United Engineers buys two HP buildings for $402m

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http://www.straitstimes.com/archive/...-402m-20130918

United Engineers buys two HP buildings for $402m

Published on Sep 18, 2013

By Cheryl Ong


UNITED Engineers (UE) is buying Hewlett-Packard Singapore's two buildings in Alexandra Road for a total of $402 million.

The acquisition will be funded wholly in cash, and will bring the net book value of the group's properties under management to over $2 billion, it said yesterday.

Under the terms of the purchase, Hewlett-Packard will lease back the 345,101 sq ft industrial building for five years, with three options to renew for a further five years each.

The American computer giant will also lease back the commercial building, with a gross floor area of 155,932 sq ft, for three years. This includes two options to renew for six months each.

The properties are 450m from the Labrador Park MRT station.

UE's deal comes on the back of its $410 million acquisition of a freehold commercial building at 79 Anson Road in February.

"The group has been steadily building up a portfolio of well- located and tenanted commercial and industrial properties across Singapore to complement its property development activities," it said.

The rental income from Hewlett-Packard will give the firm a chance to evaluate plans to redevelop the properties when the leases expire, UE added.

In July, UE sold its mixed-use property in Changi for $518 million, in one of the biggest commercial real estate deals since 2010.

Chief executive Jackson Yap said then that the move would unlock capital for other acquisitions.

He said it was also eyeing upcoming land tenders for residential or commercial developments, noting that UE might set up a real estate investment trust if it has enough projects in the pipeline.

UE shares closed 0.5 cent up at $1.80 yesterday.

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http://www.businesstimes.com.sg/arch...andra-20130917

Published September 17, 2013

UE pays $402m for HP premises in Alexandra

Computer giant to lease back freehold office tower and industrial block

By Kalpana Rashiwala [email protected]


UNITED Engineers (UE) has entered into a deal to buy Hewlett-Packard's freehold premises on Alexandra Road - an industrial building and a commercial office tower - for $402 million.

The computer giant will lease back the 12-storey office tower fronting Alexandra Road for three years, with two options to extend for periods of six months each.

HP will also lease back the eight-storey industrial building behind the tower for five years, with three options to renew for five years each.

These leases provide UE with an "immediate and steady rental income stream" while it evaluates the longer term redevelopment plan for the sites, which are within the Alexandra precinct that forms part of the new Southern Waterfront City highlighted in the government's 2030 Land Use Plan.

Another possibility is for the group to reposition its marketing strategy for the property upon expiry of the leases. The acquisition of the property will add to UE's existing portfolio of properties under its management to over $2 billion in net book value.

UE said that it will rebrand the property - which is about 450 metres from Labrador Park MRT Station - to UE BizHub West, subject to government approval.

The two buildings are on a 191,484 sq ft freehold site zoned as part industrial (Business 1) use and part commercial use.

CBRE is understood to have brokered the sale.

In July this year, UE announced the $518 million divestment of UE BizHub East, a mixed-use development in Changi Business Park under a structure that will allow the group to continue managing the business park and retail space in the property post-divestment.

In December last year, the group picked up 79 Anson, a 23-storey freehold office building in the CBD, for $410 million or $2,029 per square foot (psf) based on the building's net lettable area (NLA) of 202,092 sq ft. The building is 99 per cent tenanted and has Kellogg Brown & Root Asia Pacific Pte Ltd as its anchor tenant until 2016.

In its filing with Singapore Exchange, UE noted that the group has been steadily building up a portfolio of well-located and tenanted commercial and industrial properties across Singapore to complement its property development activities and, whenever possible, to provide a landbank with future redevelopment potential.

Its latest acquisition will further broaden the real estate portfolio under the group's management, which also includes hotels, serviced apartments and shopping malls, and will provide potential cross-marketing opportunities for the property rental and services division.

Furthermore, UE's purchase of a landmark property on Alexandra Road will reinforce its strategy of expanding its UE BizHub brand into prime commercial nodes. It noted that 79 Anson, as well as another property the group owns, The Rochester Mall in One North, are within or close to the proposed Southern Waterfront City.

The 12-storey office tower, at 450 Alexandra Road, was built in 1976 and has 155,932 sq ft gross floor area (GFA), while the adjoining eight-storey industrial block was built in 1998 with 345,101 sq ft GFA.

For illustrative financial effects of the acquisition, for the six months ended June 30, 2013, the net profit before tax attributable to the property is about $2.55 million - after deducting financing cost expected to be incurred on the acquisition.

Assuming the transaction had been completed on Jan 1, 2012, the group's FY 2012 net profit would have increased from $72.2 million to $76.4 million, while its earnings per share would have risen from 24.3 cents to 25.7 cents.

Completion of the transaction is scheduled to be on Nov 15.

UE shares closed trading yesterday at $1.795, up 1.5 cents.