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Lian Beng Group Ltd Has Just Extended Its Reach Down Under

Lian Beng Group Ltd (SGX: L03) has been very busy making deals after it announced a very weak set of results for the quarter ended 31 August 2016 back in 13 October. The company experienced a 60% year-on-year drop in net profit for the reporting quarter.

On 17 October, the company announced that it would be buying a number of strata lots in the Khong Guan Industrial Building in Singapore. The lots would have a gross floor area of 57,019 square feet and would cost the company a total of S$31 million.

Then last week, the company announced that its 32%-owned associate would be selling off 17 strata office units in Prudential Tower to a third party. The sale price was not disclosed.

The latest deal Lian Beng is involved with is the acquisition of an office building in Melbourne. The company was able to buy out an entire strata-titled building by striking agreements with the 11 owners of the building’s strata lots.

The building is located at 50 Franklin Street, right at the edge of Melbourne’s city center and located less than 400 metres away from the famous Victoria Market. Lian Beng had announced this acquisition just yesterday.

The company would be spending A$51.5 million to acquire the 18 storey office building that has a net lettable area of 11,447 square metres. This translates to a price of roughly A$450 per sqm. According to media reports, the property is currently occupied by a single tenant but the tenant has already decided to move out of the building after its lease expires next February.

Since the Australian property’s tenant is moving out soon, Lian Beng might be left without any income for some time with this investment. But, the company might have a different plan for the property if it decides to convert it for other purposes. According to the property’s listing, it sits on a 2,213 sqm parcel of land.

It would be interesting to see what Lian Beng has in mind for the aforementioned properties it is going to acquire. The company currently trades at 4.7 times annualised earnings and offers a 4.5% yield.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any companies mentioned.