Manulife Centre Singapore Sold to Chelsfield & ARA for $555.5m

Manulife Centre Singapore Sold to Chelsfield & ARA for $555.5m

The transformation plan for the 241,000 sq ft building through a joint venture will give birth to a lifestyle-based workplace project

The partnership between Chelsfield, a British property group, and ARA Asset Management led to the acquisition of Manulife Centre for S$555.5m, situated at 51 Bras Basah Road.

The value of the commercial building translates to approximately S$2,305 psf for more than 241,000 sq ft of net lettable area.

Alpha Investment Partners manages Alpha Asia Macro Trends Fund II (AAMTF II) and City Developments (CDL).

The 50:50 joint ventures confirmed the investment for Chelsfield and ARA. Chelsfield Asia is adding the acquisition to its Chelsfield Asia Fund 1 while ARA will make it a private real estate funds asset.

Why Manulife Centre was Bought?

The remaining leasehold tenure for Manulife Centre is 96 years at the time of the purchase.

The commercial property spans more than 241,000 sq ft in retail and workplace space, including the retail podium at the ground floor.

On average, the floor plate spans 23,000 sq ft, which is better than other sub-market office buildings, according to the buyers.

The urban proximity of the property is one of its highlights, specifically its closeness to the Bras Basah precinct’s Orchard corridor.

It is in the center of two MRT stations namely Circle Line’s Bras Basah station and Bencoolen station located on the Downtown Line.

The joint venture is planning for the property transformation through tenant repositioning and asset enhancement.

The buyers believed that turning into a new modern lifestyle-based workplace could open possible advantages by good rental reversion.

The possibilities for property refurbishment came with the pending lease expiration of Manulife Singapore, according to the News.

The anchor tenant rents 100,000 sq ft or approximately half of the office space of the building.

The sale of Manulife Centre from the joint venture with AAMTF II is under PPS or “profit participation securities” exercise, which took place in December 2015. Manulife Centre has a value of S$487.5 million then.

Lucrative Office Investment

Both investing parties stated, “The prediction to raise prime office rents from 20 percent to 25 percent will take place between 2018 and 2020 in lieu of the lessening supply yet steady demands.”

ARA Private Funds chief executive, Ng Beng Tiong said, “Quality office supply is tightening plus the rise of the demand from tenants will expectedly result in the robust growth of the commercial market in Singapore for the next few years.”

Meanwhile, City Developments reiterated the potential for pre-tax gain valuing at S$144.3 million, relating to the overdue sales gain of the property from CDL to Golden Crest in 2015.

Manulife Centre’s owner, Golden Crest, a joint venture company, confirmed the sale agreement. CDL is an indirect owner of its 80 percent interest.

CDL will earn 13 Singapore cents as contribution to the basic earnings per share, as being represented by the gain. However, there are no material impacts on CDL’s net tangible assets from the transaction.

An increase of 14 Singapore cents to S$8.08 or 1.76 percent per share for City Developments was recorded on Friday.

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