Family Office Buys Singapore Industrial Building From CapitaLand Ascendas REIT 

The manager of CapitaLand Ascendas REIT has agreed to sell an industrial building in Singapore’s Toa Payoh area to the family office of a foreign investor, in a deal that values the asset at three times its acquisition value nine years ago.

CapitaLand Ascendas REIT Management is selling KA Place, a seven-story industrial block at 159 Kampong Ampat for S$35.38 million ($26.5 million). Upon completion of the deal, which is expected to take place by 30 June, the SGX-listed trust expects to book a 219 percent gain from the S$11.1 million it paid to acquire the asset in March 2005.

“Because of the tight supply of good quality, private industrial properties, this property presents a good opportunity to hold a private leasehold property in the medium to long term,” said Boon Leong Tan, executive director for logistics and industrial leasing at JLL Singapore, who also brokered the transaction.

The transaction comes as private investors continue to play a growing role in Singapore’s commercial property investment market, with a set of three office floors on Cecil Street selling for $122 million this month in a record deal and a Chinese investor recently buying an office block in the Chinatown area for $70 million.

Family Office Buy

While the REIT manager and JLL did not disclose the identity of the buyer, public records show that the Singapore-registered purchaser, KA Place SPV 1 Pte Ltd, is a wholly owned unit of Paeonia Real Estate, the property investment arm of Paeonia Ventures, which is part of the family office of Hong Kong-based entrepreneur Alice Hung Yin.

Hung, whose LInkedIn profile describes her as the founder and owner of a family office specialising in deep tech and university spinouts, is a Wharton-educated former Lehman Brothers banker who attributes her fortune to having founded a testing equipment company serving the China market in 1991.

Born in mainland China before moving to Hong Kong at age five, according to this account on the Wharton School website, Hung is paying the equivalent of S$323.42 per square foot for KA Place’s 109,394 square feet (10,163 square metres) of gross floor area. That price represents a 55 percent markup from the property’s valuation of S$22.8 million as of 31 December, Ascendas REIT said.

Located a few blocks from the Tai Seng MRT station, the building is understood to be nearly 100 percent occupied and has 35 years remaining on its land lease. The property is zoned as a multi-user factory and is home to companies including textile machinery maker Groz-Beckert, electronic connector specialist Amphenol ICC and plastics producer Mold-Tech Singapore, as well as providing office accommodation.

The CapitaLand-managed REIT plans to use the sale proceeds for potential uses including meeting investment commitments, repaying debts, extending loans to subsidiaries, working capital needs or making distributions to unitholders.

The trust’s latest divestment comes after it closed on its acquisition of Philips’ APAC headquarters in January through a S$105 million sale-and-leaseback deal.

Private Party

Having spent more than 10 years in venture capital, Hung has backed over 30 ventures globally, according to her Linkedin profile, and per the Wharton account, has a portfolio of properties in Hong Kong, Shanghai and Beijing, as well as in Vietnam, the US and the UK.

Having relocated to Singapore from Hong Kong at the height of the pandemic in 2020, according to an account by the government’s Singapore Global Network website, Hung now joins a wave of family offices and other private investors picking up properties in the city-state.

With cash in hand at a time when institutional investors are facing tougher borrowing conditions, a locally incorporated private company paid a record S$4,325 per square foot to purchase the top floor of TE Capital and LaSalle Investment Management’s Solitaire on Cecil office project, in a deal disclosed last week.

Earlier this month a PRC national who formerly worked for a Beijing-based unit of China’s Sinopec petroleum conglomerate paid the equivalent of S$3,193 per square foot to acquire 51 Club Street in Singapore’s downtown core from Liberty Insurance.

Industrial Rarity

With Singapore regulators tightly controlling the land tenures of workshop and warehouse space, Industrial assets with more than 30 years on their leaseholds are precious in the land-scarce city-state, Alan Cheong, research and consultancy head at Savills Singapore, told Mingtiandi on Monday.

“Demand for industrial space is still hot today, especially if the property is centrally located, has good accessibility to major highways and a significant enough lease life left on the land,” Cheong said, noting KA Place’s favourable location in the eastern part of central Singapore.

Data from the city-state’s JTC, which regulates the use of industrial land, showed industrial rents in the Toa Payoh area surged 15.5 percent to S$2.31 per square foot in the first quarter from just S$2 per square foot a year earlier. Occupancy rates in the area, however, fell to 88.8 percent from 90.7 percent during the same comparable period.

Catherine He, research head of Colliers Singapore, said high-spec industrial buildings like KA Place, which can be used for both commercial or industrial purposes, have been outperforming other types of workshops in terms of rental growth.

“This segment has shown the highest rental growth in 2022 for factory spaces, as occupiers seek office grade industrial spaces in the city fringes as an alternative, and on the back of high office rents,” He told Mingtiandi.