Mapletree Anson was developed by Mapletree Investments in 2009 (Image: MPACT)
Mapletree Pan Asia Commercial Trust (MPACT) is selling its flagship office building in downtown Singapore to regional private equity titan PAG for S$775 million ($574 million), in a deal which will rank as the city-state’s largest office transaction in two years once it is completed, Mingtiandi has learned.
The manager of MPACT said in an exchange filing late Thursday that it has entered into a put and call option agreement for the sale of Mapletree Anson in the island’s Tanjong Pagar area, without identifying the buyer.
Industry sources identified the purchaser as PAG, which is said to be acquiring the 19-storey Grade A office block on behalf of its PAG Real Estate Partners Fund III (PREP III), which hit a record $1.8 billion final close last year. The acquisition surpasses the $408.7 million purchase of the Seletar Mall by Robert Kuok’s Allgreen Properties, as Singapore’s largest real estate transaction so far in 2024.
The deal marks the latest in a series of deals bringing together PAG and Mapletree-managed entities, with Mapletree Investments, which controls the manager of MPCACT, having tied up with the private equity shop in January of last year to acquire the Goldin Financial Global Centre in Kowloon East for HK$5.6 billion (then $713 million) in a 50:50 joint venture.
Leverage Reduction Exercise
The transaction price represents a S$10 million premium to an independent valuation of the asset as of 31 March, according to MPACT, which will be booking a gain of 1.3 percent on the deal. The trust’s manager said the deal will strengthen the REIT’s capital structure and provide it with greater debt headroom.
Sharon Lim, CEO of Mapletree Pan Asia Commercial Trust’s manager
The consideration translates to S$2,352 per square foot of the property’s 329,487 square feet (30,610 square metres) of net lettable area, and represents a 14 percent increase from the S$680 million that the trust paid to acquire the property in 2013.
The pricing is 19 percent below the S$2,900 per square foot of net lettable area which KKR paid to acquire Twenty Anson from AEW in April 2022, with that property located just across Gopeng Street from Mapletree Anson.
Developed by Mapletree Investments in 2009, the office tower was part of the initial IPO portfolio of the Mapletree Commercial Trust before it was merged with Mapletree North Asia Commercial Trust in 2022 to form MPACT.
After transaction costs and other related expenses, MPACT expects to book S$762 million in net proceeds from the divestment, which it plans to use to reduce its leverage from 40.5 percent in March to 37.6 percent following completion of the transaction in July.
“This proactive step also enhances MPACT’s financial resilience and agility, strengthening our fundamentals to navigate the dynamic market landscape and seize emerging opportunities,” Sharon Lim, chief executive officer of the trust’s manager said in the statement. “Although there will be a marginal adjustment in the proportion of our Singapore assets, Singapore remains the cornerstone of our investment strategy, accounting for more than 50 percent of our portfolio.”
Mapletree Anson is changing hands at a yield of 3.8 percent, based on the S$29.3 million in net property income the asset generated during the fiscal year ending March 2024. Post-divestment, MPACT will have 17 commercial properties in its portfolio spanning 10.8 million square feet across Singapore, Hong Kong, China, Japan and South Korea.
Located at 60 Anson Road about two minutes’ walk from Tanjong Pagar MRT station, the office block is currently fully occupied by tenants including co-working space provider WeWork.
Singapore Market Revival
Finalising the sale of Mapletree Anson will mark the largest office transaction in Singapore since a CapitaLand joint venture sold 79 Robinson Road to CapitaLand Integrated Commercial Trust for S$1.26 billion (then $930 million) in May 2022, before the REIT changed the property’s name to CapitaSky.
“As Singapore’s largest office transaction in the past 24 months, the sale reinforces the resilience in the asset class and confidence in the long-term stability and sustainable rental growth potential of the wider sector,” Ting Lim, JLL’s capital markets head in Singapore, said in a statement. JLL representatives declined to comment on the identity of the buyer.
While higher interest rates slowed trades of income earning real estate assets in Singapore by 44 percent in the 12 months ending 31 March, compared to a year earlier, the city-state’s commercial real estate fundamentals continue to attract investors. Prime office rents in downtown Singapore surged to a 15-year high of S$11.42 per square foot per month in the first quarter, according to JLL’s data.
Bullish on Office
PAG representatives declined to comment on the transaction, with the deal coming more than two years after its last big-ticket office purchase in Singapore, the S$810.8 million buy of Cross Street Exchange near Raffles Place from Singapore-listed Frasers Logistics & Commercial Trust in January 2022.
The Hong Kong-based heavyweight has also been shopping for office properties in other markets in Asia Pacific as many institutional investors scale back their exposure to the sector.
In August of last year, PAG acquired 44 Market Street, a 26-storey Grade A office tower in central Sydney, from Australia’s Dexus in a A$393.1 million (then $257.8 million) that represented a 17 percent discount to the asset’s latest book value.
In 2019, PAG also bought the Mapletree Bay Point office building in Hong Kong’s Kowloon East from Mapletree Investments shortly after hitting a $1.5 billion first close for its PAG Real Estate Partners II fund.
The pan-Asia core-plus, value-add series is now in its third iteration, with the latest vehicle recording its highest level of commitments ever, after attracting 18 institutional investors from North America, Europe, the Middle East and Asia Pacific.
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