Qatar fund buys Marina Bay office tower for $3.4b

[reporter2]

http://www.straitstimes.com/singapor...-tower-for-34b

Qatar fund buys Marina Bay office tower for $3.4b

Jun 7, 2016

Sale of Asia Square Tower 1 by BlackRock is said to be the biggest such deal in Asia-Pacific

Wong Siew Ying



Asia Square Tower 1 in the Marina Bay financial district is changing hands for $3.4 billion - said to be the biggest single-tower real estate deal in the Asia-Pacific region.

Sovereign wealth fund Qatar Investment Authority (QIA) has agreed to buy the 43-storey office tower, with a string of blue-chip corporate tenants, from United States private equity giant BlackRock.

Analysts say the deal, along with a recent $560 million offer for Straits Trading Building in Battery Road, will likely ignite further interest in prime office assets here. The market has faced oversupply worries.

BlackRock told The Straits Times yesterday its decision to sell was in line with its investment fund's aim.

"It would be enormously tempting to just hold and wait, but that's not really what this pool of capital pays us to do. (It) pays us to develop and then sell. It is purely to do with the timing of funds and capital," said head of Apac for BlackRock Real Estate John Saunders.

He added that BlackRock maintains a "very positive view" on Singapore's property market.

While the $3.4 billion figure is a record, the per sq ft price is lower than the $3,520 psf offered for the Straits Trading Building by Indonesian tycoon Tahir last week.

CBRE, a joint-adviser on the Asia Square Tower 1 deal, said the price works out to $2,720 psf based on 1.25 million sq ft of net lettable area, with a yield in excess of 3 per cent.

Citibank has been the anchor tenant since the building's 2011 completion. Other tenants include Google and Swiss private bank Julius Baer. It has an occupancy rate of about 90 per cent, BlackRock said.

CBRE Singapore executive director for investment properties Jeremy Lake expects two or three more possible deals above $500 million in the second half of the year. "When deals happen and benchmarks are recorded, it emboldens investors ."

BlackRock said the "fairly swift and orderly" sale with QIA started a few months ago. Mr Stuart Crow, head of Asia-Pacific capital markets at joint-adviser JLL, said there was "strong interest from four to five groups", but could not name them.

Earlier reports said other interested parties included CapitaLand, ARA Asset Management as well as Norway's sovereign wealth fund.

QIA is no stranger to the property scene here. It owns the Raffles Hotel via unit Katara Hospitality, and partnered The Ascott to set up a US$600 million (S$815 million) fund to invest in serviced residences and rental housing properties last year.

"This is the third sovereign wealth fund to invest here in the last five to six years. As the low interest rate environment prevails, they probably see Singapore as a good place to protect their capital," said Chestertons managing director Donald Han. The other funds are the Abu Dhabi Investment Authority and Malaysia's Khazanah Nasional.

Mr Shaun Poh, Cushman & Wakefield's executive director of capital markets, said he sees the QIA buy as "a move to garner more stable income and to diversify their portfolio, to assets outside the oil and gas sector which has been volatile".

[reporter2]

http://www.reuters.com/article/us-bl...-idUSKCN0YS03B

Business | Mon Jun 6, 2016 5:07am EDT

BlackRock's $2.5 billion sale: a sign of life for Singapore's office market

SINGAPORE | By Aradhana Aravindan


BlackRock Inc (BLK.N) said it would sell a 43-storey Singapore office tower for $2.5 billion - one of at least three office building deals in the last two months for a market gripped by worries about oversupply and rising vacancies.

The sale to Qatar Investment Authority, a sovereign wealth fund, is Singapore's largest office transaction. It is also the largest single-tower real estate deal in Asia-Pacific, according to BlackRock, the world's largest asset manager.

The selling price of S$2,700 ($1,980) per square foot for Asia Square Tower 1 in the city-state's financial district, has only been outdone by deals in London and Hong Kong, according to property consultant JLL, which was one of BlackRock's advisers on the transaction.

The U.S. firm said the deal could mark a turning point for Singapore real estate and that gloomy views about the market were likely overdone.

"Singapore as a home for capital is always very well regarded in the region," said John Saunders, head of Asia Pacific for BlackRock Real Estate.

"So for those folks who have dry powder and are looking to invest, frankly ourselves included, I think a lot of people are looking at Singapore and saying this could be an interesting environment," he added.

But others were less optimistic, saying the BlackRock deal should be regarded as an exception at a time when vacancy rates for Singapore's office property sector are near their highest level in almost a decade and a raft of new supply was about to hit the market.

"This is not a deal that triggers more deals, because of the supply and demand situation," said Nicholas Mak, executive director at SLP International Property Consultants.

He said developers were set to add 4 million square feet of office space in Singapore this year - equivalent to about 5 percent of the current market - which will be followed by another 1.4 million next year.

Media reports have said that BlackRock had been seeking S$4 billion for the building instead of S$3.4 billion it gained. BlackRock said it was happy with the price but declined comment further on financial terms.

On a per square foot basis, similar valuations were gained in a 2014 Singapore deal, according to consultancy firm Cushman & Wakefield.

The BlackRock deal follows two smaller ones - Singapore's Capitaland Commercial Trust's (CACT.SI) plan to buy the remaining 60 percent of an office building it did not own and an offer by Singapore-listed MYP Ltd (MYPL.SI) to buy the Straits Trading Building for S$560 million last week.

Asia Square Tower 1 has over 1.25 million square feet of net lettable area and Citigroup Inc (C.N) as its anchor tenant, BlackRock and Qatar Investment Authority said in a joint statement.

BlackRock owns a second tower in the Asia Square development but first wants to complete renting out the building, which is currently close to 90 percent leased, before reviewing a sale.

Qatar Investment Authority is one of the most active sovereign investors in the world. While it has focused on investments in Europe, it has recently sought to diversify its portfolio with investments in Asia.

($1 = 1.3613 Singapore dollars)

(Reporting by Aradhana Aravindan; Editing by Edwina Gibbs)