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After receiving “unsolicited offers”, Alpha Core Real Estate Fund, a group managed by the Keppel Land unit Alpha Investment Partners, has launched two office blocks in the central business district (CBD) through separate Expression of Interest (EOI) exercises.
The two office buildings can potentially yield about S$500 million in total.
DTZ has been commissioned to market the freehold office block at 135 Cecil Street, while CB Richard Ellis (CBRE) will handle the sale of Robinson Centre.
Formerly called LKN Building, 135 Cecil Street has a net lettable area (NLA) of 83,076 sq ft and a gross floor area (GFA) of 100,900 sq ft. It is zoned for commercial development, with a maximum building height of 35 storeys.
Based on its NLA, the building can be sold for between S$183 million (S$2,200 psf) and S$191 million (S$2,300 psf).
The EOI for 135 Cecil Street will close on 15 September 2011.
Meanwhile, Robinson Centre is on a site with a remaining lease of approximately 85 years. The building features a grand entrance lobby and 71 parking lots. It has a NLA of 132,388 sq ft, suggesting an achievable price of between S$291 million (S$2,200 psf) and S$304 million (S$2,300 psf).
The EOI for Robinson Centre will close on 8 September 2011.
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135 Cecil Street and Robinson Centre office blocks on market
Alpha Core Real Estate Fund has put up for sale two office blocks in the CBD through separate expression of interest (EOI) exercises.
A spokesman for Alpha said the EOI exercises are in response to ‘strong market interest in our fund’s Singapore office assets’.
‘The assets are long-term investments but unsolicited offers have been received and it is our duty as managers to explore if selling now will achieve a better return for our fund investors.’
DTZ is appointed to handle the sale of the freehold 135 Cecil Street, formerly LKN Building. The EOI closes on Sept 15.
CB Richard Ellis will market Robinson Centre, which site has about 85 years’ remaining lease. The EOI for Robinson Centre will close on Sept 8. Alpha paid $145 million in 2006 for the 20-storey building, which has 71 car park lots.
The building net lettable area (NLA) is 132,388 sq ft, currently 96.5 per cent occupied. Assuming a price in the $2,200-2,300 per square foot (psf) range, the lump-sum investment would work out to about $291-304 million.
Investors looking for a smaller deal size may zoom in on 135 Cecil Street. Based on its NLA of 83,076 sq ft, it could fetch $183-191 million assuming $2,200-2,300 psf.
The 14-storey building was extensively refurbished in 2007, said Shaun Poh, senior director of investment advisory services at DTZ.
The building’s existing gross floor area of 100,900 sq ft reflects a plot ratio of 12.595 based on the site area of 8,011 sq ft. This exceeds the 11.2 plot ratio indicated for the site under Master Plan 2008. It is zoned for commercial use with a maximum height of 35 storeys.
The building is 92 per cent occupied. The balance 8 per cent, the eighth floor, is under negotiation for lease to an existing tenant seeking to expand its space, said Mr Poh.
He added that 135 Cecil Street’s average monthly passing rent is $8.23 psf. The latest lease renewal was sealed last month at about $8 psf. Tenants include State Bank of India, which occupies the ground floor, and United Overseas Bank.
135 Cecil Street has 31 car park lots in its three basement levels.
Mr Poh says the property would appeal to investors looking for a core asset with potential for higher rentals as well as capital appreciation based on its existing office use.
‘However, opportunistic investors could potentially strata subdivide the building and sell the floors individually,’ he added.
Two office floors at the 999-year leasehold Samsung Hub at Church Street were recently sold at $2,550 psf.
There have been concerns in some quarters about a potential slowdown in office demand against the backdrop of volatile financial markets and economic problems in the United States and Europe, which could reduce investor appetite in office buildings.
However, another school of thought is that the instability in financial markets may push some investors, including insurance and superannuation funds, to allocate more monies to real estate, which is seen as more stable, and Singapore would be a favourite for its safe-haven status.
Earlier this year, Alpha’s Macro Trends Fund teamed up with NTUC Income to buy Capital Square at Church Street from Ergo Insurance Group for about $2,300 psf or $889 million.
