ARA Asset Management has announced that it has completed the purchase of Singapore’s Robinson Centre on behalf of one of its private real estate funds, marking the second acquisition by the Warburg Pincus-backed investment manager in just under two weeks.
The Singapore-based firm is understood to have paid S$340 million ($252 million) for 61 Robinson Road through its ARA Real Estate Partners Asia II value-add fund, according to a source close to the deal who spoke with Mingtiandi.
The acquisition of the 20-storey building in the city’s financial district was announced on 30 December — just 13 days after ARA revealed that it had teamed up with Singapore’s Straits Real Estate and ICBC International Holdings to jointly acquire Shanghai’s Sanlin InCity Mall for RMB 2.42 billion ($350 million).
“The successful acquisition of Robinson Centre demonstrates ARA’s extensive network and excellent deal-sourcing capabilities,” ARA Private Funds’ CEO David Kim said in a statement.
Adding Value to an Ageing Asset
Based on the Robinson Centre’s 132,300 square feet (12,291 square metres) of net leasable area, the ARA fund is purchasing the nineteen-year-old building for around S$2,570 per square foot, with plans to boost revenues through improvements to the property and strategic leasing.
“True to our investor-operator philosophy, we are ready to execute our asset enhancement plans to rebrand, reposition and revitalize the property,” said Kim. ARA indicated that its potential enhancement initiatives include upgrading the Robinson Centre’s façade and interiors.
The company also highlighted the building’s higher-than-average 3.5 metre floor-to-ceiling heights and large floor plates of around 9,000 square feet as features that would attract tenants.
Located midway between Raffles Place and Tanjong Pagar MRT stations, the property is just 65 metres from 71 Robinson Road, which local real estate investment house Sun Venture acquired from Commerzbank four months ago for S$655 million, or S$2,756 per square foot.
A range of international and local firms currently occupy the building including banks, financial companies, and consultancy firms, with market rents for the area said to be in the region of S$9 to S$9.50 per square foot.
ARA said in its announcement that the property’s short weighted average lease expiry of 1.5 years presented the opportunity to reposition the property through active leasing.
Earning a 16% Capital Gain
The ARA-managed fund is understood to have acquired the property from Homax Pte Ltd, a private company controlled by the family of Taiwanese billionaire Tsai Tseng-yu. Tsai, whose personal wealth is estimated by Forbes at $2.2 billion, inherited a stake in Taiwan’s Cathay Life Insurance from his father Tsai Wan-lin and has previously used Homax to acquire real estate in Singapore.
At the reported transaction price, Tsai’s company is notching a markup of 16 percent after buying the asset from a fund managed by Keppel Group’s Alpha Investment Partners for S$293 million in 2011, according to a report in The Business Times.
The Alpha-managed fund had purchased the Robinson Centre from developer GuocoLand for S$145 million in 2006.
Singapore Office Assets Still in Style
The acquisition of the Robinson Centre comes as the latest in a wave of big-ticket Singapore property transactions as the city-state’s socio-economic stability and market transparency attract investors according to Steven Ming, managing director of Sakal Real Estate Partners, which brokered the sale of the Robinson Centre on behalf of Homax.
“The office market remains a favourite sector amongst institutional investors,” said Ming. “Robust rental growth is expected in the near to midterm, supported by strong demand and limited new supply.”
Big-ticket sales such as Sun Ventures’ 71 Robinson Road buy and the S$1.6 billion July purchase of the Duo commercial complex near Bugis by Allianz Real Estate and Gaw Capital Partners, helped commercial property investment sales double from S$2.2 billion in the third quarter of last year to S$4.6 billion for the same three months in 2019.
In early 2019 Gaw Capital purchased Robinson 77, an office building just one block from the Robinson Centre, from a fund managed by CLSA Capital Partners for approximately S$710 million.