Properties owned by funds set to go on market in 2014

PHOTO: Properties owned by funds set to go on market in 2014

More properties owned by private investment funds can be expected to go on sale next year.

A number of these funds, which tend to sell property in their portfolio after seven to 10 years, are reaching maturity soon.

One such deal involving the TripleOne Somerset mall - which also comprises an office component - was concluded over the weekend.

Pacific Star's Asia Real Estate Income Fund had reportedly sold the property to a consortium led by Perennial Real Estate Holdings for $970 million.

Mr Ashish Manchharam, regional director of investments at Jones Lang LaSalle, who helped broker the deal, said Pacific Star had been planning to sell the property for about two years, after it was refurbished for about $80 million.

He said: "It's part of (its) asset strategy to sell it at some stage, and it came to a stage that it was the end of the fund's life."

The 566,000 sq ft building's price tag works out to about $1,714 per sq ft.

Although Perennial - led by mall veteran Pua Seck Guan - had once rejected an offer to acquire the property for $1 billion in September, the weekend deal was $10 million lower than the $980 million that it had intended to fork out.

It was also Perennial's first acquisition with an office component, added Mr Manchharam.

TripleOne Somerset's office tenants include AXA Life Insurance and Healthway Medical Group clinics. It also has retailers like FairPrice Finest, the Imperial Treasure restaurant group and the Mah Sing Group's property gallery.

Perennial is expected to increase the building's retail offerings marginally, keeping the offices as its main component.

Perennial declined to comment on details of the transaction.

BlackRock, the world's largest asset manager, is another fund that is already moving assets.

It has put the 674,000 sq ft AXA Tower at 8 Shenton Way on the market, said Mr Manchharam.

The property acquired in 2006 is expected to be sold next year, he said.

And more of such deals are expected, despite fears that interest rates will rise following the United States Federal Reserve's move to reduce its stimulus spending.

"You've got rising rents, though any rise in interest rates may affect yields, but increasing rents might offset any impact. We're pretty bullish on the rental upswing for the next two years," Mr Manchharam noted.

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