CICT and COREF to acquire Singapore’s Grade A office building 79 Robinson Road for S$1.26 billion
Acquisition offers pro forma annualised net property income yield of 4.0% and opportunities to capitalise on upturn in Singapore’s prime office market
Singapore, 25 March 2022 – CapitaLand Integrated Commercial Trust (CICT) and CapitaLand Open End Real Estate Fund (COREF), a newly established discretionary fund managed by CapitaLand Investment Limited (CLI), are buying 79 Robinson Road, a Grade A office building in the Tanjong Pagar sub-market of Singapore’s central business district (CBD) through acquiring 70% and 30% respectively of the shares of the property holding company, Southernwood Property Pte Ltd (SWP), a special purpose vehicle in which CLI has a 65% stake and a joint venture between wholly owned subsidiaries of Mitsui & Co., Ltd. and Tokyo Tatemono Co., Ltd. holds the remaining 35%. SWP will be converted to a limited liability partnership1 following completion of the acquisition.
The agreed property value, negotiated on a willing-buyer and willing-seller basis, is S$1,260.0 million or S$2,423 per square foot, in line with independent valuations2. The property has a net property income (NPI) yield of 4.0%, based on pro forma annualised January 2022 NPI. The transaction is expected to be completed in 2Q 2022.
CICT plans to fund its share of the acquisition with a combination of divestment proceeds from the sale of JCube and debt. Post-acquisition, CICT’s aggregate leverage would be about 41%. The acquisition is expected to generate a distribution per unit accretion of 2.9%3.
Mr Tony Tan, CEO of the manager of CICT, said: “CICT is pleased to acquire a significant interest in 79 Robinson Road, a new Grade A office building with premium specifications and notable green achievements that appeal to increasingly sustainability-minded tenants. The investment reinforces CICT’s continued focus on Singapore and is part of our ongoing portfolio reconstitution to enhance portfolio quality and resilience. Coupled with Capital Tower, another prime office property across the street from 79 Robinson Road, the acquisition will propel CICT to a dominant position in Singapore’s Tanjong Pagar office sub-market with more than 1 million square feet of net lettable area including ancillary retail space.”
Mr Tan added: “We are also pleased to partner with COREF in this transaction, which has enabled us to optimise our funding arrangements. The acquisition is well-timed in view of the upturn in Singapore’s prime office market and we are confident of further improving the building’s NPI yield through proactive leasing of the remaining space.”
79 Robinson Road marks COREF’s first acquisition in Singapore and its third asset after investing in two properties in Japan. COREF is CLI’s newly established regional open-end fund that provides global investors with long-term strategic exposure to a diversified portfolio of institutional grade, income-producing assets across developed markets in Asia Pacific. COREF targets to raise US$1.0 billion to US$1.5 billion after the initial three-year build-out period and is on track to reach its first closing of US$500 million in capital commitments. CLI has committed to a long-term stake in COREF of 10%.
Mr Simon Treacy, CEO, Private Equity Real Estate, CLI, said: “Leveraging CLI’s commitment to support the long-term growth and success of its sponsored investment vehicles and its ready pipeline of attractive assets, COREF is off to a positive start with its third acquisition in six months. The 79 Robinson Road acquisition reflects COREF’s focus on capitalising on evolving real estate trends including regionalisation, decentralisation, emerging locations and evolving work norms. As a sustainability-focused Grade A office building poised to capitalise on the Singapore Urban Redevelopment Authority’s rejuvenation plans for the Tanjong Pagar precinct, 79 Robinson Road fits well with COREF’s investment themes. We are delighted to partner with CICT to jointly acquire this prime asset, which will diversify and strengthen COREF’s portfolio.”
Mr Treacy added: “We hold strong conviction on prospects in Asia Pacific, where the upside potential for well-executed real estate investments is significant. Leveraging CLI’s strong track record in deal sourcing and origination in the region, COREF will be well-placed to provide investors with exposure to high quality assets in traditional hard-to-access markets in Asia Pacific.”
About 79 Robinson Road
Completed in April 2020 with a remaining land tenure of around 45 years, 79 Robinson Road is the newest Grade A office building with ancillary retail space in Singapore’s Tanjong Pagar area. It is also near Greater Southern Waterfront, an upcoming mixed-use district with residential, recreational and workspaces. 79 Robinson Road boasts excellent connectivity to public transport and major expressways. It is connected to the Tanjong Pagar MRT station on the East-West line by an upcoming underground pedestrian link, while two future MRT stations, namely Shenton Way MRT station on the Thomson-East Coast line and Prince Edward MRT station on the Circle line, are within approximately 500 metres of the property.
The 29-storey property has a net lettable area of 519,949 square feet and a committed occupancy of 92.9% as at 31 December 2021. Its weighted average lease expiry is 5.8 years and office tenants include multinational companies from diverse sectors such as banking, legal, insurance & financial services, business consultancy, IT, aviation, media and telecommunications. As part of 79 Robinson Road’s core-flex offerings, CapitaLand Development’s flexible workspace and community platform Bridge+ operates 56,000 square feet of collaborative spaces that are also accessible by tenants of the building.
The sustainability-focused 79 Robinson Road features lush landscaping, low-carbon building solutions and a wide range of amenities that support green mobility such as end-of-trip facilities and electric vehicle parking lots. It is a recipient of the Building and Construction Authority (BCA) Green Mark Platinum Award, one of the highest green accolades for buildings in Singapore.
Notes:
1 A limited liability partnership is tax transparent for Singapore income tax purposes, and CICT’s share of the taxable profits of the partnership, subject to meeting conditions, will also not be subject to income tax in the hands of its trustee.
2 Independent valuations by Colliers International (appointed by the manager of CICT and COREF) and Cushman & Wakefield (appointed by the trustee of CICT) have valued 79 Robinson Road at S$1,260.0 million as at 1 March 2022.
3 For details, please refer to CICT’s acquisition presentation issued on the same day.