[SINGAPORE] Hewlett-Packard has put its freehold officeand manufacturing premises on Alexandra Road up for sale. The computer giant is said to be looking at a sale and leaseback arrangement, BT understands.
By some market estimates, the property could fetch around $370-390 million.
The tender for the property closes early next month.
Just eight months ago, Neptune Orient Lines sold its 26-storey headquarters office tower next door, NOL Building, for $380 million.
HP's property comprises a 12-storey office block fronting Alexandra Road (housing the group's Asia-Pacific sales operations) and an eight-storey building at the rear where its regional manufacturing operations are located. The two buildings are on a site with land area of 192,000 sq ft under a single title.
It is believed that HP is seeking permission from the authorities to split the site into two, to facilitate separate sales of the two buildings.
Although the existing site has a single title, it spans two zonings. Under Urban Redevelopment Authority's Master Plan 2008, the section of the site where the office tower stands is zoned for commercial use with a 2.8 plot ratio (ratio of maximum gross floor area to land area). The manufacturing plant at the back is on the bigger portion of the site zoned for Business 1 use with 2.5 plot ratio. Light industrial and warehouse operations are among the permitted uses for Business 1 use.
The existing gross floor area (GFA) of the office block is around 156,000 sq ft and that of the manufacturing block, about 345,000 sq ft. Analysts reckon the existing GFA would be around the maximum allowed for the site, suggesting little or no development charge (DC) is payable. However, it would still make sense to redevelop the property given that a new project will have greater efficiency, increasing the saleable or lettable area.
Word on the street is that HP is planning to lease back the office tower for around two to three years and the industrial block for a longer period, possibly a decade.
So the rear portion of the site could appeal to potential buyers keen on a steady stream of rental income while awaiting redevelopment in the medium term. The front portion with the office tower can be redeveloped sooner and should draw developers hoping to catch the current wave of strong buying interest in strata commercial units, say market watchers.
When contacted,HP would only say: "HP routinely evaluates its real estate portfolio against its internal operating needs and the external market indicators."
CBRE, which HP is said to have appointed to market the property, declined to comment.
HP also has a manufacturing facility in Depot Road.
Market watchers note that last year HP sold its office tower in Seoul, with HP Korea leasing back about half of the building's space for five years. The group is also said to be in the midst of selling a property in Beijing.
As for the Alexandra Road property in Singapore, some analysts estimate that pricing for the front portion of the site, where the office tower stands, could be around $200 million, pegged to the $1,266 per square foot per plot ratio (psf ppr), based on Fragrance Group's $380 million purchase of NOL Building last year. NOL is leasing back the property till the middle of next year.
According to an industrial property agent, the back portion of HP's site, which is zoned for Business 1 use, could be priced around $500-550 psf ppr - reflecting $172-190 million. He arrived at this based on three nearby transactions this year. Metro Holdings sold its warehouse at 100H Pasir Panjang Road for $498 psf ppr, and City Developments, $500 psf ppr for 100F and 100G. The three properties - also on sites zoned Business 1 and with a 2.5 plot ratio - are further away from the nearest MRT station - Pasir Panjang Station on the Circle Line - compared with a distance of about 450 metres from HP's property to Labrador Park Station.
Source: Business Times, 7 Jun 2013
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