TE Capital in Due Diligence for Office Building in Singapore’s Orchard Area

Just a few months after wrapping up sales for a project in Singapore’s central business district, local private equity firm TE Capital Partners is doing some building shopping near the city-state’s Orchard Road retail strip as it looks for another commercial project.

The company run by brother and sister Terence and Emilia Teo is in exclusive due diligence for the acquisition of the VisionCrest Commercial building at 103 Penang Road, according to multiple sources who spoke with Mingtiandi, with the company said to be in talks at a price point of around S$460 million ($336 million) for the 11-storey office tower.

The due diligence period began recently with a deal, if one should result, not expected to materialise until next month, according to the sources, who confirmed an earlier report in the Business Times.

With the 148,854 square foot (13,830 square metre) building already approved for subdivision on a strata-title basis, a potential deal would pave the way for TE Capital and any potential partners to sell off the 10 office floors and 11 retail units separately, after the company set new price records for the city-state with the sale of individual levels in its Solitaire on Cecil project earlier this year.

Strata Office Boom

At the reported pricing, German asset manager Union Investment, which currently owns VisionCrest Commercial, would be selling the 2008-vintage building for the equivalent of around S$3,090 per square foot of net lettable area.

In transactions over the last year investors have set a number of new price records for strata office units in Singapore, with the third floor of Nomu building near Orchard Road selling for S$3,790 per square foot in July. In November of last year a mainland Chinese investor paid S$4,028 per square foot to buy a set of units in the Thong Teck Building in the same neighbourhood.

Average prices for strata office units in Singapore hit S$3,107 per square foot in the first half of 2023, which was up 14.5 percent from the preceding six months, and outstripped the average of S$2,237 per square foot in the first half of 2022 by 40 percent, according to data from Knight Frank.

Mingtiandi understands that TE Capital is looking into potential enhancements to the building near Dhoby Ghaut MRT station after investors snapped up all 15 floors in its Green Mark Platinum-certified Cecil Street project within three months of its official launch.

German Fund Manager Eyes Exit

In July Union Investment had kicked off an expression of interest campaign for VisionCrest Commercial at an asking price of S$470 million, or around 2 percent more than the figure said to currently be under discussion.

The building occupies a freehold plot and is among the shrinking set of strata-titled grade A commercial properties still available in the city centre after the government restricted development of new strata buildings in the prime business districts last year.

The property forms part of a mixed-use development that also includes the 265-unit VisionCrest Residence and the House of Tan Yeok Nee, a national monument of Singapore which is currently used as corporate offices.

Union Investment had purchased the property on behalf of its UniImmo: Global strategy 15 years ago.

When joint selling agents CBRE and JLL began marketing VisionCrest in July, the building was nearly fully occupied by tenants including Manulife Financial Advisors, German sports retailer Puma, conference organiser IBC Asia, coffee chain The Coffee Bean & Tea Leaf and petroleum additives maker Afton Chemical.

Refurbished in both 2018 and 2020, VisionCrest is also positioned to benefit from ongoing and planned redevelopment efforts along Orchard Road as part of the rejuvenation of the famous shopping district, according to the property consultancies.

TE Capital, a private equity real estate firm founded by the family behind Singaporean developer Tong Eng Group, declined to comment on the reported transaction. Representatives from CBRE and JLL also declined to comment.

Gotham Tower Back on the Market

While TE Capital is busy negotiating its next major project in Singapore, an office building in the Bugis area has gone back on the market after talks for a reported S$900 million sale to Baring Private Equity Asia (now BPEA EQT) fell through a year ago.

Mingtiandi understands that Chyau Fwu Group, a unit of Hong Kong-based real estate conglomerate Parkview Group, is marketing the Parkview Square office block at 600 North Bridge at an indicative price of S$850 million ($622 million) through a private expression of interest (EOI) exercise.

That asking price for the 24-storey tower, known to locals as the Gotham Building, represents a 5.6 percent mark-down from the price in play a year ago, with CBRE managing the EOI exercise, which is set to close in mid-October.