Alpha's Capital Square stake may fetch S$543.5m

20150503-bt-alpha-capital-square-stake-may-fetch-s545m-pic CBRE and JLL appointed joint marketing agents for the 50% stake and will conduct an expressions of interest exercise for the property

KEPPEL Land unit Alpha Investment Partners' 50 per cent stake in Capital Square along Church Street in the CBD is expected to fetch around S$543.5 million.

This reflects a price of S$1.09 billion for the entire asset - translating to around S$2,800 per square foot based on the 388,215 sq ft total net lettable area (NLA).

The property comprises a 16-storey office building with supporting retail amenity and heritage shophouses.

Based on the property's current passing income, the net yield on that price would be around 3.5 per cent.

Capital Square is on a site with about 80 years' balance lease. It was completed in 1998. The property has big-name tenants such as Citibank, Morgan Stanley, Amazon, Aberdeen Asset Management and Bloomberg.

The office tower has a typical floor plate of about 30,000 sqft, one of the largest column-free office floor plates in Raffles Place.

Capital Square has 362 car park lots, equating to 1 lot per 1,100 sq ft NLA. This compares favourably with newer office buildings which typically have car park ratio of 1 lot per 4,000 to 5,000 sq ft NLA, according to CBRE and JLL.

The two said on Thursday evening they have been exclusively appointed as joint marketing agents for the 50 per cent stake and will conduct an expressions of interest exercise for the property that is expected to end on June 3.

NTUC Income owns the other 50 per cent in the building.

In 2011, Alpha's Macro Trends Fund teamed up with NTUC Income to buy Capital Square from Ergo Insurance Group for about S$2,300 psf or S$889 million.

Alpha is the property fund management arm of KepLand, which developed Capital Square.

CBRE and JLL observed that monthly rental rates for Grade A office buildings in Raffles Place are currently in the range of S$12-14 psf square foot, which remains well below the peak of 2008. Given the high transparency of the market and the strong economy in Singapore, there has been high demand for prime office properties over recent times.

"The two most noteworthy recent sales include a 33 per cent interest in Marina Bay Financial Centre Tower 3 for circa S$1.248 billion (S$2,790 psf of NLA) and the Straits Trading building in Raffles Place for S$450 million (S$2,800 psf of NLA), both in the third quarter of 2014," the two agents said in their respective releases.

JLL's Singapore capital markets team head, Greg Hyland, said: "The Singapore office market continues to perform strongly with CBD office rents gaining over 14 per cent in 2014 - the strongest across Asia-Pacific. This is an excellent opportunity for an investor to acquire a unique and high quality asset in the heart of this thriving market."

Jeremy Lake, executive director of CBRE, said that in addition to buyers that have invested in Singapore before, "we know of two or three 'new to market' offshore buyers who are actively looking for core office investments in Singapore".

Source: Business Times, 3 Apr 2015