Keppel Buys Singapore Commercial Complex for $262M on Behalf of PGGM Fund

Keppel Ltd announced on Monday that it has purchased a commercial complex in Singapore’s Selegie district on behalf of Dutch pension fund and asset manager PGGM for S$348 million ($262 million), confirming earlier media accounts.

The firm formerly known as Keppel Corporation said in a bourse filing that it has acquired an entity which owns the office and retail components of the Wilkie Edge complex from a 50:50 joint venture between local investors, Lian Beng Group and Apricot Capital, in a deal that closed in December.

Keppel acquired the asset on behalf of Alpha Asia Separate Account, a S$360-million ($270 million) strategy it manages on behalf of PGGM, which has around $250 billion in assets under management globally.

“The demand for quality commercial real estate continues to be resilient in Singapore,” said  Christina Tan, chief executive officer of fund management and chief investment officer of Keppel. “This acquisition of a well located and well-built property will allow us to leverage Keppel’s strong asset management and sustainable urban renewal expertise to future-proof the asset through our quality and innovative space solutions.”

Major Makeover Planned

To squeeze more rent from the 2008-vintage asset, the Singaporean property heavyweight plans to “convert, reconfigure and redeploy” Wilkie Edge’s existing 157,400 square feet (14,623 square metres) of leasable space.

“Keppel will leverage its real estate division’s sustainable urban renewal expertise to improve the asset’s operational efficiency and performance. [The] strategy caters to the growing international demand for more environmentally efficient urban renewal solutions in gateway cities,” it added.

A company spokesperson added that, Wilkie Edge, which has a two-level retail podium below its six floors of office space, “has comparable rents to other similar properties” with Keppel seeing room to boost leasing values via its asset enhancement plan.

The firm said it has already secured “advance leasing interest” for the repositioned property, without elaborating further.

The total consideration works out to S$2,211 per square foot of the net leasable area, nearly 25 percent more than what Lian Beng and Apricot paid when they acquired the asset from CapitaLand Commercial Trust (now CapitaLand Integrated Commercial Trust) in 2017 for S$280 million.

Located at the intersection of Wilkie and Selegie roads at the northern fringe of Singapore’s city centre, Wilkie Edge’s retail and office components were 100 percent leased as of end-2023, with boutique consultancy firm SF Consulting and a Kaplan education campus among its major tenants.

The complex also includes the 154-unit Citadines Mount Sophia serviced residences which is held by SGX-listed CapitaLand Ascott Trust.

Keppel acquired the property nearly three years after it set up the separate account on behalf of PGGM in April 2021. The fund, which received S$360 million in initial investment and included a top-up option of up to S$320 million, aims to invest in core-plus opportunities, predominantly in commercial real estate, in key cities in Japan and China, as well as in Singapore.

Keppel declined to disclose details on the fund’s current portfolio or to provide updates on the current status of the strategy.

PGGM, Lian Beng and Apricot did not comment on the transaction. Sources familiar with the transaction indicated that CBRE advised on the deal, however, the property consultancy had not yet responded to inquiries from Mingtiandi by the time of publication.

Accelerating Asset Acquisitions

Keppel added the Wilkie Edge deal to its 2023 transaction list as the latest in a string of acquisitions after the one-time engineering firm announced in May that it was reorganising its business to become a global real estate asset manager and operator.

In November last year, the Temasek Holdings-backed company agreed to take over European fund manager Aermont Capital in a deal that could cost as much as €931.86 million ($1 billion). Keppel bought an initial 50 percent stake in Aermont and is expected to acquire the remaining 50 percent in 2028.

That deal came on the heels of the firm’s buyout of private credit specialist Pierfront Capital Fund Management in October, when it acquired the remaining 50 percent stake it did not own yet.

Transactional Tie-ups

Disposing of the commercial complex, meanwhile, leaves Lian Beng and Apricot Capital as partners in at least three properties in Singapore, including the Breadtalk headquarters near Paya Lebar which the two purchased in 2021, alongside 32RE, for S$118 million.

Lian Beng and Apricot, the family office of instant coffee king David Teo, also co-own the Sembawang Shopping Centre in the northern region of the city-state and, together with other partners, are also currently developing the 1,472-unit Riverfront Residences project in the Hougang area.

The disposal comes less than a year after Lian Beng was delisted from the Singapore Exchange in August 2023 via a S$340 million privatisation deal led by chairman and controlling shareholder Ong Pang Aik and his family.