CLSA Capital Partners bags 77 Robinson Road for S$530.8m

clsa-capital-partners-77-robinson-road

SEB ImmoInvest fund sells the property for S$1,810 psf; site has 76-year balance lease

THINGS have come full circle for CLSA Capital Partners at 77 Robinson Road.

BT understands that it has inked a deal to buy the 35-storey office tower for S$530.8 million or S$1,810 per square foot based on a net lettable area (NLA) of 293,269 square feet.

SEB ImmoInvest fund, the seller, acquired the property from an earlier CLSA-managed fund in April 2007 for S$526 million or S$1,783 psf based on a slightly larger NLA of around 295,000 sq ft for the property at the time.

The earlier CLSA fund made a handsome profit from that transaction, which entailed a holding period of under a year; it had bought the building just 10 months earlier, in June 2006, for S$343.88 million or about S$1,165 psf, from Singapore Airlines.

Once known as SIA Building, the office development is on a site with a 99-year leasehold tenure that started on Feb 18, 1994; the balance lease tenure is about 76 years. The property was completed in 1997; this was a S$175 million redevelopment of the original 17-storey SIA Building which was completed in 1968, according to earlier media reports.

The current 77 Robinson Road's maximum development potential has been tapped. Under the Urban Redevelopment Authority's Master Plan 2014, the site is zoned for commercial use with an 11.2+ plot ratio (ratio of maximum potential gross floor area to site area).

That said, there is scope for some asset enhancement work on the property for the new owner, say industry players. For one, some of the building's existing 180 carparking lots may be converted to commercial use.

In addition, some of the air handling units could be decanted to free up spare gross floor area. There is also scope to spruce up and reconfigure the main entrance lobby in addition to upgrading common areas.

Furthermore, the podium elevation may be recladded to boost the building's visibility from street level.

SEB ImmoInvest fund used to be managed by the former SEB Asset Management, which was acquired by Savills Investment Management in September last year.

CBRE brokered 77 Robinson Road's sale after conducting an expression of interest exercise that closed in August; it declined to comment when contacted by The Business Times. Attempts to contact CLSA Singapore were not successful.

This is the fourth major transaction of a completed office asset in Singapore this year, after the sales of Asia Square Tower 1 in Marina Bay (for S$3.38 billion or about S$2,700 psf on NLA; the building is on a site with about 90 years' balance lease), the 999-year leasehold Straits Trading Building along Battery Road (at S$560 million or S$3,524 psf) and Capitaland Commercial Trust's acquisition of the remaining 60 per cent stake in CapitaGreen for S$960 million (the deal valued the entire building at about S$1.6 billion or S$2,276 psf; CapitaGreen is on a site with about 57 years' balance lease).

Straits Trading Building's sale is slated for completion next month.

Alpha Investment Partners is expected to imminently divest its half-stake in Capital Square to ARA Asset Management at a price that values the development at S$2,450 psf on NLA (the building is on a site with 99 years' lease starting Jan 15, 1996; the balance lease term is about 78 years).

BT reported recently that China Life Insurance and Haitong Securities were carying out due diligence on One George Street.

CBRE Research's head of Singapore and South-east Asia, Desmond Sim, commented that despite the current pressure on Singapore office rents amid a substantial completion of new office space this year and next year, rents are seen to be nearing a trough. "Office cycles are getting shorter and at the same time, some investors are taking a longer-term approach."

Source: Business Times, 22 Nov 2016