SIA sells its Robinson Rd building for $344m
Sale price about 7% more than market’s expected price
SINGAPORE Airlines (SIA) has finally sold its building at 77 Robinson Road - for a higher-than-expected $343.88 million - to TSO Investment, a fully owned subsidiary of a property fund managed by CLSA Capital Partners. The price works out to about $1,165 per square foot (psf).
The 35-storey SIA Building was carried in SIA’s books at $118.77 million, which means the company realised a gain of $225.11 million before commissions. The sale price is about 7 per cent higher than the market’s expected price of $325 million.
‘The decision to sell the building was made as part of a regular review of the airline’s non-core assets, and following a successful private tender exercise, conducted by CB Richard Ellis,’ SIA said in a statement.
Analysts said while the transaction was material and would provide a one-off boost to SIA’s earnings, the numbers involved were small relative to the $12.5 billion worth of assets SIA carried in its books.
‘Of course, we will see a non-recurrent boost to quarterly earnings,’ said Vincent Ng of S&P Equities Research. ‘But the gain represents barely more than 2 per cent of the assets carried. I don’t think it will have a significant impact on the valuation of the company or recommendations on the stock.’
SIA plans to use proceeds from the sale, expected to be completed in eight weeks, for investment and growth of the company and its subsidiaries.
In recent years, the airline group has been seeking to divest its non-core non-airline businesses, including property, ground services (Singapore Airport Terminal Services) and SIA Engineering Co.
SIA redeveloped the building in 1997. It has a net floor area of nearly 295,000 sq ft, plus 180 carparking spaces, and is almost fully let. SIA occupies about 10 per cent of the property’s net lettable area (NLA), and has committed itself to a two-year leaseback on this space.
According to market insiders, the $1,165 psf of NLA price works out to a net property yield of around 3.8 per cent, based on prevailing rent levels.
CLSA was one of several contenders for the building, together with the real estate arm of Deutsche Bank, DB Real Estate, and a Goldman Sachs fund.
SIA also has several dozen smaller properties in Singapore and around the world. The next biggest, after the SIA Building, would be its Singapore Airlines House in Sydney. An SIA spokesman told BT that the company was ’still considering its options’ as to what do with that building.
Source : Business Times - 29 Jun 2006
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