Oxley close to buying Chevron House


Price believed to be around S$660m, working out to S$2,526 psf on existing net lettable area

OXLEY Holdings is in the advanced stages of stitching up a deal to buy Chevron House in Raffles Place.

The price is believed to be around S$660 million or S$2,526 per square foot on the property's existing net lettable area (NLA) of 261,280 sq ft.

The 32-storey office and retail development is on a 29,891 sq ft site with a 99-year tenure starting from Dec 7, 1989. This leaves 71 years on the clock.

The property is being sold by a fund managed by Deka Immobilien of Germany.

Chevron House has 215,667 sq ft NLA of offices over 27 floors (from levels 6 to 32) and 45,613 sq ft of retail space (basement 1 to level 4). There are 96 carpark lots in basements 2 and 3.

The property, completed in 1993, has basement connection to the Raffles Place MRT Station next door.

It is about 98 per cent let currently.

Anchor tenant Chevron, which occupies about 83,000 sq ft over 10 office floors, is expected to move to Duo Tower in the Beach Road/Ophir Road area, where it has signed up for about 73,000 sq ft.

The smaller space the oil major is leasing there reflects the more efficient space usage at Duo Tower due to bigger floor-plates. Duo Tower received its Temporary Occupation Permit late last year.

At Chevron House, the lease for the majority of the space that Chevron is currently leasing expires in late 2020, but observers say there may be provisions for the group to give up the space in 2019.

Going by Oxley's past moves, the property group might refurbish Chevron House and seek approval to strata-title the office and retail units for sale.

When expressions of interest for Chevron House were launched on Aug 1, marketing agents CBRE and JLL highlighted the asset enhancement potential of the development.

Office common areas including the entrance lobby, lift lobbies and toilets could be spruced up. In addition, about 14,950 sq ft of unused gross floor area could be made better use of in the retail podium, subject to approval; no differential premium would be payable to the state.

However, some observers say selling strata units in Chevron House may not be an attractive option as there may be hardly any margin left for Oxley based on its purchase price and after factoring in the refurbishment cost.

"Selling strata offices is challenging, but selling strata retail units in the project may be viable," said the head honcho of a property investment group.

On the other hand, some observers suggest Oxley could consider retaining the building, or at least part of it, as an investment property for rental income. This will help the group build up a source of recurring income.

Deka Immobilien, a unit of Germany's DekaBank Group, bought Chevron House for about S$547 million or S$2,083 psf on NLA from Goldman Sachs funds in 2010.

Goldman Sachs incurred a loss, having paid S$730 million or S$2,780 psf for it in 2007 during the property boom before the global financial crisis.

Chevron House is Deka's only major Singapore property.

According to data compiled by CBRE Research, about S$8 billion of office investment sales have been sealed year-to-date (as at Nov 22). The biggest transaction is the S$2.094 billion sale of the office and retail space in Asia Square Tower 2 by BlackRock Asia Property Fund III to CapitaLand Commercial Trust.

Mainboard-listed Oxley Holdings, headed by Ching Chiat Kwong, has been on a property buying spree this year, picking up, among other things, Mayfair Gardens off Dunearn Road for S$311 million and 231 Pasir Panjang Road at S$121 million.

It is a member of the consortiums that acquired two former HUDC sites - Serangoon Ville at S$499 million and Rio Casa in Hougang for S$575 million.

Source: Business Times, 24 Nov 2017