Monday, January 17, 2011

Clemenceau office block up for sale

ANOTHER office block is available for sale. A private equity fund is offering 182 Clemenceau Avenue near Dhoby Ghaut MRT Station for sale, and market sources say that the price could be about $75-80 million or $1,613-1,720 per square foot based on its net lettable area of about 46,490 sq ft.


The six-storey building, next to Singapore Shopping Centre, is fully occupied. The bulk of the space is leased to GE Money until 2013. Based on existing leases and the $75-80 million pricing for the property, the net yield would be in the low-end of the 3 per cent range.


The property is being sold by Silverpeak Real Estate Partners, which was launched last year as a new independent advisory business to the former Lehman Brothers Real Estate Private Equity funds. The former Lehman fund is understood to have bought the Clemenceau Avenue property in 2007 for about $85.5 million from Loo Choon Yong of Raffles Medical Group.


Jones Lang LaSalle is marketing the property by private treaty. '182 Clemenceau Avenue is owned by a fully solvent private equity fund. The sale is not part of any forced or distressed liquidation,' said the firm's national director of investments, Anthony Barr.


182 Clemenceau Avenue is on a site with a remaining leasehold tenure of about 81 years. It has 12 car park lots and is zoned for commercial use with a plot ratio of 4.2+ under Master Plan 2008. The building's existing gross floor area of 55,493 sq ft is already the maximum allowed under Master Plan 2008.


While there is no immediate redevelopment potential for the asset, investors could in the medium term seek to strata title the office units for sale. Another possible option could be to seek a change of use for the property and convert it to a boutique service apartment project, suggested Mr Barr.


'For now, the appeal of this asset to passive investors is that it gives them 100 per cent ownership of an office block close to the city, plus the potential for rental upside,' he added.


The strong fundamentals for the Singapore office market as well as 182 Clemenceau Avenue's location and good-quality specifications mean that the asset will be popular with both investors and owner occupiers, Mr Barr said.


Close to $9 billion of office investment transactions were sealed in Singapore last year as investors were drawn by the office rental recovery story. Some office blocks were also picked up for redevelopment purposes, such as StarHub Centre, Chow House and The Corporate Office.


BT reported recently that The Corporate Building along Robinson Road is being sold for about $57 million to Oxley Holdings group, which could be looking at redeveloping the property to strata office units for sale.

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