79 Anson Rd on verge of being sold for over $400m

At least one major office block transaction could be sealed before the year ends, BT understands. A deal is close to being stitched for 79 Anson Road, with both owners - German fund manager SEB and Central Provident Fund Board - selling their space.

Expectations are running high that the price will cross $1,400 per square foot based on the freehold building's existing gross floor area (GFA) of 289,185 square feet (sq ft). On a lumpsum basis, this would translate to $405 million or more. Assuming the price is in the $400-410 million range, this represents $2,000-2,050 psf based on the building's current net lettable area (NLA) of around 200,000 sq ft, say market watchers.

Industry watchers tipped United Engineers group as a possible buyer of the 23-storey tower. Others which had been in the running earlier are said to include Sun Venture.

Market watchers compare the pricing for 79 Anson Road to that for Tower 15 in Cantonment Road, which Fragrance Group bought in May this year for $1,420 per square foot per plot ratio (psf ppr) based on the building's existing GFA. Tower 15 is also freehold.

Fragrance is said to be exploring the possibility of redeveloping Tower 15 into strata office and shop units for sale. Some residences may also be included.

The buyer of 79 Anson Road could potentially redevelop the site in the mid to long term, depending on market conditions closer to when the last of the building's existing leases run out in 2016, say analysts.

Its 289,185 sq ft existing GFA is higher than the 236,566 sq ft based on the 8.4 plot ratio designated for the site under Urban Redevelopment Authority's Master Plan 2008. The site, with a land area of 28,163 sq ft, is zoned for commercial use and can be built up to 35 storeys. Most property market watchers reckon the building can potentially be rebuilt up to its existing GFA without any development charge payable to the state.

However, 79 Anson Road's new owner may also be keen on keeping the office block as a long-term investment property generating steady rental income. Located some 250 metres from Tanjong Pagar MRT Station, the building was completed 20 years ago. A major draw is its generous carpark provision, with 145 lots on levels 2-4.

SEB's space, on Levels 1 and 5-15, adds up to 117,423 sq ft in strata area. CPF Board owns 100,007 sq ft comprising eight office floors (levels 16-23) along with a ground-floor retail unit fronting Anson Road.

The most recent transaction of an office building in the vicinity is Mapletree Commercial Trust's (MCT) proposed purchase announced earlier this month of Mapletree Anson from a unit of its sponsor, Mapletree Investments. MCT will be paying $680 million or $2,049 psf based on its NLA of 331,854 square feet. Some market watchers have hailed it as the first acquisition of an office asset in Singapore undertaken by a real estate investment trust without income support or yield stabilisation structure.

Mapletree Anson's pricing is slightly lower than the $2,121 psf (without yield stabilisation support) that CapitaCommercial Trust paid earlier this year for the next-door Twenty Anson.

It acquired the property from LaSalle Investment Management's Asia Opportunity III fund.

Both buildings are on sites with remaining leases of about 94-95 years.

In late September, a property fund managed by Alpha Investment Partners acquired a half stake in 78 Shenton Way from a global fund managed by Germany's Commerz Real.

That deal valued 78 Shenton Way at $608 million, or $1,686 psf on NLA. The property is on a site with a remaining lease of about 70 years.

In July, Sun Venture clinched Robinson Point, a freehold 21-storey office block, from a fund of US-based AEW. The deal valued the asset at $284 million or $2,132 psf on NLA.

Source: Business Times –12 December 2012