Office Buildings

WeWork to lease entire 21-storey HSBC building in Collyer Quay after bank moves out

The tower, 21 Collyer Quay, will be WeWork's biggest property in Singapore and has a net lettable area of about 200,000 square feet.

SINGAPORE (REUTERS) - CapitaLand Commercial Trust (CCT) will lease out 21 Collyer Quay, a 21-storey building in Singapore's financial district currently occupied by HSBC, to US co-working giant WeWork.

The move marks WeWork's expansion in Asia. The tower will be WeWork's biggest property in Singapore and has a net lettable area of about 200,000 square feet.

The lease with WeWork will start in the second quarter of 2021, for a period of seven years, said CCT, without disclosing financial details of the new deal. Its lease deal with Hong Kong and Shanghai Banking Corp Ltd, a unit of HSBC Holdings, will end in April 2020.

CCT said that the agreement with WeWork is not expected to have a material impact on its net asset value per unit or distribution per unit for the financial year ending Dec 31, 2019.

Its manager also said it plans to capitalise on the transitional occupancy downtime during changeover of tenants to upgrade the building. It said the expected return on investment is approximately 9 per cent on an estimated cost of $45 million to upgrade the property. The building is valued at $462.2 million as at June 30, 2019.

Co-working spaces have become popular among start-ups because these give them the flexibility of short-term leases in well-decorated spaces and keep overheads low. Increasingly, larger companies are also using co-working firms to manage their offices.

In Singapore, the flexible workspace footprint has more than tripled since 2015 and now accounts for some 4 per cent of the office space in the central business district, according to real estate consultancy Colliers.


WeWork's new lease will give it rare signage rights in the country's financial district, said Christine Li, head of Singapore and South-east Asia research at property services firm Cushman and Wakefield.

"It's a very good catch for WeWork," said Li, because typically only a few floors are available in the business district due to low vacancy.

The lease will start in the second quarter of 2020 for seven years, CCT said. WeWork will occupy 20 floors of the building, the US firm said in a separate statement, but did not provide details about the one other floor.

HSBC Singapore said last year that it would relocate its head office to Marina Bay Financial Centre, within the central business district.

Rents for grade A buildings in Singapore's central business district surged 12.7 per cent last year, Cushman and Wakefield's Li said.

She expects rents to stay mostly flat this year at the current level of about $10.61 per square foot per month, due to a slowing economy and uncertainties from trade tensions between United States and China.

Founded less than a decade ago, WeWork has locations in over 28 countries, including in Singapore, China, India.

The money-losing firm, which has filed paperwork for an IPO, has faced questions about the sustainability of its business model that is based on short-term revenue agreements and long-term loan liabilities.

Source: Straits Times, 17 July 2019

Retail podium, three office floors at 30 Raffles Place on the market

A S$110 million revamp of the former Chevron House (centre) will result in a 40 per cent increase in its net lettable area.

A four-level retail podium and the three lowest office floors designated for a banking hall in a revamp of the former Chevron House have been put up for sale through an expression of interest exercise.

The 32-storey property at 30 Raffles Place is being spruced up at a cost of about S$110 million, The Business Times understands.

Among other changes, part of basement 2 is being converted from carpark space to retail. The remainder of basement 2 along with basement 3 will continue to house car park lots.

Word on the street is that the indicative combined pricing for the retail podium and banking hall space is S$480 million.

The price split is roughly S$300 million for the retail space (about S$5,800 psf on net lettable area or NLA); and S$180 million (almost S$3,100 psf) for the proposed banking hall in the office podium, which occupies levels 3, 4 and 5.

Bidders may make offers for either the retail space or the office space, or both.

Located next to Raffles Place MRT Station, 30 Raffles Place is on a site with 99-year leasehold tenure starting December 1989. This leaves a balance term of about 69.5 years.

Divestment of the retail space and the banking hall space is one of the conditions for the final completion of Oxley Holdings' sale of the 32-storey building to a unit of US-based property fund manager AEW for a total of up to S$1.025 billion under a sale and purchase agreement inked in late-April this year.

Oxley has said that it intends to divest the retail space and the banking units (on levels 3 to 5) as soon as practicable, factoring market conditions, and in any event, before the final completion of the proposed sale to AEW, which is expected to take place by the end of first-quarter 2020.

Oxley is also aiming to complete the ongoing major refurbishment of the building, which began on March 1 this year, no later than Q1 2020.

The first completion under the sale and purchase agreement with AEW took place on June 7, resulting in 82.35 per cent of the issued and paid-up capital of Oxley Beryl, which holds 30 Raffles Place, being transferred to buyer AEW's vehicle Golden Compass (BVI).

BT understands that the expression of interest, being conducted quietly by property consulting groups Cushman & Wakefield and JLL, is slated to close towards the end of this month.

The retail podium - on levels 1, 2, basement 1 and part of basement 2 - comprises 79 units. The retail podium's NLA is about 51,400 sq ft and its strata area, 61,500 sq ft.

Tenants have been secured for some of the units, including a health/fitness operator for basement 2. Upon completion of the refurbishment, the retail podium will be rebranded as Change Alley Mall.

An investor stands to derive not only rental payment from tenants but income from additional sources such as event space and a media screen.

As for the office podium (levels 3 to 5), its NLA and and strata area are the same: nearly 58,300 sq ft.

Above the office podium is the office tower (with 27 levels). A lease is close to being stitched, with coworking operator WeWork to take nine floors in the tower, BT understands.

Following the refurbishment, the building's total NLA will expand by about 40 per cent from 261,300 sq ft to 363,000 sq ft.

Source: Business Times, 12 July 2019


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

Grade A office rents in CBD to climb 8% in 2019: Colliers

Building in Singapore's central business district, on Jan 9, 2019

Rents for Grade A office buildings in Singapore's central business district (CBD) are expected to rise by 8 per cent this year, and 5 per cent in 2020, amid tight supply and high pre-commitments, according to a report by Colliers International.

The real estate services and investment management firm also expects new supply in 2019-2021 to average 614,000 square feet (57,000 sq metres) per annum or 2 per cent of stock, versus 5 per cent over the past five years. This should keep vacancies tight in 2019 through 2021, Colliers said.

It added that of the six micro-markets in Singapore's CBD, rents in Shenton Way/Tanjong Pagar could grow at the fastest rate on a three- and five-year horizon, driven by redevelopment and rejuvenation in the area. According to Colliers, new buildings such as Frasers Tower, Guoco Tower, and UIC Building, which were completed in 2016-2018, have raised the image and rents of the area.

In addition, Colliers said that redevelopments in the Shenton Way/Tanjong Pagar area, including the Afro-Asia Building and the CPF Building (to be named ASB Tower), should raise rents further in 2020 when they are completed. Rental growth could also be further supported by the withdrawal of existing stock for redevelopment, as landlords adopt the URA (Urban Redvelopment Authority) incentive scheme, Colliers said.

It also noted growth of the technology, media and telecoms (TMT) and flexible workspace sectors, which Colliers said accounted for most of the net absorption of office space in 2018 and 2019 year-to-date. In particular, flexible workspace stock has more than tripled since 2015, it added.

SEE ALSO: E-commerce growth to drive Singapore logistics services sector: Colliers

TMT and flexible workspace operators have the highest presence in Shenton Way/Tanjong Pagar, occupying 21 per cent and 6 per cent of the Grade A micro-market respectively.

The other five CBD micro-markets assessed by Colliers comprise the areas of Raffles Place/New Downtown (Premium), Raffles Place/New Downtown (Grade A), Beach Road/Bugis, City Hall, as well as Orchard. The research also considered factors such as existing industry clusters, availability of office stock, accessibility, and rents.

Colliers said the Raffles Place/New Downtown area, with the largest concentration of premium buildings, still ranks as the top choice for financial services firms, while urban renewal could boost rents at a faster pace in the City Hall as well as the Beach Road/Bugis micro-markets beyond 2022.

Colliers also noted that given Singapore's status as a global financial hub, it is unsurprising that the financial services sector occupies a lion's share (42 per cent) of total office space in the CBD.

The other relatively large space users are the professional services (15 per cent), TMT (12 per cent), followed by resources, energy and commodities (9 per cent), consumer (5 per cent), and flexible workspace companies (4 per cent).

Said Tricia Song, head of research for Singapore at Colliers International: "Singapore CBD office demand has historically been broad-based, driven by the core sectors of financial services, professional services, energy and shipping.

"However, we observed that technology firms and flexible workspace operators have taken up substantial amount of space in recent years - we estimate that they accounted for about 75 per cent of net absorption in 2018, for instance. We expect such changing occupier trends, as well as the ongoing rejuvenation and new developments within the city to continue to shape the various office micro-markets in the CBD."

Rick Thomas, head of occupier services for Singapore at Colliers International, said: "Occupier demands have evolved from the sole considerations of location, price/rent and basic amenities. Other factors that are becoming more important include flexibility, space efficiency, wellness and lifestyle amenities, and tenant experience."

He added that landlords need to ensure that their portfolio remains relevant. Meanwhile, occupiers should reassess their needs, and explore alternative lease options early given the limited prime space, and consider the strategy of combining flexible workspace with conventional office space.

Source: Straits Times, 21 Jun 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.


Guoco Tower wins excellence award

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GUOCOLAND's mixed-use Guoco Tower in Tanjong Pagar is the only Singapore winner out of 10 at the 2019 Urban Land Institute (ULI) Asia Pacific Awards for Excellence.

ULI hands the award out to projects that "showcase best land use practice from across the region," according to a media release by the organisation.

Other winners this year include the Aoyama Building in Tokyo, Japan and COFCO Landmark Plaza in Beijing.

Projects were evaluated on, among other factors, the extent to which they have a positive impact in their communities, environmental sustainability and marketplace acceptance or financial success.

GuocoLand said in a statement to The Business Times that the mixed-use development Guoco Tower, located in Tanjong Pagar, was recognised for its land use through place-making efforts - "including responsible use of land, and going above and beyond for the community".

GuocoLand said: "Even during the early design stage, the development was constructed with the users inmind, with a strong focus on building a place that the community would feel connected to."

For example, the developer set aside 150,000 sq ft for an urban park. It boasts a 16-metre high glass canopy with in-built sound and lighting systems, and can accommodate up to 2,000 people.

Guoco Tower also hosts events for placemaking efforts, events and activities at the Urban Park focusing on fitness, music and play. This includes weekly group fitness programmes, organised by anchor tenant Virgin Active.

Cheng Hsing Yao, group managing director of GuocoLand Singapore said: "With our positive experience from Guoco Tower, we will also be creating some exciting public spaces at our upcoming project, Guoco Midtown, which will be transformative for the Beach Road district."

ULI trustee and awards chair Ame Engelhart said: "Singapore is a high-density city, where all public space is delivered at a premium, but Guocoland Singapore has demonstrated how additional Grade A offices, retail, hospitality can be constructed and integrated within a genuine Transit Oriented Development and lifestyle hub that puts people first."

Source: Business Times, 12 Jun 2019

Gaw Capital, Allianz in talks to buy Duo office, retail space for over S$1.5b

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A GAW Capital Partners-led consortium that is expected to include Allianz Real Estate is negotiating to buy the office and retail space at the Duo project in the Bugis area.

The Business Times understands that a deal has yet to be inked. The pricing being discussed is expected to be shy of S$2,600 per square foot for the total net lettable area (NLA) of about 615,000 sq ft for the office and retail space.

Assuming the pricing comes in at, say, S$2,570 psf, the absolute price would work out to S$1.58 billion.

The mixed development also includes the 342-room Andaz Singapore hotel, for which separate negotiations are still ongoing for a sale to RB Capital, BT understands.

The Duo project was developed by M+S Pte Ltd, a 60:40 joint venture between Malaysia's Khazanah Nasional and Singapore's Temasek Holdings.

It sits on a site with 99-year leasehold tenure that starts from July 1, 2011, leaving about 91 years on the lease.

The project's office component, known as Duo Tower, occupies levels 4 to 23 of the 39-storey tower in the mixed development. The office NLA is about 560,000 sq ft; tenants include Abbott Laboratories, Chevron and Mastercard.

Andaz Singapore occupies the upper levels of the same tower.

The Duo project's other tower, which is 49 storeys high, is where the 660-unit Duo Residences, is located. Three of these residential units were unsold as at March 31, 2019, based on data from the Urban Redevelopment Authority.

The development's retail component, Duo Galleria, comprises about 55,000 sq ft NLA on Level 1 and in Basement 3.

Designed by renowned architect Ole Scheeren, the Duo project received its Temporary Occupation Permit in stages between end-2016 and end-2017.

An expression of interest exercise to seek buyers for the Duo office and retail space as well as Andaz Singapore began around October last year.

M+S declined to comment when approached by BT, as did Gaw Capital as well as Allianz Real Estate.

Last November, the property investment arm of insurance giant Allianz acquired a 20 per cent stake in Ocean Financial Centre, a Grade A office tower in Singapore's Central Business District, for S$537.3 million.

Hong Kong-based Gaw Capital Partners, a private equity firm set up by brothers Goodwin and Kenneth Gaw, owns two properties near the Duo project: Hotel G in the Bencoolen Street and Middle Road locale and PoMo in Selegie Road.

In January this year, Gaw Capital completed its acquisition of Robinson 77 for S$710 million.

If Gaw Capital and Allianz Real Estate forge a tie-up to acquire the office and retail space at Duo, this would mark their latest partnership.

In 2017, Allianz Real Estate participated in Gaw Capital's acquisition of PoMo.

Last year, Allianz joined Gaw Capital to buy two out of the four office blocks in the Sky SOHO development in Shanghai's Hongqiao District.

In the same year, Allianz announced that it had acquired a 50 per cent interest in a portfolio of core modern logistics assets across China. The assets were developed by Vailog China and are owned by a Gaw Capital-managed fund. Vailog China and Gaw Capital Partners continue to hold the remaining 50 per cent interest as well as manage the assets.

Based on data from Savills 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.

Foreign investors continue to be drawn to the Singapore office market, notes Alan Cheong, executive director of research and consultancy at Savills Singapore. "Most overseas institutional investors are keen on buying Singapore office assets, but there is a dearth of investible-grade stock that is available for sale. The challenge is that yields have been compressed due to owners' rising price expectations; it is difficult to write an investment paper seeking approval from a property fund's investment committee to make an office acquisition in Singapore based mainly on prospects of capital appreciation without corresponding rental increase."

Source: Business Times, 31 May 2019

Three adjoining office units at Peninsula Plaza up for sale with S$9.29m guide price

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THREE adjoining office units at Peninsula Plaza will be put up for sale in an expression of interest exercise on Thursday at a guide price of S$9.29 million, exclusive marketing agent CBRE said.

The exercise closes at 3pm on May 29.

Located on the 12th storey, the area of each unit ranges from 1,001 square feet to 1,776 sq ft. The units with a 999-year tenure have a combined area of 4,262 sq ft.

The indicative price of S$9.29 million works out to S$2,180 per sq ft based on the strata area.

Yap Hui Yee, associate director of capital markets at CBRE, noted that this is "attractive" compared to the office units at the nearby High Street Plaza and The Adelphi, which are transacting at S$2,400-S$2,600 per square foot.

She added that there will be no additional buyers' stamp duty or sellers' stamp duty imposed on the units, and that the prospective buyer, be it a local or a foreigner, has the option to purchase the units either individually, or all three collectively.

Peninsula Plaza is a mixed-use development comprising a six-storey retail podium and a 24-storey office block. It is a short walk from City Hall MRT interchange station, which serves the East-West and North-South lines. Prominent landmarks include the National Gallery, St Andrew’s Cathedral and the Supreme Court.

"The successful buyer will continue to benefit from the ongoing rejuvenation within the City Hall vicinity, which has seen much transformation, with new or refurbished developments," said Ms Yap.

She added: "We are optimistic that the property’s rare 999-year tenure, centralised location, and excellent connectivity are strong attributes that will appeal to both end-users and investors. The location is ideal for trades and businesses, including law or accountancy firms, allied health professional enterprises, and commercial schools."

Source: Business Times, 8 May 2019

CapitaLand's revamped Funan secures 98% pre-leasing commitment for twin office blocks

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THE twin office blocks of CapitaLand's revamped Funan integrated development has garnered 98 per cent pre-leasing commitment of its total office net lettable area (NLA) of 214,000 square feet (sq ft).

The CapitaLand Mall Trust-owned (CMT) Funan secured the pre-leasing commitment of about 210,000 sq ft of its NLA when it got its Temporary Occupation Permit in April.

Funan’s office tenants, which comprise public agencies, multinational corporations and startups, are slated to move into the two six-storey blocks progressively from the second-quarter of 2019.

The south office block, which has a total NLA of 95,600 sq ft, has been fully leased to three public agencies: the Attorney-General’s Chambers, Singapore Department of Statistics and the Smart Nation and Digital Government Office.

The north block's office tenants include German sporting goods company adidas' South-east Asia office and co-working space WeWork.

"The revamped Funan caters to the new generation of professionals who prefer to work in a collaborative and inspiring environment, at a convenient location where they can unwind at the end of the day with a whole host of lifestyle amenities under one roof," said Tony Tan, CEO of CapitaLand Mall Trust Management.

"With a high commitment of 98 per cent, Funan’s diversified and quality office tenant base will progressively contribute earnings to CMT from 3Q 2019.”

CapitaLand shares closed up 0.85 per cent, or S$0.03 at S$3.57 on Tuesday, while CapitaLand Mall Trust units also closed up 0.82 per cent, or S$0.02 at S$2.45.

Source: Business Times, 8 May 2019

Oxley confirms S$1.025b sale of Chevron House

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PROPERTY developer Oxley Holdings announced on Tuesday that it had signed a deal to sell Chevron House for up to S$1.025 billion, just 16 months after acquiring the prime office building in Raffles Place for S$660 million.

Oxley said that on April 29, it entered into a sale-and-purchase agreement (SPA) with Golden Compass (BVI) for the latter to buy the entire interest in its wholly-owned subsidiary Oxley Beryl, and take over the existing bank loans for an aggregate value of up to S$1.025 billion.

Oxley Beryl owns Chevron House, a 32-storey commercial development comprising 27 levels of office space and a five-storey retail podium; the building's existing net lettable floor area (NLA) is about 261,280 sq ft.

Oxley's corporate presentation in February revealed that the plan is to increase the building's NLA by 43 per cent to about 374,165 sq ft, subject to approval from the authorities.

The S$1.025 billion sale price works out to about S$2,739.43 psf on the increased NLA. The property sits on a site with a 99-year leasehold tenure from December 1989, leaving nearly 70 years on the lease.

Oxley said the proposed sale is expected to have a positive impact on its net tangible assets per share and earnings per share for the current financial year ending June 30.

It will complete the alterations, additions and asset enhancement works, begun on March 1 on the property, before the final completion of the proposed sale.

The consideration was arrived at through arm's-length negotiations, taking into account the enterprise value of Oxley Beryl, said Oxley.

Under the deal, Golden Compass is to pay S$210 million upon the first completion of the proposed sale, after which 82.35 per cent of the issued and paid-up capital of Oxley Beryl, among others, will be transferred to Golden Compass.

The buyer is to then pay the balance of the consideration and discharge Oxley Beryl's bank loans upon the final completion of the sale, after which the remaining shares in Oxley Beryl will be transferred to Golden Compass. The final completion will take place after the works are done and after the retail and banking units there have been divested.

The Business Times understands that the buyer will take over the S$450 million in borrowings that Oxley had taken out to finance its 2017 acquisition of Chevron House. The sale will thus reduce Oxley's debt by that amount.

The SPA also provides for certain retention sums which will be released when the relevant conditions are fulfilled. Oxley did not disclose these sums or conditions.

Completion of the proposed sale is subject to certain conditions precedent, including shareholders' approval if required by the Singapore Exchange (SGX).

Golden Compass is wholly-owned by the US-based real estate fund AEW. BT had reported in March that Oxley had accepted an expression of interest from AEW to acquire Chevron House.

As one of Singapore's most highly-geared developers, Oxley has been in deleveraging mode of late. It told BT in March that it aims to gradually reduce its net gearing to one time by end-2019, from 2.55 times net debt-to-equity as at end-2018.

It has S$300 million in bonds due in November 2019 and S$150 million in bonds maturing in May 2020.

To pare down its debts, Oxley is focused on selling assets and a quick turnover for completed projects.

In Singapore, aside from Chevron House, it is also looking to sell its Novotel and Mercure hotels on Stevens Road. Oxley has hired exclusive agents to sell the hotels, after having called off a S$950 million sale in March. The company has received interest for the hotels from parties in Hong Kong, BT understands.

Oxley shares closed at S$0.33, up three Singapore cents on Tuesday.

Source: Business Times, 6 May 2019