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SINGAPORE Telecommunications has sold its Robinson Road building, formerly known as Crosby House, for $163.4 million in cash to a joint venture between Lehman Brothers and the Asian arm of Japan’s Kajima Corp.

SingTel said it expects a net gain of $143.5 million from the sale of the seven-storey block at No 71, which has a net book value of about $19.7 million.

This week SingTel will receive $16.3 million or 10 per cent of the purchase price. The remaining 90 per cent will be paid on completion of the sale, which is expected to be in December.

The offer by Kajima Overseas Asia Pte Ltd - Kajima Corp’s Asia (ex-Japan) arm - and Lehman Brothers is more than double the $69 million price tag placed on the site for commercial development by independent valuer Chesterton International in July.

The 1950s property, which sits on a 2,279 square metre piece of land at the junction of Robinson Road and McCallum Street, is one of the last underdeveloped sites on the prime financial district street.

The site could be redeveloped to house a 35-storey office building or a 52-floor apartment block.

SingTel put it up for sale in August, appointing Credo Real Estate which had handled the sale of SingTel’s Old Holland Road and West Coast Road sites to market the property via a public tender.

The tender sale was launched on Aug 24 and closed on Sept 28.

SingTel said the property is not required for its business and that its sale will not affect the company’s other operations.

Deputy group chief executive Chua Sock Koong said: ‘This sale will allow us to free up cash resources and redeploy them in our core telecommunication business and new investments.’

Kajima Overseas Asia has about $1 billion of property investments in Singapore through stakes in the Millenia Singapore development and The Regent Singapore hotel.

In August, Kajima secured its first residential development site here through the en bloc sale of Balmoral View.

Source : Business Times - 23 Oct 2006

Japanese firm and Lehman will build 15-storey office block on Robinson Road site

JAPANESE property firm Kajima is riding on the wave of optimism in Singapore’s office market by paying $163.4 million for the former Crosby House in Robinson Road.

This is more than 60 per cent above the indicative price of between $90 million and $100 million that owner SingTel set for the ageing seven-storey block, which houses the Robinson Road Post Office.

And in a reversal of a recent trend, Kajima and its joint-venture partner, Lehman Brothers, will redevelop the building into a new 15-storey office block rather than convert it for residential use.

This is despite SingTel previously obtaining approval to build a 52-storey condominium on the 24,531 sq ft site, due to recent strong demand for inner-city homes such as The Sail @ Marina Bay.

The decision by Kajima and Lehman to keep the block for office use will enable it to capitalise on the current supply squeeze for quality Grade A office space in the prime Central Business District area, said its vice-managing director, Mr Masao Hashimoto, yesterday.

‘Considering the location and ambience of the site, we think its maximum potential is in office, not residential.’

He added that the new office development is expected to attract leading financial institutions and multinational companies when it is completed in mid-2009.

It will boast large column-free floor areas of about 20,000 sq ft - a rare and coveted feature in offices here.

This may be why Kajima is spending almost $300 million in total to redevelop the building, which is one of the last underdeveloped sites in Robinson Road.

On top of the $163.4 million purchase price, Kajima will have to pay a $26 million development charge and a $65.9 million premium to extend the building’s remaining 44-year lease to 99 years.

The total price works out to $928 psf per plot ratio.

Interest in the Crosby House building was ‘quite healthy’, said Mr Karamjit Singh, managing director of Credo Real Estate, which marketed the property.

‘I think the office market quite clearly has three or four good years ahead, so it makes sense to focus on good quality office space for which there is great demand,’ he added.

This is Kajima’s second property acquisition in Singapore this year. It had teamed up with United Engineers to buy Balmoral View in August for $52 million.

Kajima also said it will spend another ‘couple of hundred of million dollars’ over the next two years on Singapore property, concentrating on offices, malls and homes.

Source : Straits Times - 21 Oct 2006

Their rents will be halved until the end of the year; almost half of the mall is still empty
TENANTS at the newly refurbished The Cathay mall are getting their rents slashed by half until the end of the year.

This is the second round of rental rebates that The Cathay has granted since it opened in May and comes after unhappy tenants wrote to the management about poor shopper traffic.

Almost half the mall is still empty, with actual operational occupancy at only 60 per cent. The Cathay Cineplexes, the anchor tenant, makes up a substantial one-third of that figure.

But the mall’s management says 82 per cent has been leased and the mall will be 78 per cent occupied by next month. New tenants will include American-themed restaurant Billy Bombers and gym chain Fitness First.

Cathay Organisation’s president of business operations, Mr Suhaimi Rafdi, told The Straits Times yesterday that the new rebates were planned ‘way before’ and not a result of the tenants’ letter, of which he said he was unaware. ‘Like all new malls that offer rebates to tenants, we embarked on the same approach,’ he said.

‘We are fairly surprised by any unhappy tenants as we have already extended a second phase of rebates.’

The Straits Times understands that nine of the mall’s 20 tenants wrote to the mall’s marketing and leasing department in August, raising concerns about slow business and asking for some form of assistance.

A reply came two weeks later, saying that the landlord would be ‘evaluating the matter seriously’. It was later announced that new and existing tenants would get a 50 per cent rebate on rent for next month and December.

This is on top of an initial round of rebates between May and this month. Tenants got a 50 per cent rebate in May, 40 per cent in June, and so on until the rebate hit 5 per cent this month.

Rents are now at about $15 per sq ft (psf) for a third-floor unit to more than $20 psf for a ground-floor unit.

This compares with an overall average of slightly over $10 psf for nearby Plaza Singapura, about $33 psf on average for prime Orchard Road space and between $5 psf and $30 psf for VivoCity, another newly opened mall.

Most of the 10 Cathay tenants that The Straits Times spoke to yesterday said that while they were grateful for the additional rebates, these provided only short-term relief and were not a solution in the long run.

Many also noted that tenants at VivoCity - which opened on Oct 7 and is 93 per cent leased out and 70 per cent occupied - are enjoying similar rental rebates despite booming business.

‘When we signed the lease, they told us the mall would be 70 per cent occupied by mid-June,’ said Mr Luke Elijah Lim, who invested $150,000 in his start-up boutique, To-a-tee, on the third floor of The Cathay.

‘But even now, most of the time it’s a dead town. They promised us big-name tenants that never came.’

Mr Shenzi Chua, who runs NewUrbanMale on the ground floor, said he thinks the mall ‘has great potential’, but ‘the continuous effort to bring in more and the right group of people has somehow stopped somewhere’.

Tenants such as Ms Grace Ng, owner of premium stationery boutique Wood Would, spoke of being ‘demoralised’ by poor business. ‘This place is not functional; there is no convenience store, no pharmacy, not even an ATM,’ she said.

Property experts yesterday said The Cathay’s difficulty in attracting new tenants may lie in its location, visibility and shortage of existing tenants.

‘It is a little bit off the main Orchard Road, and you don’t really see it performing up to par right now because the occupancy is not there yet,’ said one retail consultant.

Mr Danny Yeo, executive director of Knight Frank, said malls should open with at least 90 per cent occupancy ‘to give them a chance to survive’.

This is ’so that when promotions and events are organised to draw the crowd, they won’t come to find a half-empty mall’.

fiochan@sph.com.sg

RENT RELIEF

New and existing tenants of the mall will get a 50 per cent rebate on rent for next month and December. This is on top of an initial round of rebates between May and this month. Rents are now at about $15 per sq ft (psf) for a third-floor unit to more than $20 psf for a ground-floor unit. This compares with an overall average of slightly over $10 psf for nearby Plaza Singapura, about $33 psf on average for prime Orchard Road space and between $5 psf and $30 psf for VivoCity, another newly opened mall.

Source : Straits Times, - 20 Oct 2006

Eight bids vying for 2.67ha hotel and commercial plot which includes Clifford Pier

FOREIGN property players featured prominently among a slew of bidders hoping to clinch the landmark Collyer Quay site yesterday.

The commercial and hotel site, which includes Clifford Pier and the former Customs Harbour Branch Building, drew eight bids when the tender for the 2.67ha plot closed yesterday.

The bidders included Hong Kong’s Carlton and Park Hotel groups, as well as Dubai Properties, owned by the Dubai government.

Overseas Union Enterprise (OUE), which is now controlled by Indonesia’s Lippo family and Malaysian tycoon Ananda Krishnan, also put in a bid. Another bidder, Northern Holdings, is believed to have European links.

But local interest was equally strong, with property tycoons Kwek Leng Beng and Ng Teng Fong pitted against each other.

Mr Kwek’s City Developments presented its bid to the Urban Redevelopment Authority (URA) just minutes before the tender closed at noon.

Mr Ng’s Hong Kong-listed Sino Group, the sister company of Far East Organization, surprised with not one, but two offers.

Market watchers yesterday said the fight looks set to be a close one, pitting players with local strategic interests against foreigners with cash.

If OUE wins, it is likely to combine the site with its adjacent Change Alley Aerial Plaza and Overseas Union House. Sino may wish to prevent another developer from building a project that competes with its nearby The Fullerton hotel and One Fullerton.

Unlike most other land plots, the Collyer Quay site will be awarded not just on price. The bids will first be evaluated by the URA based on their concepts. Only proposals with approved concepts will move on to the second stage to compete on price.

Sino could thus have tabled two bids to give it an extra chance of wowing the authorities with its design proposals, said Mr Jeremy Lake, executive director of investment properties at CB Richard Ellis.

But the foreign players ‘have the money and are likely to bid very aggressively’, said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Both the Park Hotel and Carlton groups recently topped tenders for hotel sites in Robertson Quay and Bras Basah respectively.

The strong foreign interest reflects the ‘historical attraction and value of this area’, said Mr Ku Swee Yong, director of business development at Savills Singapore.

The redevelopment of the Collyer Quay site is part of plans to rejuvenate the Marina Bay area. At least 40 per cent of the site must be used to build a hotel, with the remaining land used for restaurants, shops and entertainment facilities.

The winning developer must also restore and conserve Clifford Pier and the old Customs building.

Source : Straits Times - 18 Oct 2006

Distribution income up 19%; occupancy at its highest 97.2% at end-Sept

ASCENDAS Real Estate Investment Trust (A-Reit) is paying a distribution per unit (DPU) of 3.16 cents for the second quarter ended Sept 30 - up 9 per cent year on year and 2.3 per cent quarter on quarter.

Compared with a year ago, A-Reit posted a 26 per cent rise in net property income to $51.9 million and a 19 per cent rise in net income available for distribution to $40.5 million in the second quarter quarter.

On a half-yearly basis, distributable income of $80.1 million was up 20 per cent while DPU of 6.25 cents was up 9 per cent.

Tan Ser Ping, chief executive officer of Ascendas-MGM Funds Management, the manager of A-Reit, said the trust benefited from economic recovery.

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Click here to view Ascendas Reit’s press release

A-Reit’s Q2 financial statements

‘We see good organic growth resulting from both positive rental reversions from selected sectors and occupancy rate improvements across the portfolio,’ Mr Tan said.

A-Reit’s occupancy rate reached its highest level of 97.2 per cent at end-September, compared with 96.1 per cent at end-June.

As of Sept 30, A-Reit - Singapore’s first listed business space and light industrial Reit - had a portfolio of 66 properties housing 740 international and local tenants. The trust, with total asset value of about $2.96 billion, has announced four proposed investments worth a total of $180 million that have yet to be completed.

Going forward, A-Reit expects demand for business and science park space to remain healthy as the government continues to encourage companies to engage in research and development.

The trust also sees a spillover effect from the present tight office supply and rising office rents leading to increased demand for business park and high-spec industrial space.

A-Reit noted: ‘With the listing of new Reits and continued market competition, the environment for acquisitions of income producing properties has resulted in further compression of capitalisation rates.’

The trust says it remains committed to pursuing yield accretive acquisitions selectively and increasing the focus on creating its own assets through build-to-suit development projects. For Q2, A-Reit renewed and signed new leases amounting to a total net lettable area of 46,510 square metres.

The weighted average lease term to expiry remained stable at 6.1 years at Sept 30.

A-Reit’s portfolio comprises 55.3 per cent multi-tenanted buildings and 44.7 per cent sale-and-leaseback properties based on portfolio value.

Source : Business Times - 18 Oct 2006