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CB Richard Ellis, Jones Lang LaSalle appointed joint marketing agents

LIPPO Centre at 78 Shenton Way is back on the market, with CB Richard Ellis and Jones Lang LaSalle having been appointed joint marketing agents for the leasehold office building.

Market watchers say the asking price is probably around $350 million or about $1,166 psf of existing net lettable area (NLA).

Jones Lang LaSalle and CB Richard Ellis confirmed their appointment when contacted by BT yesterday, and said expressions of interest for the property close later this month. They declined to comment further.

The latest development follows the lapse of a preliminary arrangement by Lippo Group to sell the 34-storey property to a Macquarie-linked fund several weeks ago. At the time, Macquarie was reportedly to buy the property for about $290 million, subject to terms being agreed on within a stipulated timeframe. However, the deal could not be sewn up in time and the arrangement lapsed.

Lippo is said to have received offers as high as $330 million from other parties. But analysts reckon Lippo could now be targeting $350 million or $1,166 psf of NLA - after the $1,165 psf SIA Building in Robinson Road fetched in June.

SIA Building is on a site with a remaining lease of 87 years, while the lease on the Lippo Centre site has about 76 years to run.

‘While SIA Building is in a superior location and is on a site with a longer remaining lease, Lippo Centre does offer more upside as it has unutilised plot ratio which would allow an additional 50,000 sq ft gross floor area to be built,’ a market watcher said.

This could translate to roughly 40,000 sq ft of NLA of offices - or a 10 per cent-plus addition to the building’s existing NLA of about 300,000 sq ft.

A $350 million price tag reflects a low-3 per cent net yield, but investors could be looking at significant upside given tightening office supply.

The building’s current occupancy rate is in the low-90s, so there is room for increase in rental income as the remaining space is let, leases are renewed and new leases are signed at higher rental rates. Also, the additional space that can be developed will boost future income, analysts say.

Lippo stands to book a handsome profit from selling the building, which it bought for $151 million or about $505 psf of NLA from MCL Land in August 2004.

Lippo Centre is owned by Ferrell Realty, which in turn is fully owned by a property fund in which Lippo is a major investor.

The building comprises a three-storey podium with a basement level, housing a spa, retail facilities and 323 carpark lots, and a 31 storey office tower. Typical floors have about 9,500 sq ft of office space.

Source : Business Times - 2 Nov 2006

Far East also keen in first collective sale of commercial building

IN WHAT could become Singapore’s first collective sale of an all-commercial building, Ming Arcade on Cuscaden Road could be about to change hands.

Hotel Properties Ltd (HPL), which has a significant presence near the arcade, is said to have made the highest offer so far, of about $61 million, for the freehold property.

Agent Jones Lang LaSalle is looking for agreement for an en bloc sale from owners controlling the minimum 80 per cent of share value at Ming Arcade.

HPL’s offer reflects a unit land cost of $1,200 psf of potential gross floor area. No development charge is payable.

Far East Organization, which owns Orchard Parade Hotel right next to Ming Arcade, is also believed to have bid for Ming Arcade.

While it remains to be seen who eventually ends up buying the property and at what price, the collective sale of Ming Arcade could help to blaze the trail for other strata commercial properties in the vicinity - including Far East Plaza, Far East Shopping Centre and Delphi Orchard - and help rejuvenate Singapore’s prime shopping belt.

Ming Arcade was completed in the 1980s by the late Ho Kok Cheong. It stands on a 12,132 sq ft site zoned for commercial use with a 4.2 plot ratio (ratio of potential gross floor area to land area) and a maximum height of 20 storeys.

Jones Lang LaSalle, which is marketing Ming Arcade, declined to comment when contacted yesterday.

The property consultancy said in August that the site has potential for several redevelopment options such as a small office, home office (Soho) development, corporate headquarters, a high-end boutique, retail or mixed development.

Part of the new development could also be used for medical suites, given strong demand for such properties, JLL said at the time.

BT has reported that HPL owns five of Ming Arcade’s 88 units. The group’s presence in the area covers HPL House (just opposite Ming Arcade), Four Seasons Hotel, Hilton Hotel and The Forum.

Owners of several other commercial properties are also headed for the en bloc trail, but generally, property industry veterans reckon the number of commercial collective sale deals is likely to be lower than that for residential collective sales.

The method of working out who gets what from the proceeds of an en bloc sale is particularly complex for retail properties, where factors such as the floor level, a shop’s distance from an escalator and its orientation may affect its value - assuming that owners are prepared to sell anyway.

Source : Business Times - 31 Oct 2006

ANG Mo Kio is about four months away from having a new mega mall, a development seen to bring a new buzz to one of Singapore’s oldest HDB estates.

Billed as a one-stop retail and entertainment experience, the four-storey AMK Hub with 262 shops will also be a focal point for a range of services provided by National Trades Union Congress (NTUC) cooperatives.

These include a 2,000-sq-

ft lounge where the elderly can meet in air-conditioned comfort; a 4,400-sq-ft childcare centre; and an NTUC Club entertainment centre with an eight-screen cineplex.

It will also house FairPrice’s first-ever hypermarket and have a mega pharmacy run by NTUC Healthcare, the labour movement’s health-care arm

At least 90 per cent of floor space in the $340 million mall has already been taken up by the NTUC cooperatives and stores ranging from fashion and apparel outlets to banks, cafes and eateries.

The 19.3ha complex will also be connected to an air-conditioned bus interchange, slated for completion early next year, and an underpass to Ang Mo Kio MRT station.

Speaking at the mall’s

topping-off ceremony yesterday NTUC secretary-general Lim Boon Heng said its completion - hopefully in time for Chinese New Year - will complement the rejuvenation of Ang Mo Kio town centre.

‘By having a seamless linkage with the upcoming air-conditioned bus interchange and the underpass to Ang Mo Kio MRT station, the one-stop AMK Hub will also provide greater convenience and accessibility to the contemporary family needs of residents within and beyond Ang Mo Kio,’ he said.

Mr Lim believes that with a catchment of some 780,000 residents in Ang Mo Kio and nearby estates in Bishan, Hougang, Serangoon and Toa Payoh, the mall will become a ‘buzzing focal point’ for young and old alike.

It was a view shared by Mr Seng Han Thong, MP for Yio Chu Kang, who is NTUC assistant secretary-general.

‘We foresee that with the completion of AMK Hub, the town centre will be even more vibrant,’ he said.

‘The mall will attract shoppers from not just Ang Mo Kio, but other parts of Singapore as well.’

Mr Lim also saw the mall’s development as reflecting what NTUC spelt out in its Labour Movement 2011 vision for the next five years to serve workers at all levels - from low-income contract workers to executives.

‘The AMK Hub development is in line with an exciting phase for the labour movement,’ said Mr Lim, who is also Minister in the Prime Minister’s Office.

Construction of the mall began last year, and when it opens next year it is expected to generate 1,500 jobs.

Dr Chua Yang Liang, head of research at property consultancy Jones Lang LaSalle’s office here, said the mall will benefit from the large human traffic flow.

‘Such a development will complement the surrounding retail landscape, providing residents and businesses alike with a wider choice of retail opportunities,’ he said.

However, Mr Goh Ang Jee who heads an association of neighbourhood shops was less certain.

‘We are only small-scale retailers, so it’ll be very difficult to compete against such a new large-scale and air-

conditioned mall,’ said Mr Goh, who runs a furniture shop in the area.

To cope with the competition, he plans to get shop owners to put their goods on sale more often, and organise stage activities during festive seasons to draw more shoppers.

Ultimately, consumers such as administration officer Jessie Quek, 49, are the ones who stand to benefit.

‘We have waited so long for this,’ said Madam Quek, who lives a five-minute walk away from the mall. ‘Ang Mo Kio Central used to be filled with activity until the old bus interchange was demolished some years ago.’

‘We are more than happy to have the bustle back.’

Source : Straits Times - 28 Oct 2006

Placement is to fund purchase of strata offices at Suntec City

SUNTEC Real Estate Investment Trust, controlled by Hong Kong tycoon Li Ka-shing, plans to raise up to $182.4 million for expansion by selling new units in the trust to investors.

In a statement released yesterday, ARA Trust Management (Suntec), which manages the Suntec Reit, said the property trust would sell 120 million Suntec units in a private placement with an issue price of between $1.48 and $1.52 per new unit, or a 1.9 to 4.5 per cent discount to yesterday’s $1.55 closing price.

ARA Trust’s announcement came after its chief executive Yeo See Kiat confirmed earlier in the day a Reuters report on the placement.

ARA Trust said the placement is to fund the first phase of Suntec Reit’s programme to acquire office strata units in Suntec City not presently owned by it.

The deal, of which Citigroup Global Markets Singapore is the financial adviser, lead manager and underwriter, is expected to be priced by today. This probably explains Suntec’s request for a trading halt today.

Click here for Suntec Reit’s FY2006 financial statements

Suntec Reit is expanding as Singapore’s office rents recover from their lowest in a decade and are expected to surpass their 1996 peak, reaching $11 per square foot by 2008, according to UBS AG’s estimates.

Suntec, based on three commercial and office complexes in Singapore, yesterday said it would pay investors $24.8 million in distributable income for its July 1-Sept 30 fourth quarter. The trust said investors would receive 1.91 Singapore cents per unit for Q4.

‘The office market is enjoying a strong growth momentum underpinned by sustained demand amid tight supply, translating into further rental growth in the third quarter of 2006,’ the company said.

Suntec Reit said gross office revenue rose to $15.5 million, exceeding its forecast by $3.7 million. Gross retail revenue increased to $29.4 million, also surpassing forecast by $6.7 million.

Source : Business Times - 27 Oct 2006

THE surging cost of space on Orchard Road has pushed Singapore’s famous retail row up one place to 13th in the league table of the world’s most expensive shopping locations.

Its move has been driven by a rental boom, with prime ground floor space rising 13.2 per cent over the past year to $39 per sq ft (psf) a month or US$292 (S$462) a year, said property consultancy Cushman & Wakefield, which compiles the annual survey.

The rent boom has, in turn, been fuelled by increased spending and a rise in tourist numbers, said Mr Donald Han, the firm’s Singapore managing director.

‘International brands and local retailers are all jostling for a prime presence in Singapore’s key retail hub,’ he said. ‘With the limited supply in Orchard Road, there is only direction rents can go - up.’

While Orchard Road has moved up, it remains far behind the top six. New York’s Fifth Avenue is still the costliest street on which to rent shopping space, with rents at US$1,350 psf a year, followed by Hong Kong’s Causeway Bay at US$1,134 psf.

Avenue des Champs Elysees in Paris is third, followed by London’s New Bond Street, Tokyo’s Ginza district and Dublin’s Grafton Street.

Wanfujing Street in Beijing remains at 20, while Khan Market in New Delhi climbed from 41st to 24th, with rents at US$180 psf a year.

The report tracks retail rents in the world’s top 233 shopping locations across 47 countries.

Source : Business Times - 26 Oct 2006