AEW Buying Singapore’s Chevron House From Oxley for S$1B

Property developer Oxley Holdings has agreed to sell Chevron House, an office building at Raffles Place for up to S$1.025 billion ($758 million), according to a filing by the company with the Singapore Stock Exchange on Tuesday.

The buyer, according to sources familiar with the transaction who spoke with Mingtiandi, is a fund managed by US investment firm AEW, which had earlier made an unsolicited bid for the 32-storey tower in Singapore’s financial district.

The transaction price represents a more than 35 percent increase in capital value over the S$660 million that Oxley had paid to acquire the 1993-vintage tower  in a deal which closed in March 2018.

Deal to Close Following Renovation Program

Under the terms of a sale and purchase agreement described in the exchange filing, Oxley, which as of 31 December had debts totalling S$3.9 billion against current assets of S$248.5 million will receive cash compensation of S$210.0 million for the sale Chevron House, with the buyer also taking over existing bank loans against the property which bring the aggregate value of the transaction up to the S$1.025 billion figure.

The 99-year leasehold property still has 69 years remaining on the land-use rights for its 2,778 square metre site, and currently has 27 storeys of office accommodation above a five-storey retail podium.

Oxley on March 1st began work on a project to give Chevron House a makeover that includes boosting the building’s net lettable area (NLA) by 43 percent to around 374,165 square feet (34,761 square metres) from its current 261,280 square feet. Today’s agreement puts the value of the property at S$2,739.43 per square foot following the renovation.

The sale and purchase agreement is not due to close until Oxley has completed the upgrade plan.

Singapore-based law firm Rajah & Tann is said to have advised on the transaction, which was signed just over a month after the two parties were reported to have entered into exclusive negotiations for the deal and as demand for Singapore office assets continue to grow among institutional investors.

Oxley Gets Cash Infusion

Oxley, which had agreed to purchase Chevron House from Deka Singapore – a fund managed by Germany’s Deka Immobilien – at the end of 2017, 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, 2019.

Oxley Holdings, run by PropertyGuru Property Report’s 2017 Singapore personality of the year Chiang Chiat Kwong, had been involved in a number of property disposal discussions over the past few months, following a spending spree that saw the developer’s debt levels soar.

In March, Oxley Holdings announced that it had appointed new consultants to search for a buyer for its Novotel and Mercure hotels on Stevens Road after a previous suitor was found to have breached the terms of a letter of intent for purchase of the S$950 million ($702.20 million) pair of properties.

The effort to sell the Stevens Road hotels came after the developer had agreed in November to sell a leasehold interest in a Dublin mixed-use property for euros 106.5 million ($120.4 million). In January, the company sold another asset in the same Dublin project to US multi-family investor Greystar for euros 175.5 million ($198.4 million).

AEW Adds Singapore Asset

The acquisition of the Chevron House is the latest sign of activity by Boston-based AEW which closed on a $1.12 billion value-add fund in June of last year.

Since that time, AEW has made a pair of major acquisitions in China, including joining with CapitaLand in January of this year to buy 70 percent of a Shanghai office building from HNA for RMB 2.75 billion. In late 2018 the firm acquired a Beijing office tower from Hong Kong-listed Hopson Development for RMB 4.5 billion.

Contacted by Mingtiandi, an AEW representative declined to comment on the company’s reported involvement in this latest transaction.

Fund managers ARA Asset Management and Gaw Capital Partners have both made major investments in Singapore office properties in recent months, as rents for prime space continue to rise across the city.