Qatar fund buys Marina Bay office tower for $3.4b

Asia Square Tower 1 in the Marina Bay financial district is changing hands for $3.4 billion - said to be the biggest single-tower real estate deal in the Asia-Pacific region.

Sovereign wealth fund Qatar Investment Authority (QIA) has agreed to buy the 43-storey office tower, with a string of blue-chip corporate tenants, from United States private equity giant BlackRock.

Analysts say the deal, along with a recent $560 million offer for Straits Trading Building in Battery Road, will likely ignite further interest in prime office assets here. The market has faced oversupply worries.

BlackRock told The Straits Times yesterday its decision to sell was in line with its investment fund's aim.

"It would be enormously tempting to just hold and wait, but that's not really what this pool of capital pays us to do. (It) pays us to develop and then sell. It is purely to do with the timing of funds and capital," said head of Apac for BlackRock Real Estate John Saunders.

He added that BlackRock maintains a "very positive view" on Singapore's property market.

While the $3.4 billion figure is a record, the per sq ft price is lower than the $3,520 psf offered for the Straits Trading Building by Indonesian tycoon Tahir last week.

CBRE, a joint-adviser on the Asia Square Tower 1 deal, said the price works out to $2,720 psf based on 1.25 million sq ft of net lettable area, with a yield in excess of 3 per cent.

Citibank has been the anchor tenant since the building's 2011 completion. Other tenants include Google and Swiss private bank Julius Baer. It has an occupancy rate of about 90 per cent, BlackRock said.

CBRE Singapore executive director for investment properties Jeremy Lake expects two or three more possible deals above $500 million in the second half of the year. "When deals happen and benchmarks are recorded, it emboldens investors ."

BlackRock said the "fairly swift and orderly" sale with QIA started a few months ago. Mr Stuart Crow, head of Asia-Pacific capital markets at joint-adviser JLL, said there was "strong interest from four to five groups", but could not name them.

Earlier reports said other interested parties included CapitaLand, ARA Asset Management as well as Norway's sovereign wealth fund.

QIA is no stranger to the property scene here. It owns the Raffles Hotel via unit Katara Hospitality, and partnered The Ascott to set up a US$600 million (S$815 million) fund to invest in serviced residences and rental housing properties last year.

"This is the third sovereign wealth fund to invest here in the last five to six years. As the low interest rate environment prevails, they probably see Singapore as a good place to protect their capital," said Chestertons managing director Donald Han. The other funds are the Abu Dhabi Investment Authority and Malaysia's Khazanah Nasional.

Mr Shaun Poh, Cushman & Wakefield's executive director of capital markets, said he sees the QIA buy as "a move to garner more stable income and to diversify their portfolio, to assets outside the oil and gas sector which has been volatile".

wongsy@sph.com.sg

This article was first published on June 07, 2016.
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