(SINGAPORE) Singapore Technologies is said to be close to selling its eponymous office block in the Tanjong Pagar area for nearly $150 million to Resorts World at Sentosa Pte Ltd, the Genting Singapore unit that owns and operates the integrated resort on Sentosa.
The 13-storey freehold Singapore Technologies Building, at the corner of Cantonment and Lim Teck Kim roads, is currently about 90 per cent let and Resorts World is expected to occupy the building as leases expire and more space becomes available - to cope with its growth.
Singapore Technologies Building was completed in 1986 and boasts 135 parking lots.
The price Resorts World is expected to pay would work out to about $1,500 per square foot on the current net lettable area (NLA) of 98,906 sq ft.
Jones Lang LaSalle (JLL), which handled the expression of interest exercise for Singapore Technologies, did not pitch the property for redevelopment potential as the existing gross floor area of about 128,600 sq ft reflects a plot ratio of about 6.6 - higher than the 5.6 plot ratio assigned to the site under Master Plan 2008. The site is zoned for commercial use.
However, there is scope for additions and alterations work that could carve out more NLA and boost the property's rental profile, JLL's national director (investment sales) Anthony Barr had said in October when the property was launched for sale. When contacted yesterday, he declined to comment.
Singapore Technologies Building's expression of interest exercise closed in early November and is said to have drawn a wide profile of investors.
Market watchers said it made sense for Resorts World to invest in a location like Tanjong Pagar, which is close to Sentosa.
Tanjong Pagar is slated to be transformed into a new bustling waterfront district after the container terminals in the vicinity eventually move out.
The Tanjong Pagar Railway Station site is also expected to be redeveloped after Keretapi Tanah Melayu vacates the site under a historic land-swap deal between Singapore and Malaysia announced in September.
Resorts World generated revenues of $860.8 million for the second quarter of last year and $731.8 million for Q3.
The office investment market is off to a good start this year. NTUC Income Insurance Cooperative recently paid $101 million for a 49 per cent equity stake in the company holding 16 Collyer Quay (formerly Hitachi Tower).
The deal valued the 999- year leasehold office tower at about $626 million or $2,250 per square foot on a NLA of 278,356 sq ft.
The remaining 51 per cent stake in Savu Investments continues to be owned by an entity, the shareholders of which are funds managed by affiliates of Goldman Sachs and an indirect subsidiary of Goldman Sachs.
Oxley Holdings has also picked up The Corporate Building along Robinson Road for $57 million.