Bright Ruby Resources, an investment firm backed by Chinese billionaire Du Shuanghua, has won the tender for 16 Collyer Quay, picking up the Raffles Place office tower from NTUC Income for approximately S$1 billion ($717.2 million), according to multiple sources who spoke with Mingtiandi.
Bright Ruby has agreed to purchase the 276,450 square foot (25,683 square metre) property for the equivalent of around S$3,617 per square foot, after outbidding two other shortlisted players – a joint venture between BlackRock and City Developments Ltd, and Indonesian billionaire Sukanto Tanoto’s Royal Golden Eagle (RGE) Group, in a tender managed by JLL.
Sources said the Chinese investment firm is paying all cash to buy the trophy asset, which is also known as Income at Raffles, from NTUC Income and intends to hold the property for the long term.
“The sale of Income at Raffles is a landmark transaction given its prominence as one of Singapore’s most iconic buildings that sits on a rare 999-year leasehold land,” said Ting Lim, the capital markets for Singapore at JLL and the broker of the deal. “JLL is proud to have acted as an advisor on this transaction, which reinforces the longer-term appeal of core Singapore CBD assets.”
Singapore Buy Follows Aussie Hotel Sale
Formerly know as Hitachi Tower, 16 Collyers Quay is located in the heart of Singapore’s downtown core with direct access to Raffles Place MRT station, and is currently just over 90 percent occupied. NTUC completed a refurbishment of the office building last year.
Mercatus, the real estate arm of insurance arm of trade union federation NTUC Enterprise, reportedly attracted around 10 bids for the asset before narrowing the field to three suitors last month. Bright Ruby is acquiring the property at below a 2.5 percent yield, according to independent estimates.
Office rents in Singapore’s central business district rose by 2.7 percent in the second quarter, compared to the preceding three months, to average S$10.74 per square foot according to JLL. Vacancy levels in the downtown area stood at around 9.8 percent at the end of March, according to Knight Frank.
The 16 Collyer Quay deal adds to the S$4.7 billion worth of Singapore office assets that have changed hands over the past six months and pushes the year-to-date volume past last year’s total of S$5.2 billion.
NTUC Income first purchased a 49 percent stake in the building for S$101 million in 2011, and then went on to buy the remaining stake in 2013 for S$660 million.
Bright Ruby in the Little Red Dot
Controlled by controversial Chinese steel tycoon Du through six layers of entities, Singapore-based Bright Ruby has agreed to acquire the office tower following its A$530 million ($364.7 million) deal to sell the five-star Hilton Sydney in May.
That sale of the 587-room property to Baring Private Equity, should it be completed, would set a record for the single biggest hotel transaction ever in Australia.
The low profile investment firm is also said to have bid for CK Asset’s 5 Broadgate complex in London last year before Korea’s NPS agreed to purchase that office property for £1.25 billion (then $1.65 billion) through a LaSalle Investment Management vehicle.
Du is said to have testified in 2010 that he owed the rapid growth of his iron ore trading business to bribes of $9.4 million paid to Wang Yong, an executive with Australian mining firm Rio Tinto. Subsequently Wang Yong was jailed by the Chinese government for a 14 year term, while his co-worker, Stern Hu received a 10 year sentence, which was later reduced to eight years.
Australian media reports citing the Pandora Papers track how Du set up Bright Ruby in Singapore days after Wang Yong and Stern Hu were arrested and that Du apparently escaped punishment after testifying against the Rio Tinto executives.
Mall Portfolio on the Market
The sale agreement brings NTUC Enterprise and Mercatus a step closer to their goal of selling majority of the organisation’s real estate portfolio. Mercatus is understood to have hired JP Morgan to market its 2.13 million square foot (197,880 square metre) portfolio of four malls for an undisclosed sum.
Media reports indicate that the four malls could sell for around S$4 billion, which roughly matches their current valuation of S$4.15 billion ($3 billion).
The portfolio includes a half-stake in the S$1.96-billion NEX mall in Serangoon district, which Mercatus co-owns with PGIM Real Estate, Chinese sovereign wealth fund CIC and a subsidiary of US giant Prudential Financial.
Mercatus also owns Jurong Point, a S$2 billion mall located in the western portion of the city-state which spans 720,000 square feet of net lettable area.
All four malls are at least 99 percent occupied and yielded S$323.7 million in combined revenues last year, which was down by 4.5 percent from the S$339 million that the portfolio generated prior to the pandemic in 2019.
For its office assets, market sources said the co-op is planning to keep its One Marina Boulevard property in the downtown core, a 31-storey building which serves as headquarters for the real estate manager and for its parent.
Insiders told Mingtiandi that Mercatus is also keeping 1 Bligh Street in Sydney, its sole Australian property where it holds a 33.3 percent stake alongside Dexus. However, a report from the Business Times stated that JP Morgan is also gauging interest in a potential sale of the 29-storey downtown office tower.
CBD Offices in Demand
“Singapore’s resilience and attractiveness as an investment destination within Asia Pacific continue to resonate strongly with investors,” said Stuart Crow, chief executive of JLL’s capital markets division for Asia Pacific. “We remain extremely confident in the attractiveness of the Singapore office sector, given limited new supply coming to the market and intensifying competition for prime CBD assets.”
Just six months into the year, Singapore has been recording a flurry of office deals with the total committed investment of S$4.7 billion now just 8.6 percent short of last year’s total.
The biggest deal to date was Australian developer Lendlease agreeing to pay S$1.63 billion for a 49 percent stake in the redevelopment project of Singapore Telecommunications’ Comcentre headquarters earlier this month.
The two firms plan to knock down the four-decade-old building at 31 Exeter Road and replace it with a new complex featuring two 20-storey Grade A office building by 2028.
Another major office deal was SGX-listed CapitaLand Integrated Commercial Trust teaming with a private fund managed by CapitaLand Investment in April to purchase the 29-storey CapitaSky office tower at 79 Robinson Road for S$1.26 billion. The two picked up the asset from a consortium of CapitaLand and its Japanese partners, Mitsui and Tokyo Tatemono.