AM Alpha Buys Robinson 112 in Singapore, TE Capital Links With LaSalle for PIL Building

Singapore’s Robinson Road remains a hotbed for investors looking for office assets with upside, with local asset manager Lion Trust last week agreeing to sell its headquarters on the commercial strip near Tanjong Pagar to German investment manager AM Alpha for S$269.7 million ($198.21 million).

The deal for Robinson 112, a 1980-vintage office block, comes just two months after local private equity firm TE Capital tied up with LaSalle Investment Management to purchase another aging office tower within five minutes’ walking distance, as investors turn to value-add strategies as a way to squeeze yields from Singapore’s competitive office market.

The pair of property transactions mark the third and fourth major sales of office properties on the commercial strip between Raffles Place and Tanjong Pagar this year as investors fight for a foothold in a market which has proved to be among the most resilient in Asia Pacific.

After notching less than $3.2 billion in property investment during 2020, according to data from Real Capital Analytics, that volume is expect to more than triple to $10 billion by the end of this year, with the commercial sector accounting for two-thirds of that total, as investors see the island as a safe haven.

Off-Market Transaction

German family office AM Alpha picked up Robinson 112 from Lion Trust, which also occupies part of the 14-storey freehold office block, according to a caveat lodged with the Singapore Land Authority on 14 December by local entity named Alpha Eins (SG) Pte Ltd, which is controlled by the German investor. The transaction was first reported by the Business Times.

Occupying a 9,794 square foot site just a few doors down from 108 Robinson Road, which PGIM purchased for S$143 million in April of this year, AM Alpha’s new acquisition is currently 90 percent occupied by a range of small to medium-sized tenants, with F&B outlets on the ground floor. Occupying its office levels are AETNA Insurance, OA Assurance PAC, Global Partners Consulting and London Offshore Consultants, in addition to Lion Trust.

At the reported compensation, AM Alpha is paying the equivalent of S$2,925 per square foot for the property, which measures 92,205 square feet (8,566 square metres) by net lettable area. That rate is approximately 33 percent more than PGIM paid for its acquisition of 108 Robinson Road seven months ago.

AM Alpha, which during this year has picked up office projects in Dublin, London and Paris, as well as acquiring a set of 31 residential assets in Tokyo during March, is expected to retain the property for long-term rental returns. With Robinson 112 having last been refurbished in 2003, the Munich-based firm is likely to reposition the property through renovation of public areas and upgrades of systems without undertaking a full-scale redevelopment of the property.

Cushman & Wakefield advised the seller on the transaction and both Lion Trust and AM Alpha had not replied to inquiries by the time of publication. Cushman & Wakefield declined to comment.

TE Capital Partners with LaSalle

The latest Robinson Road deal comes less than two months after local private equity firm TE Capital teamed up with LaSalle Investment Management to sign a sale and purchase agreement for the PIL Building, which is located just two blocks away at 140 Cecil Street.

First put on the market in mid-2020 at an asking price of S$350 million, the private equity affiliate of developer Tong Eng Group headed by third-generation tycoon Terence Teo, together with LaSalle is paying approximately S$325 million for the property, which occupies a 19,503 square foot site which amalgamates a freehold primary plot with two smaller leasehold parcels.

The transaction involves a short-term leaseback by shipping firm PIL, which currently uses the building as its headquarters, and is expected to close during the first quarter of next year, contingent on the parties involved succeeding in consolidating the parcel as a single freehold site.

The current 17-storey building on the site measures 218,447 square feet by gross floor area, making the transaction equivalent to S$1,487 per square foot of existing GFA. Should the new owners be able to secure government approval to redevelop the site under current incentives, after paying a land premium to consolidate the site, they could potentially develop up to 283,963 square feet on the property.

Cushman & Wakefield marketed the asset on behalf of PIL, but declined to comment when contacted by Mingtiandi. PIL, TE Capital and LaSalle all had not responded to inquiries from Mingtiandi by the time of publication.

Face Lift a Trend along Main Road

With Singapore having welcomed $5.3 billion in foreign real estate investment through 14 December, according to RCA, the commercial strip between Raffles Place and Tanjong Pagar which is home to landmarks such as CapitaLand’s headquarters in the Capital Tower and the 43-storey AIA Tower, has been a central target for fund managers.

A local analyst pointed out that Robinson Road and Cecil Street are both blessed with freehold or 999-year leasehold properties, and with the smaller scale of assets in the area, buildings in the vicinity are often available at price points within the capabilities of a broad range of strategies.

In addition to PGIM’s April deal, in September, Singapore’s ARA Asset Management was able to sell 61 Robinson Road at a more than 24 percent premium to what it had paid to acquire the office asset less than two years earlier.

Local financial management startup Rivulets Investments agreed to pay ARA S$422 million, or S$2,973 per square foot, for the two-decade-old property after the Singaporean fund manager had invested in enhancements and expanded the floor area by 7 percent to 141,958 square feet.

In November of last year, local developer Tuan Sing sold the Robinson Point office block at 39 Robinson Road to an investor from Vietnam for S$500 million.

Industry sources have also indicated that AEW’s 20 Anson, an office tower 500 metres south of 112 Robinson where the same strip of pavement is known as Anson Road, could potentially change hands before the end of the year.