Private equity giant KKR on Tuesday announced its acquisition of the Twenty Anson office tower in Singapore’s downtown core, confirming a Mingtiandi report from a few weeks ago.
KKR paid Boston-based fund manager AEW just under S$599 million ($441.6 million) for the 20-storey property in the Tanjong Pagar area, according to sources familiar with the transaction who spoke to Mingtiandi in early April. The deal was signed during the second half of March and first reported by the Business Times.
The transaction marks KKR’s first office investment in Singapore and reflects the firm’s confidence in the Lion City’s position as a leading regional financial hub and the long-term prospects of the local office market, Manhattan-based KKR said in a release.
“Our acquisition of Twenty Anson is aligned with our strategy of pursuing opportunities in Southeast Asia, including in Singapore that will benefit from long-term tailwinds such as the city-state’s status as a leading destination for corporations’ Asia headquarters, and as Singapore reopens and stabilises in a post-COVID environment,” said Jeremy Chee, principal and KKR’s real estate lead in Southeast Asia.
The selling price for Twenty Anson equates to S$2,376 per square foot of built area and is 16 percent higher than what AEW paid in 2018 when it acquired the 252,069 square foot (23,418 square metre) building from Singapore-listed CapitaLand Commercial Trust for S$516 million.
The 2009-vintage property has roughly 86 years remaining on its 99-year leasehold and is zoned for commercial use. Considering its 27,281 square foot site and maximum allowable plot ratio of 10.5, the building’s gross floor area can be expanded by 13.6 percent to reach 286,450 square feet, based on guidelines issued in the 2019 Master Plan by the Urban Redevelopment Authority.
KKR on Tuesday praised the asset’s environmental, social and governance credentials, with the building having attained both LEED Certified Gold and BCA Green Mark Platinum certifications. Among the top tenants in the property just a few minutes’ walk from Tanjong Pagar MRT station are auto giant Toyota and investment manager BlackRock.
KKR purchased Twenty Anson on behalf of its Asia Pacific real estate strategy led by John Pattar, who is reportedly spending time in Singapore these days while his home base of Hong Kong sorts out its borders, giving the fund manager ample opportunity to inspect projects along Anson Road and in other prime locations.
Lion’s Roar Continues
KKR’s show of confidence in Singapore’s office market came as CBD Grade A rents in the first three months of the year rose by 2.3 percent from 2021’s fourth quarter to reach an average of S$10.46 (now $7.65) per square foot per month, according to JLL’s Property Market Monitor report.
The third consecutive quarter of rent growth supported a fourth straight period of capital value appreciation, with asset prices rising 2.2 percent compared to the October through December period, as investors crowded into the city-state’s property market.
In addition to the Twenty Anson transaction, the first quarter saw AEW’s sale of 55 Market Street in Raffles Place to Japanese construction and real estate firm Kajima Corp for S$286.9 million ($213.4 million), as well as CapitaLand Investment and its Japanese partners’ disposal of 79 Robinson Road for S$1.26 billion ($930 million) to CapitaLand Integrated Commercial Trust and a private fund managed by the Temasek Holdings-backed giant.
“We are optimistic about Singapore’s economic growth and the long-term prospects of its office real estate sector, buoyed by the country’s strong recovery from the pandemic, macro tailwinds, and supportive government policy,” said Tom Lee, managing director of real estate at KKR. “Singapore continues to be a key part of our real estate strategy.”
KKR’s previous office investments in Asia Pacific have included Namsan Square and K Twin Towers in the Seoul CBD and Melbourne’s World Trade Centre.