Perennial could take up to a 30% stake in AXA Tower

PERENNIAL Real Estate Holdings may take on the role of an asset manager and could take up to a 30 per cent stake in AXA Tower. Responding to The Business Times story published on Friday, Perennial said: "(The company) wishes to clarify that it is exploring the syndication of a consortium of investors to acquire AXA Tower, taking on the role of an asset manager and potentially investing up to a 30 per cent stake in the property."

It said no definitive agreement has been entered into and no firm decision has been made on whether or not to proceed with the deal.

BT had earlier reported that Perennial is said to be leading and syndicating a consortium that is close to inking a deal to buy AXA Tower - the 50-storey distinctive circular office building opposite Tanjong Pagar MRT Station - from BlackRock.

The price is understood to be about S$1.18 billion, translating to roughly S$1,750 per square foot (psf) based on the existing net lettable area (NLA) of nearly 675,000 sq ft.

AXA Tower is on a site with a balance lease term of about 66.5 years.

Said Perennial: "Singapore is one of the key markets for the company and it is in the ordinary course of business to explore and evaluate potential investment opportunities that may arise."

It added that it will announce more details if and when there are material developments.

Based on AXA Tower's current rental income, the purchase price is said to reflect a net yield of 4 per cent. Located at 8 Shenton Way, the building is around 90 per cent occupied - pointing to income upside for the buyers from leasing out the balance of 10 per cent as they ride on the ongoing recovery in the Singapore office rental market.

Perennial requested a trading halt at 9.22am on Friday morning, in order to issue its clarification announcement. The counter resumed trading at 10.45am, and closed up 0.48 per cent at S$1.04.

Source: Business Times, 17 Jan 2015