Sale of Equity Plaza may be in the works

20140425-bt-sale-equity-plaza-in-the-works-pic NEGOTIATIONS are under way for a potential sale of Equity Plaza, a landmark quadrant-shaped office block beside Republic Plaza in the Raffles Place financial district.

Talk in the market is that listed GSH Corporation and its chairman and key shareholder, Sam Goi Seng Hui, are teaming up with a view to acquire the 28-storey office tower. They may be entering an exclusive due diligence period on the asset, BT understands.

The price is thought to be around $550-560 million, which would work out to $2,177-$2,217 per square foot based on the building's net lettable area of about 252,600 sq ft.

It is thought that Equity Plaza's owners - Keppel Land and a fund managed by Alpha Investment Partners - were looking for $580 million or $2,300 psf for the asset. Alpha is KepLand's wholly owned property fund management arm.

Equity Plaza - which was formerly known as The Exchange and The Quadrant - is on a site with a balance lease term of about 74 years. Offices fill levels three to 28 of the building, while the first level has a retail unit. There are close to 90 carpark lots in the basement levels.

Market watchers reckon that GSH and Mr Goi could be looking for a source of steady rental income from the asset, which stands at a busy corner bound by Cecil, Church and Market streets. Or GSH could potentially occupy part of the building in future.

However, the potential buyers may be eyeing the possibility of sub-dividing the building into smaller units and selling them.

BT understands that the authorities granted preliminary approval for strata sub-division in the building last November.

Completed 22 years ago, the building may have about 15,000 sq ft of unutilised gross floor area (GFA) - roughly 5 per cent of the existing GFA. The additional space could be utilised for food & beverage use, say market watchers.

GSH - which stands for Global Strategic Holdings - was a struggling consumer goods distributor that took on new life as a property developer after Mr Goi boosted his stake in the company and took a more active role a couple of years ago. The company, formerly known as JEL Corp, has its headquarters at GSH Centre along Changi North Way.

Opposite Equity Plaza, a potential deal is said to be in the works at Prudential Tower, for a 92.8 per cent stake in the building that is owned by Keppel Reit.

KepLand is the Reit's sponsor. A consortium, whose members are said to include private equity group KOP and listed group Lian Beng, is believed to be doing exclusive due diligence on a potential purchase of Keppel Reit's space in Prudential Tower.

Based on BT's report last week, the price could be around $2,340 psf or close to $520 million.

Prudential Tower is on a balance lease term of about 81 years. It is already a strata-titled property - with one strata title per floor on the higher levels and two units per floor on the lower levels.

This would facilitate strata sales in the building by any new owners.

Source: Business Times, 25 Apr 2014