Trust mulls sale of 3 prime area apartment blocks

Trust mulls sale of 3 prime area apartment blocks

A bundle of three smallish freehold apartment developments in prime districts 9 and 10 may be put on the market soon, The Business Times understands.

Estimated to be worth "a couple of hundred million Singapore dollars", the portfolio comprises 120 Grange Road, Cuscaden Mansions at 3 Cuscaden Walk, and 8 Hullet Road. The developments house 47 units in total.

The owner is said to be a trust operated out of the United Kingdom, and the assets are being managed by a London-based wealth-management company that makes investments for rich individuals, families and charitable endowments.

The apartments are said to be held through foreign-incorporated companies.

Each of the developments comprises a single apartment tower 10 to 12 storeys high.

Of the three, Cuscaden Mansions is the oldest and the one with the most redevelopment potential. It comprises 11 three-bedroom apartments, with just one of these large units, at 3,627 sq ft each, on each floor.

Their total strata area is almost 40,000 sq ft. The current estimated gross floor area (GFA) is believed to reflect a 2.2 plot ratio (ratio of GFA to land area).

Under the Master Plan 2014 of the Urban Redevelopment Authority (URA), the 21,560 sq ft site is zoned for residential use with 2.8 plot ratio, which means a bigger project can bebuilt on the site.

120 Grange Road has 18 units, adding up to about 26,350 sq ft strata area.

The existing GFA is estimated to reflect a plot ratio of just below 2.0 - not far off the 2.1 plot ratio designated for the 15,780 sq ft site residential-zoned site under the Master Plan.

All the units in this development are three-bedders of 1,464 sq ft each.

8 Hullet Road, which is off Cairnhill Road, sits on a residential-zoned site within the Emerald Hill conservation area. It has 18 apartments.

Though the site has 2.8 plot ratio, which ordinarily would allow a residential project of up to 36 storeys, the height is subject to evaluation.

On the flipside though, there is more rental demand for 8 Hullet Road than the other two properties.

The 10 per cent vacancy in the building - which has nine two-bedroom apartments of about 900 sq ft each and nine three-bedders of 1,152 sq ft - is lower than that at 120 Grange Road (30 per cent vacancy) and Cuscaden Mansions (40 per cent vacancy), BT understands.

Cuscaden Mansions was completed in 1994, and the other two, between 2000 and 2001.

The 8 Hullet Road units are understood to have been purchased by the vendor in 2002 and 2003. The units at 120 Grange Road were all bought at the same time in 1997, while all the Cuscaden Mansions units were purchased on the same date in early 1992, going by caveats data.

BT understands that in addition to the three apartment developments, two apartments at The Claymore are also part of the package that the vendor is seeking to sell.

Market talk has it that CBRE and JLL have been appointed to find a bulk buyer for the portfolio. Both declined comment.

Market watchers believe that details, including those on the mode of sale, are still being worked out. Among other things, the vendor(s) and their advisers would have to weigh the pros and cons of doing an outright asset sale vis-a-vis share sales in the companies that own the 49 residential units.

Jacqueline Wong, executive director and head of residential leasing & ad-hoc sales at Savills Singapore, commented that the portfolio represented a rare opportunity to gain full ownership in prime-district freehold residential developments.

"This would be one of few such bite-sized offerings.

"In the interim, the buyer may pump in some capital expenditure to spruce up the apartments to improve the portfolio's rental yield, and then choose to redevelop the properties at the right time."

Ian Loh, head of investment and capital markets at Knight Frank Singapore, also said that it is "quite rare for investors to hold on to a such a sizeable residential portfolio here for so long".


This article was first published on Sep 09, 2016.
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