 5% level at which Bursa Malaysia requires a vote of the shareholders who have no interest in the deal. No such vote will be held.

Mr Lee and his brother Lee Yeow Chor, a non-executive director, are both major shareholders through the family company Vertical Capacity. Both abstained from the board's deliberations and voting, and will continue to do so, according to EdgeProp.

Maybank Investment Bank is the principal adviser. IOI also appointed Affin Hwang Investment Bank as independent adviser, a step that Mingtiandi and The Star both describe as voluntary for a deal of this size. The announcement records Affin Hwang's opinion that the purchase is fair and reasonable and not detrimental to the non-interested shareholders, and a statement from the audit committee that it is on normal commercial terms.

The building today and the tower planned

The existing Shenton House has 25 storeys: a 20-storey office tower on a five-storey podium of shops and car parking, completed in the mid-1970s, the announcement says. It holds about 218,246 sq ft of net lettable area on a site of 36,350 sq ft, and its occupancy averaged 55.7% in 2025. The land is held on a 99-year lease from 2 June 1969, which leaves about 42 years.

The case for rebuilding rests on a planning incentive. Under the Urban Redevelopment Authority's scheme for renewing older buildings in the central business district, EdgeProp reports, the site qualifies for 25% more floor area, lifting the maximum plot ratio from 11.2 to 14 for commercial and hotel use.

The announcement describes what would be built: a 35-storey tower with 12 floors of Grade A offices, a 165-key luxury hotel on 10 floors, three levels of car parking and one basement level. Net lettable area would rise to about 393,185 sq ft, which is 80% more than today. The plan also includes a fresh 99-year lease.

The margin between those bars is thin. The S$973.65 million cost estimate covers construction, professional fees, a contingency, finance costs, the land betterment charge and the lease renewal premium, according to the announcement, which does not give the two government charges separately. Added to the S$593.29 million deal value, the total outlay is about S$1.567 billion. Against an estimated completed value of S$1,608.30 million, that leaves about S$41 million, or 2.6% of the outlay. Mingtiandi, working from rounded figures, put the margin at about S$43 million, or 2.7%.

What it does to IOI's balance sheet

The purchase will be paid for from internally generated funds and no new shares will be issued, the announcement says. Its effect shows up in borrowing and in earnings per share, because a half-empty building due for demolition brings debt before it brings income.

Gearing is debt measured against shareholders' funds. The step from the audited column to the next one is not the work of Shenton House: the announcement shows gearing already at 1.31 times after events that followed the audited accounts, before the planned property trust brings it to 1.29. That trust, IOIPG REIT, is a listing of Malaysian shopping centres, hotels and offices worth RM7.58 billion, which shareholders approved on 30 September, Mingtiandi reports.

Shenton House itself adds 0.04 to gearing and takes 0.63 sen, about 3.8%, off pro forma earnings per share. The announcement notes that those figures leave out any future earnings from the redevelopment. Mingtiandi adds a comparison with 2024, when IOI calculated that the same purchase would have lifted gearing to 0.89 times.

Conditions and the timetable ahead

The agreement is conditional. The announcement lists approval from Bank Negara Malaysia, the central bank, for investing in foreign currency assets beyond the group's permitted limit; the consent of Shenton 101's lenders; the consent of the Singapore Land Authority for the redevelopment; and a waiver of a right of first refusal held by Multi Wealth (Singapore), which Mingtiandi identifies as IOI's own project management subsidiary. If the conditions are not met within six months of signing, or a later date the two sides agree, the agreement lapses.

Planning is part-way there. The Urban Redevelopment Authority granted provisional permission on 8 June 2026, and written permission is still outstanding. The announcement names three risks: that the conditions are not met, that a valuation is an opinion and may differ from real prices, and that the redevelopment depends on timing, funding, costs, demand and regulation.

What analysts and the market are watching

The Star, reporting on 5 October, found analysts less cautious than in 2024. It cites TA Research, whose view is that the group's finances now work differently: "What has changed is IOIPG's ability to recycle capital from its growing investment-property portfolio."

The same research house is not yet counting on the deal. The Star reports that TA Research forecasts net gearing of 1.16 times for the year to 30 June 2027, has not included either the property trust or Shenton House in its forecasts, and keeps a target price of RM4.70 for the shares, which the newspaper last saw trading at RM3.42. On the Singapore market, it cites TA Research for a core central business district Grade A office vacancy rate of 3.3% in the second quarter of 2026 and for consultants' forecasts of 4% to 6% rental growth in 2026.

Shenton House may not be the group's last move in the financial district. Mingtiandi says IOI and CapitaLand Investment are reported to be negotiating to buy One Raffles Place for close to S$2.4 billion; that is an unconfirmed press report, not an announcement by either company. If the Shenton House purchase completes as planned, IOI will own a site with roughly 42 years on its lease, a hotel and office scheme awaiting written permission, and five years of building ahead of it.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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