KUALA LUMPUR: IOI Properties Group Bhd has rejected the proposal from its group chief executive officer Lee Yeow Seng to buy Shenton House in Singapore.
The proposal involved the redevelopment of Shenton House, a commercial property located at 3 Shenton Way.
Shenton House was acquired by Lee's private vehicle Shenton 101 Pte Ltd in a tender for S$538 million (RM1.9 billion).
In a statement today, IOI Properties said its board concluded that accepting the proposal would not be in its best interest.
The decision came amid the group's existing and upcoming investments in Singapore, including IOI Central Boulevard Towers, W Residences – Marina View, W Singapore – Marina View, and recent acquisitions such as the W Kuala Lumpur and Courtyard by Marriott Penang.
"The board also considered the additional funding required for the Shenton House project."
Meanwhile, to address potential conflicts of interest due to Lee's involvement with Shenton 101, IOI Properties today entered into two management agreements with Shenton 101.
Multi Wealth (Singapore) Pte Ltd, a subsidiary of IOI Properties, will serve as the exclusive project manager for the redevelopment of Shenton House, while Wealthy Link Pte Ltd, another IOI Properties subsidiary, will manage the property's ongoing operations.
These agreements include provisions for the IOI Properties group to have a right of first refusal on any potential sales or joint ventures involving Shenton 101 or Lee's equity interest.
The right of first refusal remains valid until the end of the redevelopment period in the first quarter of 2031 or for seven years from the agreement date, whichever is longer.
The management agreements are classified as related party transactions but do not require shareholder approval due to the transaction's percentage ratio being less than five per cent.
IOI Properties said it will hold a general meeting to address the conflict of interest involving Lee with further details to be announced.