CapitaLand Commercial Trust (CCT) announced on Friday (29 June) that it agreed to sell the Twenty Anson office building in Tanjong Pagar to an unrelated third party for $516 million.
According to Cushman & Wakefield which brokered the sale, this is Singapore’s largest office transaction so far this year that sets a benchmark for other office deals for the remainder of 2018.
“The sale caps a robust quarter for the office investment market on the back of prime rental recovery,” said Cushman’s executive director for capital markets Shaun Poh, adding that investors remain upbeat on Singapore’s prime office rental growth amidst dwindling office supply over the next three years.
Completed in 2009, Twenty Anson’s selling price is 19.2 percent higher than the building’s valuation of $433 million in December 2017, and is a 20 percent premium over the original purchase price of $430 million in 2012.
The consideration works out to a net property yield of 2.7 percent based on the building’s net property income of $13.8 million for the 12 months prior to 31 March 2018.
“Assuming net divestment proceeds are used to repay existing debt, CCT’s pro-forma aggregate leverage would drop from 37.9 percent as at 31 March 2018 to 34.5 percent,” noted Kevin Chee, CEO of CapitaLand Commercial Trust Management.
The consideration translates to $2,503 psf based on the property’s net lettable area of about 206,000 sq ft. As of 31 March, 94.3 percent of its premises are occupied. Major tenants include Toyota, BlackRock and BCD Travel Asia.
Upon completion of the deal by Q3 this year, CCT will have 10 properties with a combined net lettable area of 4.7 million sq ft in Singapore’s central business district and in Frankfurt, Germany.