07 March 2010

City Harvest Church to co-own Suntec City Singapore!

Amid cheers from the congregation, City Harvest Church (CHC) yesterday announced that it will pay $310 million to become a co-owner of Suntec Singapore, a prime piece of downtown real estate.

Senior pastor Kong Hee broke the news first at CHC's service at its Jurong West building, then later at another service at the Singapore Expo in Changi.

He said CHC had acquired a 'substantial stake in a consortium company that owns 80 per cent of a joint venture fund that owns Suntec Singapore'.

The complex's full name is Suntec Singapore International Convention and Exhibition Centre.

The $310 million includes the cost of acquiring shares in the consortium, rental costs, renovation costs and others.

Suntec Singapore was acquired by ARA Asset Management through the ARA Harmony Fund last year, with its investors comprising Suntec Reit - which holds 20 per cent - and a consortium company which holds 80 per cent.

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The news is out: City Harvest will be moving to its new premises at Suntec Singapore International Exhibition and Convention Centre by 2011.

This has probably been City Harvest Church’s best-kept secret in its 21-year-history. The exact location of the church’s new site has been a hot topic that has kept Christians within and outside the church guessing, since it was confirmed on Jan. 16 that a space had finally been procured after a five-year search.

Bound by a non-disclosure agreement, the management could not say a word until yesterday afternoon, at the first service of the weekend at the Jurong West church.
The revelation of Suntec Singapore International Exhibition and Convention Centre met with great excitement from the church congregation. This location would put all the services of the church under one roof.

“When we were looking for a property, there were three major considerations,” said senior pastor Kong Hee.

1. Size. “It had to be as big as we can go in our small city-state with limited land. Suntec Convention Centre has a total usable area of more than 1 million sq ft—that is 20 times our Jurong West property and 10 times Expo Hall 8. Suntec has the size we need and can accommodate our traffic.”

2. Location. “We wanted a place that was central and easy to get to by MRT and bus. CHC members come from all over the island. Suntec is centrally located with three major MRT stations nearby: City Hall MRT is a 10-minute walk; Esplanade MRT and Promenade MRT open this April and are even closer by.”

3. Facilities. “A church is not just a main sanctuary and nothing else. Having extra facilities is critical to the operations of the church. We need areas for children, rooms for Bible study, car park space and eating places. Suntec Convention Centre has more than 30 meeting rooms, and we will have access to over 8,680 car park lots in the Suntec-Marina area. Between Suntec City and the Convention Centre, there are 283 stalls/restaurants for our members to eat at, and 622 retail stores for our members to shop in.”

Through this agreement, CHC becomes a co-owner of Suntec Singapore International Convention and Exhibition Centre, and has a share in the annual revenues of all its facilities. The two floors CHC will primarily use are the sixth and seventh floors and include the CHC Auditorium which is column-free and can accommodate up to 12,000 seats. Early plans for this space reveal a stadium-style layout with a sizeable play area for children, and 10 meeting rooms. “All our morning prayer meetings, seminars and conferences will be held here in the future,” explained Kong.

The other parts of the Convention Centre will be open to the public, and will continue to be rented by third parties for exhibitions, fairs and performances as is currently the case.

Tan Ye Peng, deputy senior pastor, explains to City News what co-ownership of Suntec Singapore means. “Last year, ARA Asset Management Limited announced that its ARA Harmony Fund had acquired the Suntec Singapore International Convention and Exhibition Centre. Harmony Fund’s investors comprise Suntec REIT, which holds 20 percent, and a consortium that holds 80 percent. CHC has bought a significant stake into the consortium.”

City Harvest is looking to raise S$310 million, but this sum is not the value of the property, says Tan. “This amount consists of cost of shares; rental; renovation and equipment; professional building, management logistic and maintenance fees; refundable deposits and moving costs.”

One of the key considerations for this site is the business model that CHC can and will adopt for Suntec Singapore. “For Singapore Expo, we are in a lease-only business model. As such, what is being paid out does not have any returns or profit-sharing for CHC. The Board and the Building Committee discussed and concluded that with an ‘ownership-and-lease’ business model, the rent we pay out will be recovered by CHC in the form of profits and dividends.”

“It’s perfect for our church,” says Tan. “This place has everything we need. It’s been around, it’s an established place. It has been the venue for some of the most important events that ever took place in Singapore, like the APEC CEO Summit last November, and the International Monetary Fund-World Bank meeting in 2006. This August it will be the venue for the 2010 Youth Olympic Games. It’s got all the facilities, and it’s super convenient. There is no other place that allows us this space size in this part of Singapore.”

In the event that there are such key events on the same scale as the IMF-World Bank meetings, Tan says City Harvest will exercise flexibility and vacate the space for such clients. “We are now part-owners,” he explains. “It benefits us too.” Tan points out that although City Harvest will use the space for its services, the building is still a commercial entity, and technically not a “church building”. “The church will lease the space to use for our services,” explains Tan. “The difference is that we are also co-owners of this building.”

For Chew Eng Han, who was tasked in 2005 to be the key person on the ground to find out what was available, and to speak to consultants and banks, the success of this partnership with Suntec Singapore is a triumph. “I feel fulfilled,” he declares.
The search was far from an easy one. “It required a lot of wisdom,” says Chew. “We needed the right location, central yet big enough, yet it could not be too costly, and it had to earn income, too. At the time we were looking, between 2005 and 2008, construction costs were escalating. When the crash came, property prices came down, but finding a partner became a challenge.”

Suntec Singapore was negotiated at the right time, and agreed upon at the right price, says Chew.

“It’s the best location because it’s already in existence. Although it may have been around for a number of years, the building is continually being refurbished and in good shape. Since we are not buying a new plot of land, we don’t have the risk of escalating costs—building costs fluctuate. The space is great: it totals over 1 million square feet, the hall is big enough, there are more than 30 meeting rooms and we have access to the Gallery space, and also the 600-seat Theatre on weekends.”
“It’s an ideal location for City Harvest, really—but at a much lower price than its original cost.” Suntec Singapore was originally built for a price of S$650 million in the early 1990s.

The best news for the burgeoning congregation may be the fact that with the space already built and available, CHC targets to move in by the end of the first quarter of 2011 once its lease at the Singapore Expo expires.

For some, the announcement brought tears of joy. For others, the location was a complete surprise. (See box story: What The Members Say)
Kong’s wife, singer Sun Ho, flew back to celebrate the announcement together with the church. Moments after the announcement, she tells City News: “I’m standing in a historical moment when miracles have just happened. God has done it again. My heart is overwhelmed, because this is something in which not just Kong and I, but the whole church have sown, labored, prayed, believed and claimed for, for so long. This is the time, this is the moment—we sowed in tears, and now we are really reaping in joy. Above the location, my heart is just so full of gratitude that we are able to build this house for God, for His glory. I’m grateful I can be a part of it.”

The church will fund the S$310 million through freewill donations from churchgoers. The church building fund, Arise & Build, is into its fifth round, with a target of S$17.3 million. There are eight more Arise & Build campaigns planned.

Further information on the design and details of the Suntec Singapore location will be released in the coming weeks.

(Asiaone and Citynews)

7 Macro Voice(s):

Anonymous said...

ARA Harmony Fund (the “Fund”) owns 100% of Suntec Singapore International Exhibition and Convention Centre (“Suntec Convention Centre”). In September 2009, the Fund paid S$235million and bought over Suntec Convention Centre (source: http://www.ara-asia.com/Document_Library/newsLetter/01-Oct-0908-10-43_PressRelease-HarmonyFund.pdf).

The Fund is 20% held by Suntec REIT and 80% owned by a consortium company (“Consortium Co”)

Consortium Co’s investment in Suntec Convention Centre, in terms of monetary value is therefore = 80% x S$235m = $S190.4m.

In order that City Harvest Church could fulfil the dream of owning (or rather, co-owning) a 12,000-seater auditorium, the church leadership agreed to pay S$310m to acquire a “substantial” share in Consortium Co.

The profit gained by Consortium Co out of the deal is at least S$119.4m (S$310m minus S$190.4m), and that is assuming that Consortium Co sold 100% of its shares to City Harvest, which isn’t the case. Assuming City Harvest bought 50% of shares in Consortium Co, the profit for Consortium Co (or the premium paid by City Harvest) would be: $310m – (50% X $190.4m) = S$214.8m.

How much is the actual premium borne by City Harvest, we may never know, because of the non-disclosure agreement that forbids the church leadership from disclosing the relevant information.

A very good deal for Consortium Co indeed. Hope it is not too bad deal for City Harvest

observer said...

On 9 March 2010, Lianhe Zaobao (Singpore’s leading Chinese press) reported that Suntec Singapore had released a one-page statement and a 3-page FAQ in response to City Harvest's announcement that it will be paying $310m to "co-own" Suntec Convention Centre.

An extract of the Lianhe Zaobao news article, which appeared on page 4 of the paper, is reproduced below:


[B]新达新加坡声明: 城市丰收教会入股 不影响新达新加坡运作[/B]

新达新加坡国际会议与展览中心说,通过ARA Harmony基金获得其部分股权的城市丰收教会,在基金的参与不大,也没有董事会席位。它的加入不会影响新达新加坡的正常运作,也不会引发任何人力削减或裁员行动。

  新达新加坡(Suntec Singapore)昨天发表上述声明,对城市丰收教会(City Harvest Church)决定入股的消息作出回应。

  新达新加坡在1页长的声明和3页长的问答录中说,它所发给城市丰收教会的授权合约允许后者在周末使用6楼的三个会议厅、3楼大厅和横跨2楼和3楼的礼堂,明年3月生效。

(for more: http://www.zaobao.com/sp/sp100309_006.shtml)


Extracts from the FAQs issued by Suntec Singapore are as follows:

[B]1. Who owns the Suntec Singapore International Convention and Exhibition Centre (Suntec Singapore)?
[/B]
- Suntec Singapore is owned by the ARA Harmony Fund. Stakeholders of the Harmony Fund include Suntec Reit (20%) and other private investors including City Harvest Church.

[B]2. Does City Harvest Church have a majority share in the Harmony Fund?[/B]

- While details of the stakeholders are confidential, it can be confirmed that City Harvest Church has a minority participation in the Harmony Fund.

[B]3. Will City Harvest Church have a seat on the ARA Harmony Fund Board?[/B]

- Currently, CHC has no board seats in the ARA Harmony Fund.

[B]4. Will the Church have any influence in the daily business of the Convention Centre?
[/B]

- No. The operation of the Convention Centre has been contracted to Suntec Singapore International Convention and Exhibition Services Pte Ltd, a wholly owned subsidiary of ARA.

[B]5. What leased spaces will City Harvest Church be using in the convention Centre?
[/B]

- Suntec Singapore has issued a license agreement to the Church to provide 3 halls on the 6th floor, the Gallery space on the 3rd Floor and the theatre on the weekends. The license agreement will come into effect in March 2011.

[B]6. Will the Church be renovating the licensed spaces for their use?[/B]

- Yes. An auditorium with the latest sound system will be constructed in the 6th floor halls. This auditorium will be available for Suntec Singapore to market for MICE business and other events during the week. The Gallery will be converted into smaller rooms for exclusive use by the Church. There are no changes planned for the theatre that will be used by the church on the weekends only.

Anonymous said...

On 9 March 2010, Lianhe Zaobao (Singpore’s leading Chinese press) reported that Suntec Singapore had released a one-page statement and a 3-page FAQ in response to City Harvest's announcement that it will be paying $310m to "co-own" Suntec Convention Centre.

An extract of the Lianhe Zaobao news article, which appeared on page 4 of the paper, is reproduced below:


[B]新达新加坡声明: 城市丰收教会入股 不影响新达新加坡运作[/B]

新达新加坡国际会议与展览中心说,通过ARA Harmony基金获得其部分股权的城市丰收教会,在基金的参与不大,也没有董事会席位。它的加入不会影响新达新加坡的正常运作,也不会引发任何人力削减或裁员行动。

  新达新加坡(Suntec Singapore)昨天发表上述声明,对城市丰收教会(City Harvest Church)决定入股的消息作出回应。

  新达新加坡在1页长的声明和3页长的问答录中说,它所发给城市丰收教会的授权合约允许后者在周末使用6楼的三个会议厅、3楼大厅和横跨2楼和3楼的礼堂,明年3月生效。

(for more: http://www.zaobao.com/sp/sp100309_006.shtml)


Extracts from the FAQs issued by Suntec Singapore are as follows:

[B]1. Who owns the Suntec Singapore International Convention and Exhibition Centre (Suntec Singapore)?
[/B]
- Suntec Singapore is owned by the ARA Harmony Fund. Stakeholders of the Harmony Fund include Suntec Reit (20%) and other private investors including City Harvest Church.

[B]2. Does City Harvest Church have a majority share in the Harmony Fund?[/B]

- While details of the stakeholders are confidential, it can be confirmed that City Harvest Church has a minority participation in the Harmony Fund.

[B]3. Will City Harvest Church have a seat on the ARA Harmony Fund Board?[/B]

- Currently, CHC has no board seats in the ARA Harmony Fund.

[B]4. Will the Church have any influence in the daily business of the Convention Centre?
[/B]

- No. The operation of the Convention Centre has been contracted to Suntec Singapore International Convention and Exhibition Services Pte Ltd, a wholly owned subsidiary of ARA.

[B]5. What leased spaces will City Harvest Church be using in the convention Centre?
[/B]

- Suntec Singapore has issued a license agreement to the Church to provide 3 halls on the 6th floor, the Gallery space on the 3rd Floor and the theatre on the weekends. The license agreement will come into effect in March 2011.

[B]6. Will the Church be renovating the licensed spaces for their use?[/B]

- Yes. An auditorium with the latest sound system will be constructed in the 6th floor halls. This auditorium will be available for Suntec Singapore to market for MICE business and other events during the week. The Gallery will be converted into smaller rooms for exclusive use by the Church. There are no changes planned for the theatre that will be used by the church on the weekends only.

Anonymous said...

Reproduced below is an interesting reply by the executive pastor of the City Harvest Church in response to the queries raised by church members.

Source: http://www.konghee.com/www/2010/03/chc-new-home-suntec-convention-centre/

Derek on March 11th, 2010 10:16 pm

Dear John,

I am Rev Derek Dunn, the Executive Pastor of CHC. Thank you for your post and your vigilance on behalf of all of us. There are however a number of flawed conclusions in your post.

There is nothing inherently inconsistent between Suntec’s announcement and Pastor Kong’s. Suntec’s statement is a formal legal announcement in compliance with the SGX-ST listing manual and thus uses bare legal terms. Pastor Kong pastors our Church and thus announced this development in terms of how the Church sees this investment.

You buy your shares in Singtel for investment, the Church invested in the holding company of Suntec because it aspires to co-own the premises it uses within the confines of the law and existing legal arrangements relating to Suntec Convention Centre. There is also a great deal of difference between a stake that may be several decimal points away from 1% and one that is just one share short of 50%, yet both are minority shareholders in the eyes of the law.

Without breaching our confidentiality obligations, neither the shareholders nor ourselves can say more. We are a Church and not a court of law. Pastor Kong spoke from his heart. After years of exploring many different sites and their pros and cons, and after much heartache and difficulty which it is not possible to share here, Pastor Kong wanted to share the enthusiasm of everyone involved that we finally have a place of worship in a central
location.

What we can say however is that we are not an investor in a fund. We are not passive with respect to our investment into the convention centre leaving the fund manager to manage our money and our investment.

While we are tenants of Halls 601 to 603, this is not necessarily an arrangement that we would have made but for our investment into the holding company, without being at liberty to say more.

(to be cont'd)

Anonymous said...

(...continuing from above)

From my personal in depth contact with Pastor Kong and serving together with him for more than 15 years, I can say that he would never intentionally bring insult to any person, much less an entire Church. We are all Christians and any inadvertent slight is regretted. Please accept his apologies in peace for any offense taken.

The present arrangements are the first step of many that the Church will need to take to secure centrally located premises for its congregations. Whether these steps revolve solely around Suntec Convention Centre or any other space it is not appropriate to disclose at this point. The Church is constantly reviewing and evaluating its options and guards carefully the funds entrusted to it by its members.

We call our project “Arise & Build” because we will not be daunted by the difficulties we have faced or continue to face in securing a permanent place of worship for our congregations in a central location. The building isn’t just of brick and mortar but of spiritual determination. However humble you consider our results, this has been the result of years of determination and
hard work and personal testimonies on this will, God willing, be
shared with the whole Church one day.

As a Church, it is not appropriate for us to conduct our commercial activities directly. In the UK, we understand that the Commissioner in fact requires Churches to form subsidiaries to conduct their commercial activities, and we are advised by our lawyers that our Commissioner in Singapore has similar views.

Apart from the older Churches who have land in central locations
historically, there are no religious sites in the city centre. There is no choice for the newer churches such as ourselves but to co-own commercial centers, but always within the confines of the law. We do not run Suntec Convention Centre nor do we intend to do so. That is a commercial activity reserved to commercial people.

Ironically, it is belief in the courage of the leadership to do what is right even if it attracts calumny that binds the majority of our members rather than blind faith.

There are easier ways to have avoided the present debate, but there is no intention to hide or plug yours or any other member’s right to comment on the proceedings. We ask only that you consider our response in the spirit in which it is made – a humble, quiet confidence that we have done the right thing for our Church members.

Anonymous said...

Please ask the Board members to explain how their performance bonus will tie in with the profits gained from the Suntec City investment. Will they pocket more bonus if there are profits or will ALL profits be generated to church work, ie, mission, charities, the poor, etc? If they get a cent of the profit, directly or indirectly, wouldn't they be abusing public funds and church members'contributions for their own monetary gain or more?

Anonymous said...

Hi Annonymous,

All board members are elected and purely voluntary.

None of them receive remunerations or has any financial interests - whether directly or indirectly.

Thus, there're no bonuses to speak of, no profit-sharings, nothing of such at all.