Ascendas-Singbridge has acquired a portfolio of 33 grade A US office properties from Starwood Capital, giving the Singapore-based developer its first holdings in the US market.
Dubbed “The Innovation Collection” by Starwood, the set of commercial assets is estimated to be worth $1 billion, has a total net lettable area of 3.3 million square feet and an average occupancy rate of 95 percent, according to an offering document obtained by Mingtiandi.
The acquisition is “in line with the group’s strategy to widen the footprint in deep and mature markets such as the US and Europe,” He Jihong, Ascendas-Singbridge’s group chief investment officer, said in a statement. The developer did not provide financial details of the transaction, and inquiries by Mingtiandi to Starwood Capital and Eastdil Secured went unanswered at the time of publication.
Investing in US Growth Clusters
The government-backed developer emphasised in its statement that the acquisition targets “concentrated clusters” benefitting from advances in science, technology and innovation to tap key growth drivers in the US economy.
Ascendas-Singbridge also added that it expects the portfolio to generate stable returns and long-term growth, supported by strong cash flow from a tenant base that spans technology, Internet, apparel, aerospace and biotech. Among the big name tenants are Nike, Oracle, Microsoft, TD Ameritrade, Northrup Grumman and Becton Dickinson.
According to the offering memorandum originally created by Eastdil Secured, which represented Starwood Capital in the disposal, the collection represents “a critical mass of best-in-market office buildings” spread across a trio high-growth and technology-centric markets in Portland, Oregon, Raleigh, North Carolina and San Diego , California. The portfolio originally included 300 Pine Street in Seattle – the former Macy’s Department store – however that asset was removed from the group and sold separately after being 100 percent leased to Amazon.com through 2033.
All the properties, including Creekside Corporate Park and Cornell Oaks Corporate Center in the Sunset and 217 Corridors of Portland, Campus at Sorrento Gateway, Carefusion Campus and Innovation Corporate Center in San Diego’s Sorrento Mesa and the Rancho Bernardo submarkets and Perimeter Park in the heart of Raleigh-Durham’s Research Triangle Park, are said to be centrally positioned within a few miles of major shopping centers, freeways, airports and mass transit in campus-like environments.
Starwood Buys and Sells US Offices
The 33 buildings acquired by Ascendas-Singbridge came primarily from assets purchased by Starwood Capital during 2014 and 2015. The Connecticut-based private investment firm acquired the Creekside Corporate Park and the Cornell Oaks Business Park, totaling 1,133,543 square feet from PS Business Parks for US$164.1 million in 2014.
In the same year, Starwood also took over 13 San Diego office buildings from Kilroy Realty Corporation for $327 million, with 12 of these southern California assets later becoming part of the Innovation Collection.
Three of the properties in the Raleigh collection, Perimeter One, Two and Three, were bought by Starwood Capital as part of a US$455 million joint venture deal with Trinity Capital Advisors and Chicago-based Vanderbilt Partners in 2015 for US$44.5 million, US$46.4 million and US$52.8 million respectively.
Ascendas Singbridge Sets Up SF Office
The acquisition followed an initial foray beyond the Asia-Pacific region by an Ascendas-Singbridge affiliate just last month when Ascendas REIT, a Singapore-listed investment trust bought 12 logistics assets in the UK in a deal worth £207 million ($272 million).
In announcing this latest acquisition, Ascendas-Singbridge also revealed plans to further its foreign footprint by establishing a regional office in San Francisco which the groups says will be used for asset management, business development and related services.
“We haven’t seen much Singaporean dollars in San Francisco yet but would love to!” noted Erik Hanson, senior vice president with JLL Capital Markets in San Francisco, to Mingtiandi.
According to Singapore’s Business Times, market observers believe the group could be eyeing prospects of putting together a US office REIT in the medium term.
“The US is definitely an attractive market for the REITs to get into right now…it’s a very deep market for office space or data centers,” reported the news outlet, quoting an unidentified analyst.
Jointly owned by Temasek Holdings and JTC Corporations, Ascendas-Singbridge is best known for its urbanization projects. Globally, it has assets under management of over S$20 billion and now has projects in 11 countries, counting Australia, China and Indonesia among its Asia-Pacific markets. It is also the sponsor and a substantial unit-holder of Ascendas REIT, Singapore’s first and largest listed business space and industrial real estate investment trust.