TripleOne Somerset sold for $970m

PHOTO: TripleOne Somerset sold for $970m

A CONSORTIUM led by Perennial Real Estate Holdings has finally secured TripleOne Somerset in a deal concluded over the weekend, at a price understood to be $970 million.

This is $10 million less than the $980-million amount when Perennial, headed by Mr Pua Seck Guan, earlier did due diligence to buy the asset under a letter of intent granted by the building's owner, a fund managed by Pacific Star.

But in late September, Perennial aborted the proposed transaction after the fund raised the asking price to $1 billion.

At least one other potential buyer, Lend Lease, is understood to have been approached. The Australian property giant did due diligence but, when no deal materialised, Perennial was brought back into the picture.

The $970-million transacted price for TripleOne Somerset works out to about $1,714 psf on the property's net lettable area (NLA) of around 566,000 sq ft. This includes some 60,000 sq ft of retail space, with offices making up the rest.

Formerly known as the Singapore Power Building, the 17-storey property is on a site with a balance-lease term of about 61 years. It is located opposite Somerset MRT station.

Jones Lang LaSalle and CBRE brokered the transaction.

Singapore-based Pacific Star's Asia Real Estate Income Fund (AREIF) paid $1.01 billion, or $1,836 psf, on NLA in early 2008 for the property, which it picked up from Singapore Power and national water agency PUB.

AREIF is said to have later invested about $80 million to spruce up the asset, including converting its first two levels into retail space and revamping the entrance and lobby.

AREIF's investors are said to include Great Eastern, the Qatar Investment Authority and German funds.

TripleOne Somerset's office tenants include AXA Life Insurance, WorleyParsons, Parkway Group, the International Air Transport Association and Petra Foods. Healthway Medical Group operates several clinics in the building.

Its retail tenants include FairPrice, which runs gourmet supermarket FairPrice Finest, Chinese restaurant group Imperial Treasure, Atlas Sound and Vision, and The Orientalist Carpets.

The building has 403 basement parking spaces.

Based on an earlier Business Times report, TripleOne Somerset generates annual net property income of around $40 million - which would translate to around 4 per cent net yield based on the $970-million price.

Talk in the market is that China interests are likely to take part in Mr Pua's consortium. It would also not be surprising if some of Perennial's familiar partners, such as Mr George Quek's BreadTalk Group and Mr Ron Sim, join forces with Perennial in its latest acquisition.

Mr Pua is reported to be looking at further asset enhancements for TripleOne Somerset, including converting even more office space into higher-yielding retail space.

Another possibility would be to lease out more office units as medical suites.

This article by The Business Times was published in MyPaper, a free, bilingual newspaper published by Singapore Press Holdings.