The Prospex back on the market with lower price tag

THE Prospex, a nine-storey retail and office building next to Bugis+, is back on the market, this time with an indicative guide price "in excess of S$70 million".

This appears to be lower than the S$80 million asking price when the building was previously put up for sale on an en bloc basis through an expression of interest (EOI) exercise that closed in October 2015.

The big difference this time around is that the building has now been substantially let; no tenants had been signed up when the previous sale attempt was launched.

A price of S$70 million translates to S$2,081 per square foot based on the total net lettable area (NLA) of 33,631 square feet. The Prospex is on a site with a 99-year leasehold tenure starting Dec 1, 1974; this translates to a balance term of about 57 years.

Located at the busy corner of Middle Road and Victoria Street and just a stone's throw from Bugis MRT Station, The Prospex consists of a two-level retail podium (with 4,040 sq ft NLA) and seven levels of offices above (29,591 sq ft).

The building is about 85 per cent leased. Only the top floor and some units on the seventh floor are available for lease.

"On a fully leased and stabilised basis, a price of S$70 million would work out to about 3.5 per cent net yield," says Anthony Barr, regional director of capital markets at JLL, which is conducting an EOI exercise for The Prospex, closing on March 21. The earlier EOI was conducted by another property agency.

Prospex is being offered by Hong Kong and Singapore-based property fund manager Pamfleet, which bought the former Bright Chambers on the site at S$45 million in 2013 and made major additions and alteration works to the building to achieve its current modern look. The Prospex received a Temporary Occupation Permit in the first quarter of 2016.

Tenants in the building include the second Singapore branch of Shanghai-based Mellower Coffee (which occupies the entire two-level retail podium); 701 Search, a leading digital media company backed by Singapore Press Holdings; and Zrii, an international nutrition company based in Draper, Utah.

Momentum in the Singapore property investment sales market is starting to pick up with the recent transactions at GSH Plaza, Prudential Tower and TripleOne Somerset.

Mr Barr anticipates strong interest for The Prospex from the likes of boutique property funds, family offices and high-net-worth individuals looking to invest in a newly refurbished income-producing asset.

"The property will also attract owner occupiers who are looking to purchase for their corporate headquarters with potential for naming and signage rights. The property's income should grow organically with recovery in office sector rents over the next few years and by adding signage/advertising to the prominent façade of the building."

Buyers may choose to purchase shares in the special purpose vehicle that holds The Prospex or do an outright asset purchase.

Acquiring 100 per cent control of this asset gives the future owner flexibility to later sell the entire property or do individual strata unit sales. Strata subdivision of the building has been approved.

"There is immense potential value to be unlocked from doing strata sales especially for the prime ground-floor retail units," Mr Barr said.

As the property sits on land fully zoned for commercial use, foreigners may buy without regulatory approval . There is also no additional buyer's stamp duty and seller's stamp duty for such property, he added.

Source: Business Times, 15 Feb 2017