Office Buildings

Realty Centre in Tanjong Pagar sold for S$148m, below reserve price

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REALTY Centre, an office building in Tanjong Pagar, has been sold for S$148 million in 2019's first commercial en bloc sale, although the figure falls short of the reserve price. 

Marketing agent Cushman & Wakefield had put the freehold 12-storey building up for collective sale with a reserve price of S$165 million in January. 

The buyer is Singapore-listed The Place Holdings, which intends to redevelop the property into a mixed-use commercial andresidential tower, subject to regulatory approvals. The building will also serve as the company's headquarters, according to SGX filings on Monday night.

The Place Holdings deals in branding, events organising and tourism-related business development, and is backed by China's The Place Investment Group.

Realty Centre has a land area of about 11,000 sq ft and is zoned for commercial use under the Urban Redevelopment Authority's 2014 Master Plan with a plot ratio of 5.6 times and a maximum storey height of 35 storeys.

Cushman & Wakefield noted that under the recently announced CBD Incentive Scheme, Realty Centre falls under the Anson precinct. This means that the property is expected to enjoy bonus plot ratios of between 25 per cent and 30 per cent if there were to be a change ofuse to either residential and commercial (+25 per cent) or residential with commercial on first storey (+30 per cent). 

Its director of capital markets, Christina Sim, called Realty Centre a "versatile site" sitting on the fringe of a location which will be undergoing "massive urban rejuvenation and transformation".

Source: Business Times, 22 Apr 2019

UBS Singapore to take up all 8 floors of office space at redeveloped Park Mall building

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SINGAPORE - Developer SingHaiyi Group and its joint venture (JV) partners - Suntec Reit and Haiyi Holdings - announced on Wednesday (April 17) that UBS Singapore has signed on to take up all the office space at the redeveloped Park Mall building.

The move confirms an earlier report by The Business Times report on April 1 that UBS was mulling over a consolidation of its Singapore office footprint.

Located at 9 Penang Road, the property is now undergoing redevelopment, which is on track to be completed in the fourth quarter this year, SingHaiyi said in an exchange filing.

UBS Singapore will take up 381,000 sq ft of net lettable area, spanning eight levels across two towers, and plans to move to the 10-storey Grade A office building in the second half of 2020.

Besides UBS Singapore, the new building has also garnered "strong interest" from potential retail tenants including food and beverage outlets, and ancillary services, SingHaiyi added.

Haiyi Holdings is a wholly owned entity of the group's major shareholders, SingHaiyi's group managing director Celine Tang, and her husband, Gordon Tang.

SingHaiyi Group and Haiyi Holdings each hold a 35 per cent stake in the JV, while Suntec Reit owns the remaining 30 per cent.

The new building is located near Singapore's prime shopping belt Orchard Road and Dhoby Ghaut MRT station. It also has 15,000 sq ft of retail space, and an extended 99-year leasehold which will expire on Dec 7, 2115.

Said Mrs Tang: "9 Penang Road marks SingHaiyi's first foray into commercial property redevelopment, and a strategic springboard to expand our brand and track record in commercial and retail property development."

Separately, UBS Singapore's country head, August Hatecke, noted that the move will allow UBS Singapore to bring its employees working at One Raffles Quay and Suntec City under one roof to enhance collaboration, as well as offer new capacity for future growth in the Asia-Pacific region.

UBS has close to 4,000 employees in Singapore across its businesses, and the new premises will also be home to UBS University, which will lead training and development programmes for its staff across the region.

In a circular sent out to its employees on Wednesday and seen by BT, UBS noted that Singapore is a "strategic priority" of the group, and that the future-ready workplace with the latest connectivity and health facilities will offer an "ideal environment" to enhance the way its staff work and collaborate.

"As sole tenant, UBS Singapore will have full control of building security, which will feature a single-entry system including facial recognition technology."

It added that the new building's energy-efficient construction will also help the group operate in line with the highest environmental standards.

At 4.21pm, SingHaiyi shares were trading flat at 9.5 cents, while units in Suntec Reit were trading unchanged at $1.90.

Source: Straits Times, 17 Apr 2019

Rejuvenating CBD with new integrated buildings 'visionary': JLL

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The CBD Incentive Scheme could see the introduction of state-of-the-art buildings, including new homes and hotel rooms in the area.

MORE than 20 ageing office buildings in Singapore's CBD, currently housing some 6 to 6.5 million sq ft of office space, could be redeveloped to make way for state-of-the-art buildings under the CBD Incentive Scheme as part of the recently released draft Master Plan 2019. This is the number of buildings JLL Research estimates could satisfy the criteria set under the scheme, which offers higher plot ratios for owners who convert older office buildings to other complementary uses.

In their place, we can expect brand new buildings potentially yielding some four to five million sq ft net floor area of office space and injecting over 3,000 new homes and over 3,000 hotel rooms in the heart of CBD.

In our view, the benefits of this visionary initiative are multifold.

Firstly, we believe the scheme will transform Singapore's downtown CBD to meet modern demands. From our work with global corporate clients, we know that employees of today prioritise hospitality, health and lifestyle amenities in their choice of office locations. The scheme can reinvigorate the CBD to meet these needs by encouraging new mixed developments, bringing together new residents, tourists and digital nomads of all ages into the district, and allow for more 24/7 social activities and events.

Secondly, we foresee that the CBD Incentive Scheme could accelerate the decentralisation strategy to enhance sustainability and reduce commuting. As older office stock is withdrawn and redeveloped, office occupiers displaced by the withdrawal of older stock in the CBD will need new premises, giving the government scope to release more land parcels in decentralised gateways, such as Jurong East, Woodlands and Tampines to expedite the development of these hubs.

Thirdly, with limited new supply of office space in the CBD and potential initiation of redevelopment projects over the next five years, we expect office rents to continue to rise, barring any demand shocks. This would likely widen the rental gap between CBD and suburban hubs, and motivate more businesses to consider moving some operations out of the CBD.

Granted, not all owners who qualify for the scheme will immediately jump on the incentives and redevelop their properties. After all, we recognise that time is needed to evaluate the financial feasibility of the conversion, especially at a time when the office market is enjoying an upcycle amid healthy demand and tight supply, while the residential market is facing a challenging environment weighed down by July's cooling measures, as well as a long pipeline supply. Besides, hotel and residential properties do not fit the investment profile of some of the existing landlords, and redevelopment could likely take place only when the assets change hands.

Nonetheless, the CBD Incentive Scheme could kickstart urban renewal momentum and could be extended beyond the initial five-year implementation period, giving owners and investors more time to take advantage of it.

To help foster a vibrant city centre, the planning authority is also studying the possibility of transforming Robinson Road into a transit-priority corridor for public transport and active mobility, providing more scope for wider sidewalks and for ground-level activities such as al-fresco dining to spill into the streets.

Singapore is already the location of choice for most regional headquarters. We believe the CBD Incentive Scheme proactively catalyses the reshaping of our CBD to address transport concerns and plants the seeds for more integrated live-work-play developments. This will likely uplift Singapore's downtown CBD and further widen our lead as a top global city for talent, companies and capital.

Source: Business Times, 13 Apr 2019

String of public agencies lease offices at Funan

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A STRING of government bodies have leased office space at the revamped Funan in the North Bridge Road/Hill Street location.

These include the Department of Statistics (DOS) , organ of state Attorney-General's Chambers (AGC) and the Smart Nation and Digital Government Office (SNDGO), which are leasing a total of about 8,590 sq m (or 92,462 sq ft) of net lettable office space in the South Tower office block of Funan.

The Ministry of Culture, Community and Youth (MCCY) will be taking 360 sq m.

The Government Technology Agency (GovTech) will occupy 170 sq m there - but this will be within the co-working facility to be operated by WeWork in the building's North Tower office block.

The Business Times understands that WeWork has increased the space it is leasing at Funan from 40,000 sq ft to 70,000 sq ft.

DOS, which will move to Funan later this year, now operates out of The Treasury next door.

"DOS works closely with many of the agencies in The Treasury, and being in Funan will facilitate these work interactions. DOS will be occupying about 5,000 sq m in Funan's South Tower office block, similar to its current office space at The Treasury," a Ministry of Finance (MOF) spokesman told BT.

MOF owns The Treasury and is also housed there. Also in the building are the Trade and Industry and Law ministries, the Prime Minister's Office Strategy Group, the Public Service Division and Accountant-General's Department.

The roughly 20-year-old Treasury has about 24,000 sq m (about 258,334 sq ft) net lettable area (NLA).

The space now occupied by DOS at The Treasury will be taken up by other government units, said the MOF spokesman.

An AGC spokesman told BT that by early next year, part of the AGC will be relocated to Funan, where it will occupy about 1,790 sq m in the South Tower.

"This is in line with AGC's need for more office space in order to accommodate the increased headcount to manage the government-wide increase in demand for legal services," she added.

The organ of state operates out of One Upper Pickering in Chinatown near the State Courts. It has a long lease for the whole of the 15-storey office building, which has about 87,070 sq ft NLA.

The AGC began operating from there in March 2013.

Market watchers note that a presence at Funan will place the AGC near the Supreme Court Building, which houses the High Court and Court of Appeal. It also marks the AGC's return to where it once was - in leased premises at The Adelphi - before its move to One Upper Pickering.

That move was triggered by a lease expiry; the landlord had said then that it had plans for the premises, it was reported.

SNDGO's spokesman told BT that it will move to Funan's South Tower by year's end, taking up about 1,800 sq m. "The relocation would better meet SNDGO's needs," he added.

The agency is now in Raffles City Tower.

GovTech's spokesman told BT that it will be taking co-working space at Funan to work more closely with SNDGO to "build digital solutions for citizens and businesses".

The two agencies make up the Smart Nation and Digital Government Group (SNDGG). Funan, redeveloped from the former Funan DigitaLife Mall, has about 887,000 sq ft gross floor area. It comprises a retail component (held through CapitaLand Mall Trust or CMT), two office towers (held by trusts fully owned by CMT), and the lyf co-living serviced residences. The serviced residence component is owned by a fully-owned subsidiary of Ascott Serviced Residence (Global) Fund.

Retail tenants in the development include Golden Village, FairPrice Finest and theatre company Wild Rice. The mall will use experiential retail concepts with the integration of online, offline, data and logistics offerings.

Source: Business Times, 9 Apr 2019

Uber launches Asia-Pacific hub in Singapore, no plans to restart services in South-east Asia

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SINGAPORE - Just a little over a year after it announced its exit from Singapore and the South-east Asian market, Uber now says it is in the Republic to stay.

The American ride-hailing giant officially launched its Asia-Pacific hub here on Tuesday (April 2), occupying about 2,000 sq m at Frasers Tower, in Cecil Street, overlooking the Central Business District.

The new office, which is headed by Uber's international chief business officer Brooks Entwistle, oversees the firm's operations in nine countries across the region, including Australia, Bangladesh and Japan.

While there are local teams on the ground in these countries, Uber is maintaining its regional hub in Singapore as it is an "amazing hub for talent", said the firm's Asia-Pacific senior director for policy and communications Amy Kunrojpanya.

There are currently 165 people employed at the office - working in areas such as marketing, strategy and planning, as well as product support - with plans to hire more.

As of Tuesday, the Uber website lists 17 job openings for its Singapore office.

However, it has no plans to relaunch any of its services in Singapore or the rest of South-east Asia.

In March last year, Uber announced that its South-east Asian business would be acquired by Grab, in exchange for the American ride-hailing giant getting a 27.5 per cent stake in Grab and a seat on the Singapore-based firm's board.

"We feel really good about the business decision behind that," Ms Kunrojpanya told The Straits Times, describing Singapore as a "non-operational market" for the American firm.

"We are the single largest shareholder in the largest mobility player in the region, and we are invested in their success."

While Uber no longer operates in Singapore, she noted that the firm's experience here has influenced how it does business elsewhere, such as its decision to partner taxi companies in countries like Japan.

This is in line with the longer-term strategy and collaborative approach taken by chief executive Dara Khosrowshahi, who succeeded Uber co-founder Travis Kalanick in 2017 following a series of scandals involving the company.

The American firm launched its taxi-booking service UberTaxi in Singapore in 2014, and in late 2017 announced a partnership with local taxi giant ComfortDelGro, which was later dissolved following the merger with Grab.

Uber, which is reported to be valued at US$120 billion (S$162.7 billion), is said to be eyeing a public listing in the first half of this year.

However, Ms Kunrojpanya declined to comment on whether Uber would follow in American ride-hailing rival Lyft's footsteps in launching an initial public offering (IPO).

Separately, ST reported on Tuesday that the $6.58 million fine imposed on Uber following its merger with Grab last year has been suspended, pending Uber's appeal against the Competition and Consumer Commission of Singapore's ruling that the deal was anti-competitive.

Source; Straits Times, 2 Apr 2019

UBS said to be mulling move to 9 Penang Rd

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UBS is understood to be mulling a consolidation of its Singapore office footprint by relocating from One Raffles Quay and Suntec City into 9 Penang Road, which is coming up on the former Park Mall site opposite Dhoby Ghaut MRT Station.

This could potentially be one of the biggest office leasing deals on the island in recent years if the bank decides to lease the entire development in Penang Road comprising about 352,000 sq ft net lettable area of office space and 15,000 sq ft of retail space.

BT understands that a relocation from Singapore's financial district would be motivated not so much by financial savings but a desire by the bank to operate in a campus-style facility, occupying the whole building and even having its own canteen with its own chefs cooking for UBS staff.

Word in the market is that the commercial terms of a potential lease for 9 Penang Road have been more or less hammered out, but a deal is pending approval by the top brass at the world's biggest private bank in Switzerland.

Most office leasing observers were somewhat startled that UBS, which is also Asia's largest wealth management bank, is considering moving out of the financial district into Penang Road, which is not a typical headquarters location for a major bank. That said, 9 Penang Road is a stone's throw from the prime Orchard Road shopping belt and the location offers good connectivity: Dhoby Ghaut station is an interchange for the North-South, North East and Circle lines.

"Penang Road is not a traditional location for a major bank HQ but the project provides the scalability that UBS requires for consolidating its offices at one location," said a seasoned office leasing agent who is not involved with the potential leasing deal for 9 Penang Road. "In a very tight office market, the pool of buildings that have 350,000 sq ft office space to offer is very limited."

Currently UBS leases around 230,000 sq ft at One Raffles Quay's North Tower and about 90,000 sq ft at Suntec City.

The bank's lease at One Raffles Quay is said to be expiring around late next year and that at Suntec City in early 2021. This timing should dovetail with a potential move to 9 Penang Road. The 10-storey project is expected to be completed towards the end of this year and it would take some time for UBS to fit out a vacant building, say market watchers.

UBS is expected to retain its backroom operations at Hansapoint in Changi Business Park.

Analysts said that UBS could have negotiated for a gross effective monthly per square foot rental in the high single digit at 9 Penang Road.

If it were renew its existing leases, it may have to pay a rental in the low double-digit range at One Raffles Quay and high single digit at Suntec City.

Office leasing agents generally rate One Raffles Quay's specifications as being similar to 9 Penang Road despite One Raffles Quay being completed more than a decade ago - in 2006.

However, 9 Penang Road has the advantage of having bigger floor plates of 24,000 sq ft compared with 18,000 sq ft at the North Tower of One Raffles Quay.

Market watchers say UBS's potential decision to move out of the established Raffles Place and Marina Bay financial districts could signal an expansion of Singapore's Central Business District - thanks to better quality buildings springing up with appealing food and beverage offerings and MRT connectivity.

9 Penang Road is being developed by a 35:35:30 joint venture between SingHaiyi Group, Haiyi Holdings and Suntec Reit at a total development cost of about S$800 million, based on information on the website of Singapore-listed SingHaiyi Group.

Haiyi Holdings, a private vehicle of Gordon and Celine Tang, owns a majority stake in SingHaiyi.

The 9 Penang Road development will have eight floors of office space in two wings, from levels 3 to 10. The first floor is designated for retail space. Car parking will be in the basement and on the second floor.

The leasehold tenure for the site has been topped up to 99 years, expiring in December 2115.

Source: Business Times, 1 Apr 2019

New CBD options offer flexibility in medium to long-term

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Analysts: Headwinds aside, it offers alternatives for older buildings and could support rentals

CITY Developments Limited (CDL) and Hong Leong Holdings are among the property players that could benefit from the government's push to inject greater vibrancy into the central business district (CBD).

The CBD Incentive Scheme, which offers a higher gross plot ratio to pave the way for older CBD office buildings to be converted into hotels, homes or mixed-used projects, makes for greater flexibility in the medium to long term, but owners can choose not to redevelop their existing properties in the near term amid headwinds, analysts say.

CDL's assets, Fuji Xerox Towers and City House, should qualify for the scheme, which is part of the Draft Master Plan 2019.

Hong Leong Holdings, which counts Anson Centre and 80 Robinson Road among its properties, said it welcomes the incentive scheme.

"We will need to review and carry out feasibility studies on how our properties can fit into the URA Master Plan," said its spokesman.

The scheme is targeted at office buildings in certain parts of the CBD - Anson, Cecil Street, Shenton Way, Robinson Road and Tanjong Pagar.

Buildings under 20 years old or which have gone through significant asset enhancements from the last TOP date are excluded from the scheme. Site area is also a qualifying criterion.

The allowable increase in plot ratios is capped at 25 per cent for most proposed land uses and at 30 per cent for residential with commercial use in the first storey in the Anson and Cecil Street areas.

Christine Li, senior director and head of research for Cushman & Wakefield, said: "The new scheme opens up more redevelopment options, especially for non-performing obsolete office stock."

She added that the new scheme gives more flexibility to commercial buildings attempting an en bloc sale. It opens them to a bigger pool of potential buyers - not just commercial landlords, but also residential and hotel developers.

Ms Li noted, however, that last year's hike in additional buyer's stamp duty, as well as the high development charge (DC) rates for conversion to hotels may make developers more cautious about going for residential and hotel developments in the current environment.

Tricia Song, head of research (Singapore) for Colliers International, said owners could be less inclined to take up the scheme if they lack expertise in managing a hotel or in residential development.

They could, however, choose to sell their property to a hotel operator or developer, or even set up a joint venture with a suitable partner.

She also pointed out that office properties typically command steady and predictable income, with rental contracts locked in for two to three years.

"Hotels' rates and occupancies, on the other hand, change on a daily basis and tend to be seasonal and volatile. The owner may also prefer to have a higher amount of recurring income, instead of a substantial one-off income from trading residential properties."

Desmond Sim, head of research (South-east Asia) at CBRE, noted that many of the buildings along Anson Road, Cecil Street and in Tanjong Pagar have small site areas and therefore fall short of the minimum site size. This ranges from 1,000 square metres (sq m) to 2,000 sq m, depending on the location of the site.

Interested parties might thus have to acquire and amalgamate two or more sites in order to take advantage of the scheme, he added.

Mr Sim said real estate investment trusts (Reits) and private equity funds should be key beneficiaries of the scheme, because the potential removal of older CBD offices might further whittle down the near-term supply shortfall.

Meanwhile, OCBC Investment Research analysts, who singled out CDL and the UOL Group as potential beneficiaries, suggested that while conversions may not happen in the near-term amid headwinds in the residential sector, the scheme still offers developers flexibility in the medium-to-long run.

Analysts also said office rents could receive a boost from the potential reduction in office supply in the targeted areas, and displaced occupiers could opt to move out of the CBD in search of more affordable rents.

Over the next seven to 10 years, Cushman & Wakefield expects Grade A office rents to surpass the peak of S$15.40 per square foot per month, last seen in the second quarter of 2008. As of the first quarter of this year, Grade A office rents stood at S$10.61 psf per month.

Ms Li said: "Office rents will receive a further boost if more projects are going for conversion as the Grade A CBD office vacancy rates are only at 2.6 per cent in the first quarter of 2019, a record low since 2007."

DBS Group analysts wrote in a research note: "With the potential reduction in office supply due to conversion into hotels or residential developments and a more vibrant Downtown area, we believe this will be supportive of both Grade A and Grade B CBD office rents.

"However, this would be partially tempered by new office supply in Marina Bay, with shorter land leases which would likely have lower asking rents, and by increased decentralised office supply as the Singapore government focuses on developing various regional hubs."

The analysts singled out Reits with office properties in the CBD as beneficiaries over the medium-term; examples are CapitaLand Commercial Trust, Frasers Commercial Trust, Keppel Reit, OUE Commercial Reit and Suntec Reit.

Source: Business Times, 29 Mar 2019

CapitaLand Commercial Trust pursues S$1.5b Duo office tower

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[KUALA LUMPUR] CapitaLand Commercial Trust, Singapore's biggest office landlord, is among suitors in talks about a potential acquisition of the Duo office and retail development in the city, people with knowledge of the matter said.

The real estate investment trust has been negotiating the purchase of a 39-story office building called Duo Tower, along with the connected Duo Galleria mall, according to the people. The property could be valued at more than S$1.5 billion, one of the people said, asking not to be identified because the information is private.

Other parties also remain interested in the asset, which is located in the Bugis area on the fringe of Singapore's central business district, the people said. The project's owner is separately seeking a buyer for the hotel portion of the development in a deal that could fetch as much as S$500 million, according to the people.

The development is owned by M+S Pte, a joint venture set up in 2011 between Malaysian sovereign fund Khazanah Nasional Bhd and Singapore state investment firm Temasek Holdings. No final agreements have been reached, and there's no certainty the talks will result in a transaction, the people said.

Source: Business Times, 19 Mar 2019

Standalone CBD building formerly known as Cecil House up for sale again after revamp

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A STANDALONE building at 139 Cecil Street is up for sale again via an expression of interest exercise after an extensive revamp, said real estate firms CBRE and JLL in a statement on Tuesday.

An 18-month additions and alterations exercise by the building's owner has increased the number of floors from 11 to 16, with a restaurant on the ground floor and a pool on the roof terrace.

The building is fully leased for an initial six years to Campfire Collaborative Spaces, a Hong Kong-based co-working space. With a net lettable area of about 85,000 square feet, the space is also Campfire’s largest site globally, said the joint marketing agents.

The property, formerly known as Cecil House – was unsuccessfully put up for sale in April 2017 with an indicative price of S$210 million. It is owned by Ececil, a joint venture between Vibrant Group and DB2 Group - with Vibrant holding 51 per cent of the company, according to an earlier BT report.

The expression of interest exercise closes on April 17.

Galven Tan, CBRE’s executive director, capital markets for Singapore said that given its prime location and strong attributes, “keen investor interest" in 139 Cecil Street is expected. He added that the availability of naming and signage rights also adds to the appeal of this property.

Clemence Lee, JLL’s Singapore senior director, capital markets, said that the property offers investors an opportunity to acquire a brand new, high-quality standalone office building with a “palatable investment quantum in Singapore”.

"With a six-year lease to a strong anchor tenant in place, investors will be able to enjoy immediate, long-term and stable cash flow with built-in rental escalations," Mr Lee added.

Source: Business Times, 12 Mar 2019

Many ways for Oxley to exit its Chevron House investment

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SINCE the start of this year, Oxley has unveiled a few divestments. On Jan 21, the group announced the sale of two offices blocks (Blocks 4 and 5) of its Dublin Landings project in Ireland for a total of 204 million euros (or S$315 million). This was followed by the announcement on Jan 28 of a proposed sale in parts of two residential blocks (Blocks B and E) in the same development for 175.5 million euros.

Earlier in the same month, on Jan 10, Oxley revealed that it had accepted a non-binding letter of intent for the purchase of the Mercure and Novotel hotels along Stevens Road for S$950 million.

Completion of the above transactions is expected to help Oxley - one of the most highly geared property groups listed on the Singapore bourse - to lower its net gearing ratio to about two times from the high of 2.55 times as at Dec 31, 2018.

Word on the street is that its stake in Chevron House, an office-and-retail development next to Raffles Place MRT Station, may be a further candidate for divestment.

However, things are still fluid, with a few permutations of a potential exit mulled over the past year for Chevron House, which has an eye-catching design, including office floors that have a circular shape at one end.

Oxley has owned Chevron House for about a year. It entered into a deal in December 2017 to buy the 32-storey building from Deka Singapore, a unit of Germany's DekaBank Group, for S$660 million, and completed the transaction in March 2018.

When the building was being marketed in the second half of 2017, it had been pitched, among other things, for potential asset enhancement and strata sale exit.

Word in the market is that Oxley last year courted some potential tenants to lease space in the building after it has been revamped; the group also tried to interest potential investors to buy strata floors with the proposition of secured tenancies and assured recurring income.

Let's look at the scope of potential works for the asset, which was previously known as Caltex House and completed in 1993. The building has a total net lettable area (NLA) of about 261,280 sq ft - comprising 215,667 sq ft of offices over 27 floors (from levels 6 to 32) and 45,613 sq ft of retail space on five floors (from basement 1 to level 4).

Basements 2 and 3 house car park lots.

The development has unutilised gross floor area (GFA) of about 15,000 sq ft which may potentially be accommodated in the retail podium, based on earlier reports. The lettable space on office floors will go up due to renovations including relocation of mechanical and electrical equipment.

Some of the basement car park space is expected to be converted to lettable area and this is expected to be occupied by a gym/fitness operator.

A few F&B tenants are also said to have signed up.

There has been speculation that Oxley is in advanced negotiations to lease multiple floors to WeWork post-refurbishment. By some accounts, WeWork could take up eight office floors.

According to market talk, a combination of whole-floor tenancies and renovation works is expected to boost Chevron House's efficiency (ratio of NLA to GFA) from about 65 per cent to 80 per cent. A slide in Oxley's corporate presentation last month shows that the plan is for the building's NLA to increase by 43 per cent to about 374,165 sq ft, subject to approval from the authorities.

BT understands that Oxley began serving notice to tenants in the third quarter of last year to vacate Chevron House. The building is now empty. (Anchor tenant Chevron moved to Duo Tower last year; it had negotiated its lease in the iconic Beach Road project even before Oxley bought Chevron House in Raffles Place).

Preparatory works for Chevron House's refurbishment are under way and the spruce-up is expected to be completed in about a year's time.

While Oxley may have begun exploring its exit for this asset through potential strata sales, probably on a one-title-per-floor basis, it turns out that some potential investors may have provided feedback to Oxley that they are more keen on buying the whole building.

The touted price tag of about S$1 billion works out to about S$2,670 psf on the increased NLA of about 374,165 sq ft.

No doubt, Chevron House has a prime location in the traditional Raffles Place CBD. However, it is on a site with 99-year leasehold tenure since December 1989, leaving nearly 70 years' balance lease - compared with freehold and 999-year leasehold tenures for most of the surrounding buildings.

Will Oxley proceed with its strata sale strategy? Perhaps the group may be more inclined to sell a stake in the property to a like-minded partner and thus retain a share in any further upside. That said, if an attractive offer surfaces, who knows if the group may just divest the entire building on a turnkey basis.

As the old saying goes: There is more than one way to skin a cat.

Source: Business Times, 7 Mar 2019