City Developments Ltd (CDL) and Alpha Investment Partners have agreed to sell a suburban office project in Singapore at a reported S$395 million ($291.5 million) valuation, marking the second divestment from a joint venture between the listed developer and the private equity division of Keppel Corp so far this year.
The pair are selling 7 and 9 Tampines Grande, a pair of eight-storey office blocks in eastern Singapore, to a fifty-fifty joint venture between listed-developer Metro Holdings and privately held Evia Real Estate, according to an announcement to the Singapore stock exchange by Metro.
The transaction comes less than four months after CDL and Alpha, which participated in the joint venture through its Alpha Asia Macro Trends Fund (AAMTF) II, had sold the Manulife Centre on Singapore’s Bras Basah Road for S$555.5 million, with Metro saying it was investing in the Tampines properties due to both the positive outlook for suburban offices and the opportunity to break up the assets for sale on a strata title basis.
Partners Split Suburban Property Acquisition 50-50
Metro is paying a cash consideration of S$45.6 million to purchase its 50 percent stake in the issued shares and related shareholders loans in the company which holds the 361,660 square foot (33,599 square metre) office property, according to its statement. The development also includes shops and food and beverage outlets on the ground floor.
SRIF GP Pte Ltd is Metro’s partner in the joint venture, with the company understood to be controlled by Evia.
In addition to the cash consideration paid, the buyers are agreeing to take responsibility for other liabilities associated with the project which bring the net asset value for the 99-year leasehold property to the S$395 million figure, Mingtiandi understands. At that valuation, the acquisition works out to a value of just over S$1,092 per square foot.
Metro’s partner in the project, Evia, is best-known as a developer of executive condo (EC) projects in Singapore – a type of hybrid public-private housing. Metro and Evia previously worked together to develop The Crest, a 469-unit condo project at Prince Charles Crescent, near Singapore’s Botanical Gardens, which was completed in 2017. The company has also invested in logistics and commercial projects in South Korea.
Betting on the Future of Singapore’s Suburbs
The Tampines Grande project was completed in 2009 to a LEED Gold standard and has around 87 years remaining on its leasehold. Key clients at the project, which is said to be around 91 percent occupied, include Hitachi Asia, NCR Asia Pacific and AIA Singapore.
“With its strategic location and its connectivity to both private and public transportation network, Metro will be able to leverage on the growth potential for office market particularly in the eastern side of Singapore,” the buyer said in its statement.
The project occupies an 86,100 square foot site in Tampines, an area just west of Changi airport, and benefits from its location five minutes walk from the Tampines MRT station which allows commuters to ride downtown in less than a half hour.
Metro also pointed out that the property has received approval for strata-subdivision and that, “Currently there is no strata-titled office development in Tampines and the eastern part of Singapore.” The capital markets team at Cushman & Wakefield Singapore is understood to have represented the sellers in the transaction, with attorneys from law firm Rajah & Tann Singapore said to have advised on the deal.
60-40 CDL-Alpha JV Sells Second Asset
For CDL and Alpha, the transaction allows the local duo to complete a two-thirds exit from a joint platform originally set up in 2015.
At the time CDL had contributed the Tampines Grande project, along with the Manulife Centre on Bras Basah Road and the 168,000 square foot office block at the Central Mall on Magazine Road near the city’s Clarke Quay to create the S$1.1 billion platform.
The new venture had purchased the assets from CDL at rate of S$366 million for 7 & 9 Tampines Grande, S$487.5 million for the Manulife Centre and S$218 million for the Central Mall office asset via a Profit Participation Securities (PPS) transaction with Alpha’s Alpha Asia Macro Trends Fund (AAMTF) II taking a 40 percent stake.
In April last year the joint venture put the Manulife Centre and the Tampines Grande assets on the market through expressions of interest, with the target price at the time said to be in excess of S$450 million.
The Manulife Centre was said to have an asking price of S$550 million at the time with a joint venture between ARA Asset Management and the UK’s Chelsfield agreeing to purchase the 241,000 square foot building during the first week of this year for S$555 million.
The disposal is the fourth major asset sale by the AAMTF II fund in just over a year with the vehicle, which was established in 2013, currently said to be divesting assets to provide returns to investors.