Pramerica bags Tampines complexes
$289m properties will be injectedinto its Asian Retail Mall Fund II
PRAMERICA Asia - formerly known as GRA Singapore - has bagged DBS Tampines Centre and the adjacent Pavilion complex near Tampines MRT Station for $288.9 million.
It has bought the property for its Asian Retail Mall Fund (ARMF) II fund, which closed last month with US$400 million of equity raised. The plan is to redevelop the combined site of 90,689 sq ft into a mall with a total gross floor area of about 380,894 sq ft.
Knight Frank, which handled the tender for the two properties, said yesterday the deal sets two records. ‘First, $288.9 million is the highest sale quantum achieved in a collective sale since the $370 million sale of Cairnhill Court in 2000. Second, together with an estimated development charge of $9.97 million, the price works out to be $785 per square foot per plot ratio - the highest unit land price for a suburban site.’
Based on the acquisition price for the Tampines properties, the breakeven cost for a new mall will be about $1,700 to $1,800 psf. The target net property yield is reportedly at least 6 per cent.
This will be the second property for the fund after Liang Court Mall, which it is buying for about $175 million.
Pramerica Asia - which does the asset and fund management for ARMF I and II - is part of US-based Prudential Real Estate Investors. Headed by Josephine Au-Yeong, Pramerica Asia manages six funds that hold a total of almost US$3 billion of assets. These include residential developments in China, luxury homes in Hong Kong, offices in Tokyo, Korea (including Hansol Building in Seoul) and Hong Kong (like PCCW Tower) and malls.
ARMF I, whose S$320 million equity was fully invested in 2004, owns four malls in Singapore - Tiong Bahru Plaza, Century Square at Tampines, White Sands at Pasir Ris and Hougang Mall.
The two funds have some common investors, including Pramerica-linked entities, Guthrie and three big Dutch pension funds. NTUC FairPrice invested in the first fund but not the second. The second fund also has some new investors.
Market watchers expect that when the first fund’s seven-year life runs out in two years, a natural exit strategy for its investors will be to spin off a real estate investment trust (Reit).
And when the second fund’s term expires, the properties in this fund could then be offered to the Reit, analysts suggest.
Asia Malls Management, a joint venture between the funds and Guthrie, handles the retail management for both funds. The new mall planned for the DBS Tampines Centre and Pavilion site will be the second owned by these funds near Tampines MRT Station, after Century Square.
Industry observers expect the new mall to feature mostly speciality outlets, rather than anchor tenants like hypermarkets or furniture retailers, to avoid a head-on clash with the big-box formats of Dairy Farm, Ikea and Courts that will open nearby in the Tampines/Pasir Ris area near the wafer fab plants.
Redevelopment of the two Tampines buildings is not expected to start until next year, as the properties will only be handed over and the purchase completed in December.
DBS Tampines Centre was securitised by DBS Bank in 1999, and Pavilion is owned by Cathay Organisation. The tender attracted four other bids - from CapitaLand (whose CapitaMall Trust owns the nearby Tampines Mall), Lippo group, Lend Lease and Centrepoint.
Source : Business Times - 3 Mar 2006
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