Singapore’s Oxley Holdings is in talks to buy the Chevron House commercial tower in the city-state’s financial district, the company confirmed, following a newspaper report that the developer was close to purchasing the asset for around S$660 million ($490 million).
The vendor, Deka Singapore – a fund managed by Germany’s Deka Immobilien – had fielded offers for the 32-storey property at the Raffles Place commercial centre from August 2 through September 14, with an initial asking price of S$700 million ($515.2 million).
The price of the prospective deal equates to around S$2,526 ($1,878) per square foot of net lettable area for the 261,280 square foot (24,274 square metre) prime asset. If successful, the sale would mark one of the larger office transactions in Singapore this year, continuing a surge of investment in the country’s commercial property market.
Oxley Bids on a CBD Trophy
The Business Times of Singapore reported last Friday that Oxley is in advanced talks to purchase Chevron House, formerly Caltex House, which comprises a 27-storey office tower and a five-storey retail podium. The price is believed to be about S$660 million, according to the newspaper. If the bid is successful the Raffles Place property would instantly become the most prominent asset in the S$1.6 billion developer’s investment portfolio.
In a filing to the Singapore stock exchange today, Oxley Holdings Limited confirmed that “it is in negotiations with the owner of Chevron House to acquire the property,” but added that “no definitive agreement has been executed and the Group is in the process of conducting due diligence reviews in connection with the Proposed Acquisition.” The company said that it would make further announcements as and when appropriate.
Completed in 1993, Chevron House is located in the same commercial square that is home to One Raffles Place and CDL’s Republic Plaza. The building, which sits on a lease-hold site with a remaining tenure of 71 years. is directly connected to Raffles Place MRT station.
The office and retail portions have a net lettable area of 215,667 square feet (20,036 square metres) and 45,613 square feet (4,238 square metres), respectively. The property is reported to be 98 percent occupied overall, anchored by Chevron International and gym operator True Fitness.
Deka Singapore has explored options for enhancing the asset, including refurbishing the office common areas and harnessing the property’s unused gross floor area of around 14,950 square feet (1,389 square metres). Oxley may consider renovating the property and seeking approval to sell the office and retail units on a strata-title basis, according to the newspaper, citing market experts.
Deka, which acquired Chevron House in 2010 from a Goldman Sachs-managed property fund managed for around $420 million, hired CBRE and JLL to sell the building.
Mid-Sized Real Estate Player Ups Its Game
Oxley has expanded aggressively since its formation in 2010, building up a development portfolio of 34 projects, 27 of which have been completed as of August. The firm has scooped up a series of residential properties this year including the en bloc Mayfair Gardens off Dunearn Road for S$311 million and 231 Pasir Panjang Road for S$121 million, and joined in the purchase of en bloc sites Rio Casa in Hougang for S$575 million and Serangoon Ville for S$499 million.
The developer of residential, commercial and industrial properties is building the 32-storey Oxley Tower on Robinson Road, a few blocks away from Chevron House, and has an investment portfolio spanning Singapore and Japan, as well as stakes in British and Australian property groups. Trading in Oxley resumed today after being halted on Friday following the publication of the news report.
The potential deal for Chevron House comes amid a sharp upswing in Singapore’s commercial property investment market, which saw sales treble year-on-year in the third quarter to S$2.8 billion ($2.1 billion), according to a report by global brokerage Colliers International. Just last week, it was announced that a fund managed by Hong Kong’s Gaw Capital Partners was buying PoMo, a nine-storey downtown commercial complex, for S$342 million ($253 million).
In September, Singapore’s CapitaLand Commercial Trust (CCT) bought Asia Square Tower 2 from a real estate fund managed by BlackRock for about S$2.1 billion ($1.5 billion). The deal for the downtown skyscraper in Marina Bay, just south of Raffles Place, grabbed the title of Asia’s second-biggest office transaction of 2017.