CLSA Ltd is Selling Robinson 77 after buying it at S$531m in 2016
The buoyancy of the country’s office market has encouraged CLSA Ltd, the investment group managing one of Singapore’s CBD skyscrapers, Robinson 77, to put it up for sale.
The 35-storey development, which used to be Singapore Airline’s flagship building, is expected to fetch more than S$725 million.
CLSA acquired the building in 2016 at a price of S$530.8 million, but the investor now wants to capitalize on the vibrancy of the property market to sell it at a huge margin.
JLL and CBRE are the two firms marketing the property through Expression of Interest (EOI), and although no official date has been set for the closing of the offer, it is believed it is could be towards end of September 2018.
Sale Expected to be Greatest of 2018
If, as anticipated, CLSA gets an offer of S$725 million or above, which means the price per square foot of lettable area would be S$2,357 or above, the sale will make a record as the biggest Singapore has seen in 2018.
Going by the forecast income for the building’s first year of acquisition, the price of S$725 million results to a net yield of between 3% and 3.5%.
It is notable that Robinson 77 still has 74½yrs left on its 99-yr lease.
A major upgrade on the building was completed in 2017 and so the potential buyer can expect to attract decent rental income figures immediately after acquisition of the property.
This was pointed out by JLL and CBRE, who also noted that Robinson 77 is likely to attract interest not only from local investors but also from across the region and internationally.
They observed that investors are currently so optimistic about the office market that they are willing to purchase property even if it is currently bringing in modest income, as they see prospects of the rental income soon increasing and the property capital value growing fast.
CLSA has not disclosed how much was spent on renovations, but it is estimated it could have cost them in excess of S$30 million to reconfigure the lobby at the main entrance, convert the car park on the second floor to lettable office space of around 15,000 sq ft, upgrade lift lobbies and toilets, and overhaul the cladding of the building façade.
Not only has the makeover led Singapore’s Building & Construction Authority to give Robinson 77 the Green Mark Gold accreditation, but it has also expanded the building’s net lettable area (NLA) from the initial 293,269 sq ft to 307,585 sq ft.
CBRE’s capital markets’ Managing Director, Jeremy Lake, says investors already appreciate the country’s positive outlook of the office market and recent sales are proof enough.
He notes that Twenty Anson, an office building within Singapore’s CBD, has recently been bought at S$516 million, which is equivalent to S$2,503 per sq ft (psf) and that now serves as the area’s new price benchmark.
Jeremy Lake also observed there is no indication there are other office buildings soon being offered for sale, so Robinson 77 is bound to attract great interest.
Nevertheless, there have been other sales of office space this year, and they include a S$247 million transaction involving the sale of MYP Plaza and another S$216.8 million transaction involving the sale of 55 Market Street, both in Prime District 1 within the country’s central region.
In the meantime, Manulife Centre, a commercial development in District 7, also in Singapore’s central area, is about to be acquired by a British investment group called Chelsfield for about S$550 million; the equivalent of S$2,300 psf. The building has 96-yrs still remaining on its leasehold.
Robinson 77 is already on high demand as far as tenancy is concerned. As at the beginning of the year’s second quarter, the building’s occupancy was at 91%, with a good proportion of tenants being renowned international firms. Adidas, Sony Pictures, Ernst & Young, NTUC Link and DVB Bank are some of the famous tenants in the building.
Even for the retail space of 6,018 the building has on the ground floor, there are reputable tenants to add to the building’s goodwill.
They include First Commercial Bank, Old Tea Hut and Mellower Coffee. According to the property’s marketing agents, the high-profile tenants associated with the building are bound to help raise the price offers beyond S$2,350 psf.
Another attraction is that many of the floors that comprise the building’s net lettable office space of 301,567 sq ft are quite sizeable, each being either being 8,000 or 11,000 square feet.
The property also has 137 car park lots and is near four MRTs. All pointers are that the new buyer is going to enjoy great benefits especially considering how robust the office rental market is at present.
Besides, the 90 m long building frontage that stretches alongside Robinson Road has potential that can be exploited further.
On the overall, JLL Singapore’s head of capital markets, says, the Singapore office market is performing well, and this is underlined by the fact that office rents rose by 6% in the first half of 2018.