A SALE is in the works for 71 Robinson Road.
The Business Times understands that property investment group Sun Venture has been granted exclusive due diligence with a view to buy the 15-storey office block. The pricing is slightly under S$2,800 per square foot of net lettable area (NLA), which would translate to an absolute price in the region of S$660 million.
The pricing would reflect a net yield of about 3.5 per cent based on income from the existing leases. Currently running at full house with an average monthly passing rent in the low-S$10 psf range, 71 Robinson Road's tenants include CommerzBank, Visa, Ogilvy and WeWork.
The building, with 237,644 sq ft NLA, is on a site at the corner of Robinson Road and McCallum Street; the site has nearly 74 years' balance lease. Completed 11 years ago, 71 Robinson Road is deemed to have Grade A specifications.
Commerz Real, the owner of the property, earlier this year appointed CBRE and JLL to market the asset. According to the grapevine, the duo contacted a small pool of potential buyers and conducted a low-key expression of interest exercise, which closed in May.
A couple of parties were shortlisted to sharpen their bids and make final offers later the same month, culminating in the selection of Sun Venture to enter a period of exclusivity to conduct due diligence on the asset.
The office block stands on the site of the former Crosby House, which Singtel sold in 2006 to a Lehman Brothers-Kajima Overseas Asia partnership.
They redeveloped the site into the current 71 Robinson Road office block, selling the property on a turnkey basis to Commerz Real in April 2008, as it was being built, at a then-record price of S$3,125 psf. At the time, the site had about 85 years left on its lease term.
That transaction came with a coupon payment by the seller to Commerz Real, amounting to 4.5 per cent for the duration of construction.
The S$3,125 psf transaction remained a benchmark price for an entire office building in Singapore for eight years. In 2016, that record was broken when listed MYP Ltd, controlled by the family of Indonesian tycoon Tahir, bought the Straits Trading Building at 9 Battery Road for S$3,524 psf on NLA or S$560 million. (The 28-storey, 999-year leasehold building has since been renamed MYP Centre.)
Interestingly, it was Sun Venture that sold the property to MYP, reaping a nice profit over a two-year holding period; it had paid S$450 million for the property in 2014.
Another office building that Sun Venture bought and sold is the freehold Robinson Point. It acquired the 21-storey property from AEW in 2012 in a deal that valued the asset at S$284 million, and sold it the following year to Tuan Sing Holdings for S$348.9 million.
Sun Venture, which is backed by Taiwanese and Singaporean investors, currently owns 50 Scotts Road, a transitional office development it built on a site with a short lease that runs until 2023.
The group also owns Levels 9 to 11 of the 999-year leasehold Samsung Hub.
In partnership with Low Keng Huat (Singapore), Sun Venture owns the Westgate Tower office block near Jurong East MRT Station, and the retail component of Paya Lebar Square.
Based on data from Savills Singapore, Singapore office transactions of S$10 million and above in the private sector so far this year have amounted to S$3.05 billion.
The figure for the whole of 2018 was S$5.24 billion and that for 2017, nearly S$7.5 billion.
Major deals in the past few months include Chevron House, 7 & 9 Tampines Grande and a 50 per cent interest in Frasers Tower.
Said Savills Singapore executive director Alan Cheong: "In recent months, we've witnessed continuing efforts by institutional investors, be they private equity funds or corporate entities, to deploy capital into the Singapore office market.
"The buying momentum should continue for the rest of 2019 , thanks to a surfeit of funds that have been raised recently by private-equity groups and family offices; as well as a shortage of investible Grade A office stock on the island.
"Investors have also bought into the argument that the Singapore office rental recovery will continue, at least in the near term."
Source: Business Times, 11 July 2019