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01-06-22, 10:48
Income At Raffles quietly on market; S$3,300 psf guide price works out to about S$900m
Net yield is nearly 2.5 per cent; market watchers say office deals may slow due to rising interest rates
May 31, 2022
Income At Raffles, a 999-year leasehold predominantly office property at 16 Collyer Quay, is being quietly marketed for sale via a closed expression of interest exercise, The Business Times understands.
The guide price is said to be S$3,300 per square foot (psf) based on the 37-storey property’s net lettable area (NLA) of about 276,450 sq ft — or an absolute price of about S$900 million.
This pricing level reflects a net yield of close to 2.5 per cent based on the current rental income from the building, which has occupancy of slightly over 90 per cent.
The property is held by Savu Investments, which, according to a Handshakes search, is fully owned by NTUC Income Insurance Co-operative. The building is an investment property for Income, which is in the process of being corporatised.
The building’s NLA comprises about 253,650 sq ft of offices and 22,800 sq ft of retail space (on levels 1 and 2). Formerly known as Hitachi Tower, the building also has 148 car parking lots in the basement levels.
Its existing gross floor area (GFA) of around 415,450 sq ft is 14 times the land area. There is untapped GFA of 29,000-plus sq ft for the commercial-zoned site, which has 15.0 plot ratio under the Urban Redevelopment Authority’s (URA) latest Master Plan.
A refurbishment of the property was completed last year.
Earlier this year, BT reported that a unit of Kajima Corporation bought 55 Market Street - also with 999-year land tenure and in the Raffles Place financial district - for about S$3,450 psf. However, this building is a much smaller asset with about 83,000-plus sq ft NLA; the absolute price was nearly S$287 million.
Income At Raffles is a much larger asset, which would reduce the pool of potential buyers. That said, the property offers Marina Bay views and sheltered connectivity to Raffles Place MRT station via 30 Raffles Place (formerly known as Chevron House and prior to that, Caltex House).
The 2 buildings are located back to back and were formerly known as the Savu Tower project, completed between 1992 and 1993 by Reef Holdings (a privately-held vehicle of businessman Ong Beng Seng) and Japan’s Kowa Real Estate. In late 1999, Reef and Kowa divested the 2 buildings, which further changed hands.
Income acquired the 16 Collyer Quay property from Goldman Sachs in 2 stages. In early 2011, it was reported to have bought an initial 49 per cent stake in Savu Investments, which holds the property, in a deal that valued the property at about S$626 million or S$2,250 psf. A couple of years later, Income picked up the remaining 51 per cent of Savu Investments; that transaction valued 16 Collyer Quay at around S$660 million or close to S$2,400 psf, according to earlier media reports.
Analysts say that in terms of psf of existing NLA, the highest price fetched for an entire office building in Singapore is S$3,721 psf, for the S$500 million sale of the freehold Robinson Point by Tuan Sing : T24 0% to Viva Land. The deal was entered into in 2020 and completed in 2021. However, market watchers suggest the record price probably took into account the property’s redevelopment potential. Recently, Viva Land also acquired the next-door SO/ Singapore hotel; there is scope to rejuvenate the 2 properties by tapping the URA’s CBD Incentive Scheme.
Other Singapore office assets currently available for sale include Lazada One, 78 Shenton Way, Robinson 77, Anson House and Bugis Junction Towers.
After the slowdown in 2020, Singapore office investment sales transactions began to pick up last year on the back of the economic recovery and the tight office supply situation. The momentum has continued in Q1 this year (with CapitaSky at 79 Robinson Road and Twenty Anson among the larger transactions).
That said, market watchers say office deals may slow due to rising interest rates. Most private equity real estate investors would want a fixed-rate non-recourse loan to help fund their acquisitions. Currently, some banks in Singapore are quoting interest rates of 3.3-3.5 per cent per annum for such loans — exceeding net property yields based on the asking prices for most office assets in the market.
However, Savills Singapore’s research and consultancy head, Alan Cheong, said: “While institutional funds may adopt a more cautious stance towards investing in the Singapore office market, ultra-high net worth individuals and family offices may still be keen on the sector. In an age of uncertainty, yield is not their primary concern. Rather, they are in search of safe harbour — for which Singapore has a clear advantage.”
https://www.businesstimes.com.sg/real-estate/income-at-raffles-quietly-on-market-s3300-psf-guide-price-works-out-to-about-s900m
Net yield is nearly 2.5 per cent; market watchers say office deals may slow due to rising interest rates
May 31, 2022
Income At Raffles, a 999-year leasehold predominantly office property at 16 Collyer Quay, is being quietly marketed for sale via a closed expression of interest exercise, The Business Times understands.
The guide price is said to be S$3,300 per square foot (psf) based on the 37-storey property’s net lettable area (NLA) of about 276,450 sq ft — or an absolute price of about S$900 million.
This pricing level reflects a net yield of close to 2.5 per cent based on the current rental income from the building, which has occupancy of slightly over 90 per cent.
The property is held by Savu Investments, which, according to a Handshakes search, is fully owned by NTUC Income Insurance Co-operative. The building is an investment property for Income, which is in the process of being corporatised.
The building’s NLA comprises about 253,650 sq ft of offices and 22,800 sq ft of retail space (on levels 1 and 2). Formerly known as Hitachi Tower, the building also has 148 car parking lots in the basement levels.
Its existing gross floor area (GFA) of around 415,450 sq ft is 14 times the land area. There is untapped GFA of 29,000-plus sq ft for the commercial-zoned site, which has 15.0 plot ratio under the Urban Redevelopment Authority’s (URA) latest Master Plan.
A refurbishment of the property was completed last year.
Earlier this year, BT reported that a unit of Kajima Corporation bought 55 Market Street - also with 999-year land tenure and in the Raffles Place financial district - for about S$3,450 psf. However, this building is a much smaller asset with about 83,000-plus sq ft NLA; the absolute price was nearly S$287 million.
Income At Raffles is a much larger asset, which would reduce the pool of potential buyers. That said, the property offers Marina Bay views and sheltered connectivity to Raffles Place MRT station via 30 Raffles Place (formerly known as Chevron House and prior to that, Caltex House).
The 2 buildings are located back to back and were formerly known as the Savu Tower project, completed between 1992 and 1993 by Reef Holdings (a privately-held vehicle of businessman Ong Beng Seng) and Japan’s Kowa Real Estate. In late 1999, Reef and Kowa divested the 2 buildings, which further changed hands.
Income acquired the 16 Collyer Quay property from Goldman Sachs in 2 stages. In early 2011, it was reported to have bought an initial 49 per cent stake in Savu Investments, which holds the property, in a deal that valued the property at about S$626 million or S$2,250 psf. A couple of years later, Income picked up the remaining 51 per cent of Savu Investments; that transaction valued 16 Collyer Quay at around S$660 million or close to S$2,400 psf, according to earlier media reports.
Analysts say that in terms of psf of existing NLA, the highest price fetched for an entire office building in Singapore is S$3,721 psf, for the S$500 million sale of the freehold Robinson Point by Tuan Sing : T24 0% to Viva Land. The deal was entered into in 2020 and completed in 2021. However, market watchers suggest the record price probably took into account the property’s redevelopment potential. Recently, Viva Land also acquired the next-door SO/ Singapore hotel; there is scope to rejuvenate the 2 properties by tapping the URA’s CBD Incentive Scheme.
Other Singapore office assets currently available for sale include Lazada One, 78 Shenton Way, Robinson 77, Anson House and Bugis Junction Towers.
After the slowdown in 2020, Singapore office investment sales transactions began to pick up last year on the back of the economic recovery and the tight office supply situation. The momentum has continued in Q1 this year (with CapitaSky at 79 Robinson Road and Twenty Anson among the larger transactions).
That said, market watchers say office deals may slow due to rising interest rates. Most private equity real estate investors would want a fixed-rate non-recourse loan to help fund their acquisitions. Currently, some banks in Singapore are quoting interest rates of 3.3-3.5 per cent per annum for such loans — exceeding net property yields based on the asking prices for most office assets in the market.
However, Savills Singapore’s research and consultancy head, Alan Cheong, said: “While institutional funds may adopt a more cautious stance towards investing in the Singapore office market, ultra-high net worth individuals and family offices may still be keen on the sector. In an age of uncertainty, yield is not their primary concern. Rather, they are in search of safe harbour — for which Singapore has a clear advantage.”
https://www.businesstimes.com.sg/real-estate/income-at-raffles-quietly-on-market-s3300-psf-guide-price-works-out-to-about-s900m