Singapore-listed ARA Asset Management is reportedly buying five office floors in Suntec Tower One, a prime business location in the city-state for S$129.3 million ($89 million).
The fund management firm run by investor John Lim is buying up the floors in the Suntec complex as it navigates a $1.3 billion privatisation scheme, backed by US private equity giant Warburg Pincus and China’s AVIC Trust.
The reported price that ARA is paying for levels 24, 25, 34, 35 and 36 of the 1995 vintage building works out to S$2,400 per square foot according to the Business Times. The floors are being sold by German chemicals giant BASF, which currently occupies the floors, and is said to be planning to lease back some of the space from the buyer.
The ARA team should be well familiar with the BASF offices, as it manages Suntec REIT, which holds a 60.8 percent interest in the Suntec City complex. The investment management firm’s own offices are in Tower Four of the 395,500 square metre complex. Located in Singapore’s Marina Centre near City Hall, Suntec City comprises five office towers, a retail and entertainment complex, and a convention and exhibition centre.
Second Suntec Buy-Back in Two Months
The S$2,400 per square foot pricing is lower than the S$2,648 per square foot achieved in November 2015, when Maybank Kim Eng Properties sold three floors at the adjacent Suntec Tower Two to Suntec Real Estate Investment Trust (Suntec REIT) for S$101.56 million under a sale-and-leaseback arrangement, the paper said.
The Suntec deal comes on the heels of ARA Asset’s acquisition of a 50 percent stake in Capital Square from Alpha Investment Partners for S$475.5 million, or S$2,450 per square foot.
Vacancies of prime office space are expected to reach record-levels in 2017, with many investors seeing this as an opportune time to buy commercial assets at bargain prices.
ARA Continues Record-Setting Year
ARA Asset Management manages $20.8 billion in Asian property assets. It focuses on a diverse range of REITs and private real estate funds that are invested in the office, retail, logistics and industrial, hospitality and residential sectors in the Asia-Pacific.
The company, which counts Li Ka-shing’s Cheung Kong group among its largest investors, is also eyeing the booming Chinese market. The Singaporean firm launched the ARA Harmony VI fund in October to invest in Century Link, a $4.1-billion premium-grade integrated commercial property in Shanghai.
ARA earlier said the investment, which boasts China Life as its core investor, would be the biggest single-asset property transaction in the Asia-Pacific this year.