BlackRock Set to Buy Citadines Raffles Place From CapitaLand JV for Circa $222M

The world’s largest asset manager is set to pick up its second Singapore residential property this year as a deal for Citadines Raffles Place enters the final stages, according to sources familiar with the discussions who spoke with Mingtiandi.

BlackRock is expected to pay around S$290 million ($222 million) to purchase the residential element of the CapitaSpring complex from a joint venture of CapitaLand Integrated Commercial Trust (CICT), CapitaLand Development and Japan’s Mitsubishi Estate which developed the Raffles Place project.

The JV had engaged property consultancy Colliers to market the 299-unit residential asset off-market for the last several months in what analysts have termed a capital recycling exercise, with a deal having yet to be concluded at this time. News of the discussions were first reported by Singapore’s Business Times.

“We regularly review and evaluate asset plans for CICT’s portfolio to maximise value for our unitholders. As there is no certainty of any deals materialising, unitholders are advised to exercise caution when trading CICT units,” a spokesperson for CapitaLand Integrated Commercial Trust said in response to inquiries from Mingtiandi. BlackRock representatives had not yet replied by the time of publication.

Ascott Management Locked In

While the CapitaLand JV is set to divest Citadines Raffles Place, which occupies floors nine through 16 of the 51-storey CapitaSpring tower, the serviced apartment property is expected to continue to be managed by the Singapore property giant’s The Ascott residential division.

The US asset manager is said to have completed due diligence on the acquisition although terms of an agreement have yet to be finalised. At the reported pricing, BlackRock would be acquiring Citadines Raffles Place at the equivalent of less than S$1 million per key with units in the building ranging from 215 to 646 square feet (20 to 60 square metres) in size.

With Citadines standing as The Ascott’s economy serviced apartment brand, market analysts point to opportunities for BlackRock to boost yield from the property by repositioning it under one of the group’s higher end marques.

CapitaSpring’s office element is anchored by US investment bank JP Morgan with Sumitomo Mitsui Banking Corp, JLL and White & Case also occupying the prime tower. Online listings show rooms in Citadines Raffles Place available at around $285 per night while The Ascott Raffles Place, located a few blocks away, offers accommodation at around $391 per night.

Citadines Raffles Place officially opened in October 2022 just after Singapore emerged from COVID-19 lockdowns with the office element of the Bjarke Ingels Group and Carlo Ratti Associati-designed CapitaSpring complex having debuted one month earlier.

The joint venture partners developed the tower on the former site of the Golden Shoe car park at 88 Market Street after acquiring the plot in 2017.

Value-Add Focus

Should a deal be concluded, the Citadines Raffles Place acquisition would follow BlackRock’s February deal to acquire another property under the same brand.

In that first quarter deal the US giant, which managed $10.6 trillion in assets as of 30 June, joined with rental accommodation specialist Weave Living to acquire the Citadines Mount Sophia from CapitaLand Ascott Trust for S$148 million.

While Singapore’s rental residential sector remains small in scale, at a Mingtiandi event in March of this year, BlackRock’s head of APAC real estate, Hamish MacDonald, keyed on demand for well-appointed, medium-term accommodation as creating an investment opportunity.

Appearing in an interview with Weave founder Sachin Doshi, MacDonald said, “In Singapore we found a niche in the market with this high-amenity serviced apartment sector, which is a relatively small part of the market, but highly in demand.”

The BlackRock executive made clear in the interview that value-add opportunities are a focus of the company’s residential strategy in the region.

“Our job as value-add investors is often to create liquid products that are in demand globally,” MacDonald said in the same interview. He added that, “There’s clearly a lot of global capital flow that wants to come into the residential space. In Asia Pacific, there aren’t that many opportunities, particularly outside of Japan, so if we can find ways to access the market, almost create a market, in some circumstances, then we think that we’ll have a very nice liquid exit at the end of it.”