Alpha had teamed with a local insurer to buy Capital Square in 2011 for $650 mil
ARA Asset Management is said to have won its bid to purchase a 50 percent stake in Singapore’s Capital Square from Alpha Investment Partners, according to an account in Bloomberg.
No transaction price was disclosed for the 16-story building at Singapore’s Raffles Place, but market reports indicate that the two sides agreed to a rate per square foot of between S$2400 to S$2500 ($1754 to $1827), bringing the price for the 50 percent share in the 340,000 square foot (32,000 square metre) tower to between $298 million and $310 million. Neither ARA nor Alpha have yet commented publicly on the reported transaction.
Alpha, which is a fund management subsidiary of Keppel Group had put Capital Square, whose tenants include Morgan Stanley, Citigroup and Bloomberg, up for sale last year, just as office rentals peaked in the southeast Asian financial hub.
Alpha Sells Two Assets in One Week
The Capital Square stake was one of two asset disposals by Alpha to be revealed this week hitting the news on the same day that the fund manager, together with Keppel Land China, announced the joint sale of an 80 percent stake in a commercial complex in Shanghai for $517 million. Alpha had invested in the Shanghai project, Chongbang Group’s Life Hub@Jinqiao through its Alpha Asia Macro Trends Fund II.
Alpha made the Capital Square investment through its first Alpha Asia Macro Trends Fund in 2011, teaming with local Singaporean insurer NTUC Income to buy Capital Square from Germany’s Munich Re for S$889 million ($650 million).
Falling Rental Rates Help to Drive Deals
ARA’s John Lim could have another trophy to add to his case
ARA, which is managed by John Lim and counts among its key investors Hong Kong’s Li Ka-shing, was reported to show interest in Capital Square shortly after it broke off exclusive negotiations with Blackrock for purchase Asia Square Tower 1 in March of this year.
The Qatar Investment Authority (QIA) later bought Asia Square Tower 1 from the US alternative investment manager in June for S$3.4 billion ($2.45 billion).
Office rents in central Singapore fell by 3.5 percent in the second quarter of this year, the fifth straight quarter of declining leasing rates, according to government figures. There is also more than 3 million square feet of new office space expected to debut on the Singapore market in the next 12 months, including the Guoco Tower in the Tanjong Pagar area and Marina One in Marina Bay.
Capital Square, which was completed in 1998, is currently said to be 91 percent occupied, according to Knight Frank, but it could be expected to face pressure from the new office supply entering the market in the coming months.