An ARA-managed fund is close to signing a final agreement to purchase a commercial building in Singapore’s financial district for approximately S$340 million ($251 million), according to a source familiar with the transaction who spoke to Mingtiandi.
The fund, which is understood to be the value add vehicle ARA Real Estate Partners Asia II, has exchanged contracts for 61 Robinson Road with a private company reportedly controlled by the family of Taiwanese billionaire Tsai Tseng-yu.
A separate source close to the transaction who spoke to Mingtiandi has indicated that previous reports that the ARA fund may be forming a joint venture with UK investment firm M&G to acquire the nineteen-year-old building are incorrect.
Acquiring an Asset in a Prime Location
Based on the approximately 132,300 square feet (12,291 square metres) of net leasable area in the Robinson Centre, the ARA-M&G joint venture is purchasing the office building mid-way between Raffles Place and Tanjong Pagar MRT stations for around S$2,570 per square foot.
Located in Singapore’s central business district, the 20-storey 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 occupy the building including banks, financial companies, and consultancy firms, with asking rents listed on JLL’s website at S$8.50 per square foot per month.
Exiting at a 16% Gain
Sakal Real Estate Partners is understood to have brokered the sale on behalf of 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.
The company is making a markup of 16 percent on the transaction after acquiring 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 Robinson Centre from developer GuocoLand for S$145 million in 2006.
ARA Asset Management declined to comment on the acquisition when approached by Mingtiandi, while Sakal Real Estate Partners had not replied to an enquiry from Mingtiandi at the time of publication.
Growing Investment Volume in Singapore
The reported Robinson Road acquisition follows a wave of transactions in Singapore that saw 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.
“Amid unprecedented levels of uncertainty in the global environment, Singapore remains firmly on investors’ radar owing to its growth potential, stable government, and pro-business policies,” Tricia Song, head of research for Singapore at Colliers International, said with regard to the surge in investment shown in the most recent figures.
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, led the growth in volume.
Jerome Wright, Colliers’ director of capital markets for Singapore, said that investor interest was strong due to Singapore’s strong market fundamentals and the favourable interest rate environment.
Showing a Continued Appetite for Office Assets
The joint venture Robinson Centre buy comes eight months after ARA acquired a commercial block in the central business district of Brisbane for a reported A$96.5 million. That Australian purchase is also believed to have been made on behalf of the ARA Real Estate Partners Asia II fund.
Two months before that acquisition, the Singapore firm agreed to purchase the iconic Seoul Square office building from KR1 CR REIT through a specially formed fund. The deal, which was said by brokers in the market to be in the neighbourhood of KRW 1 trillion, was the largest trade of a single building in Korean history.