AN associated company of CapitaLand is buying the office space at the former GSH Plaza in Cecil Street from a fund led by Hongkong-listed Fullshare Holdings in a deal expected to exceed S$500 million.
The building, now known as Plus, is at 20 Cecil Street, beside Republic Plaza.
Sources told The Business Times the price works out to about S$2,320 per square foot, lower than what Nanjing-headquartered Fullshare paid for the space in 2017 to a consortium led by Sam Goi’s Singapore-listed GSH Corporation.
However the loss to the Fullshare fund should be mitigated as the deal is structured to give the seller a share of upside in the asset in future, for instance, if it is sold for a profit.
Plus stands on a site with a remaining leasehold tenure of nearly 69 years. It is near Raffles Place MRT station.
Talk in the market is that the CapitaLand unit making the acquisition counts Switzerland-headquartered private equity firm Partners Group as a stakeholder.
CapitaLand’s interest in its associated company is held through an entity of CapitaLand Asia Partners I, the property giant’s first discretionary real estate equity fund which was announced earlier this year.
Two years ago, the available office units in the then GSH PLaza that Fullshare bought were valued for “at least S$2,900 psf”, based on information made public by the parties then.
However, it is widely believed in industry circles that the effective price for the offices Fullshare acquired was lower, about S$2,600 psf, after factoring in, among other things, the high price of S$6,166 psf (totalling S$75.59 million) at which a member of the GSH-led consortium agreed to buy all 21 retail units in the 28-storey building. Fullshare, helmed by Ji Changqun, subsequently moved its investment in GSH Plaza to a fund in which it is a stakeholder, along with other co-investors.
The retail units – on Levels 1 and 2 and with a total strata area of 12,260 sq ft – were bought by Dennis Leong, a shareholder of niche property developer DB2 Properties. A joint venture between DB2 Properties and listed Vibrant Group held a 35 per cent stake in the consortium, which was led by GSH Corporation with a 51 per cent stake. The remaining 14 per cent was held by Mr Goi’s private investment vehicle TYJ Group.
In 2014, the consortium had acquired the building, then known as Equity Plaza, from Keppel Land and Alpha Investment Partners for S$550 million, and embarked on a major spruce-up costing about S$100 million, with a view to doing strata sales.
Besides the retail units on the lowest two floors, the building has 259 strata office units on Levels 3 to 28 adding up to 283,349 sq ft.
Prior to selling the company, that held the building, to Fullshare in 2017, the GSH-led consortium had already managed to find buyers for some of the strata office units – including the 28th floor, which was sold to GSH and is now where its corporate headquarters are located.
Assuming the remaining strata office space amounts to, say, 230,000 sq ft and based on the S$2,320 psf price, the latest transaction involving the CapitaLand associated company would work out to about S$530 million.
The building has had several names over the years including The Exchange and The Quadrant. It was developed by Straits Steamship Land (the predecessor of Keppel Land) and DBS Land on a 99-year leasehold site that the duo clinched at a state tender in 1989.
DBS Land merged with Pidemco Land to form CapitaLand in 2000; and in 2006, CapitaLand exited the investment.
The latest transaction, involving the CapitaLand associate’s purchase of the strata office space at Plus from the Fullshare fund, will help boost 2019’s tally of investment sales of Singapore office properties.
Even prior to this deal, office transactions of S$10 million and above in the private sector so far this year already totalled S$5.46 billion – exceeding the S$5.24 billion for the whole of last year, based on data from Savills Singapore.
Market watchers say the year should end on an even higher note, with at least one more sizeable transaction in the offing.
BT understands that the sale of Bugis Junction Towers is set to be inked soon. The price is likely to be S$547.5 million, reflecting S$2,200 psf on net lettable area of 248,853 sq ft.
The 15-storey office block is being sold by Keppel Reit to a fund managed by Angelo Gordon, a US-headquartered global alternative investment manger.
Alongside the fund, Singapore-based property investment manager TCRE Partners is expected to take a minority stake in the acquisition.