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.)
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.
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.