71 Robinson Road

Sun Venture granted exclusive due diligence for 71 Robinson Rd

The pricing for 71 Robinson Road is nearly S$2,800 psf on NLA and reflects a net yield of about 3.5 per cent.

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

71 Robinson Road quietly put on the market

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STEALTH marketing is going on at 71 Robinson Road, which was last transacted in April 2008 at a then-record price of S$3,125 per square foot.

The Business Times understands that an expression-of-interest exercise to find a buyer for the 15-storey office block began without publicity in April, with the appointed marketing agents, CBRE and JLL, approaching a small pool of potential buyers.

Submissions of offers by potential buyers were made last month; building owner Commerz Real is still in talks with shortlisted parties, BT understands.

The word in the street is that the building, with almost 74 years of its leasehold tenure left, was presented to the market with an indicative pricing of S$2,850 per square foot on net lettable area (NLA).

Based on 71 Robinson Road's approximately 237,645 sq ft NLA, this works out to a price tag of around S$677.3 million.

Market watchers noted that the S$2,850 psf indicative pricing is higher than the S$2,308 psf which Robinson 77 next door fetched late last year. Buyer Gaw Capital paid the seller, a fund managed by CLSA Real Estate, nearly S$710 million for that 35-storey property. (see amendment note)

Both buildings are on sites with state leases that expire in February 2093.

That said, Robinson 77 is an older building. It was completed in 1997 (against 2008 for 71 Robinson Road), but has been substantially refurbished a few years ago.

The newer 71 Robinson Road has superior specifications. It has bigger floor plates, that is, leasable space per floor, each of which spans about 20,000 sq ft; the next-door property's floor plates typically range between 8,000 to 12,000 sq ft.

71 Robinson also has higher floor-to-ceiling height, in addition to having full-height windows, note office leasing agents. Reflecting its superior specs, this property has been commanding higher rents, say market watchers.

When Robinson 77 went to the market around last July/August, the average monthly passing rental was said to have been around the mid-S$7 psf mark. The building's occupancy rate was a shade above 90 per cent.

On the other hand, 71 Robinson Road is said to be running at full house with an average passing rent in the low-S$10 psf range. Tenants in the building include CommerzBank, Visa, Ogilvy and WeWork.

A senior office leasing agent said: "Blue-chip tenants with bigger space requirements would choose a building with a larger floor plate, so they can operate more efficiently over fewer floors."

71 Robinson Road 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 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 and philanthropist Tahir, bought the Straits Trading Building at 9 Battery Road for S$3,524 psf on NLA, or a total quantum of S$560 million. (The 28-storey, 999-year leasehold building has since been renamed MYP Centre.)

Anson House

Meanwhile, the owner of Anson House is said to have granted exclusive due-diligence rights to a potential buyer.

Market watchers say it is likely to be Arch Capital Management.

The price is expected at around S$210 million, which works out to over S$2,400 psf on an NLA of about 86,200 sq ft.

Located near Tanjong Pagar MRT station, Anson House is on a site with nearly 77 years left on its lease. The property is owned by a fund managed by Savills Investment Management, formerly known as SEB Asset Management.

Samsung Hub

Chinese Chamber Realty is understood to have bought the entire Level 14 of the 999-year leasehold Samsung Hub in Church Street for S$44 million.

This translates to S$3,356 psf on approximately 13,110 sq ft of strata area.

This was a mortgagee sale; the mortgagor, Kyen Resources Pte Ltd, had paid S$39.72 million or S$3,030 psf for the floor in 2014.

Kyen Resources is in receivership.

Including the latest deal, Chinese Chamber Realty, which is fully owned by The Financial Board of the Singapore Chinese Chamber of Commerce, owns a total of 11 floors (Levels 22 to 30, and Levels 14 and 15) in the 30-storey building. Chinese Chamber Realty co-developed Samsung Hub, which was completed in 2005.

Based on Savills Singapore data, Singapore office transactions of S$10 million and above in the private sector so far this year have totalled S$1.9 billion. The figure for the whole of last year was S$5.2 billion.

Colliers International's average monthly rental value for CBD Grade A office space rose 2.3 per cent quarter on quarter to S$9.64 psf in Q1 2019.

For the whole of this year, the group is looking at an 8 per cent increase, moderating from the high base last year, when the rise was 14.9 per cent on the back of tight supply and limited new completion.

Colliers said in its Q1 Singapore office market report: "We expect capital values to trail our projected rent growth, and hence, yields to remain largely stable over 2019-2021."

In general, global capital still favours gateway cities such as Singapore, it added.

Source: Business Times, 15 Jun 2019

Amendment note: An earlier version of the story had wrongly stated the S$2,850 psf indicative pricing is lower than the S$2,308 psf which Robinson 77 next door fetched late last year, when in fact it should be higher than S$2,308. The article above has been revised to reflect this.


Record $3,125 psf paid for office building in volatile market

Commerzbank unit buys 71 Robinson Rd for $743.8m

(SINGAPORE) Commerz Real, a fully-owned subsidiary of Germany's Commerzbank, has bought 71 Robinson Road, setting a record in the process and perhaps heralding a new wave of office deals.

The price paid for the building, which was owned by a partnership of Lehman Brothers and Kajima Overseas Asia, was not disclosed by Commerz Real. But sources say it was $3,125 per sq ft of net lettable area (NLA), or $743.8 million. This is 7.7 per cent higher than the $2,900 psf of NLA paid for Hitachi Tower in January.

Lehman/Kajima acquired the building in October 2006 from SingTel for $163.4 million. A year later, the partnership said it would spend about $450 million, including the land cost of $163.4 million, to redevelop 71 Robinson Road into a 280,000 sq ft (gross floor area) building to be completed by mid-2009.

While the selling price represents a healthy capital appreciation, it is understood that the acquisition comes with a coupon payment by Lehman/Kajima to Commerz Real amounting to 4.5 per cent - or about the investment yield for Commerz Real for the duration of construction.

Jones Lang LaSalle (JLL) was appointed by Lehman/ Kajima to market the development in late-2007. JLL managing director (SEA) Chris Fossick said marketing was done globally, with interest from both Singapore and international funds.

In terms of leasing, Mr Fossick said there are no pre-commitments yet but talks are going on with several parties.

Commerz Real was advised by CB Richard Ellis. Commerz Real management board member Hans- Joachim Kuehl said: 'We have seen strong interest from major financial institutions in the development and expect to attract rents in the region of $15 psf.'

The acquisition was made by Commerz Real's real estate fund hausInvest global which also owns 78 Shenton Way, bought in December 2007 for $650 million or $1,857 psf of NLA.

It is worth noting that 78 Shenton Way was sold by a joint venture between Credit Suisse and CLSA funds after they paid $348.5 million for it earlier in the same year.

JLL's Mr Fossick believes this year could see more such assets held by opportunistic funds go to core funds like Commerz Real.

By his reckoning, 2007 saw core funds acquire at least 10 office assets held by opportunistic funds. Larger deals include that by CLSA, which sold the SIA Building to German pension fund SEB.

Mr Fossick believes at least another 13 office assets could be targets for core funds, including DBS Towers 1 and 2. 'We could look back on 2008 and still see quite a lot of transactions despite the global credit crunch,' he said.

Source: Business Times, 29 Apr 2008