M+S has agreed to the sale of all the shares of its wholly owned subsidiary, Ophir-Rochor Commercial, to Allianz Real Estate and Gaw Capital Partners, for a sale consideration of $1.575 billion. The offer was received through an expression of interest exercise conducted by JLL.
Ophir-Rochor Commercial is the developer and owner of Duo Tower and Duo Galleria, which make up the office and retail components of the mixed-use development, Duo. The sale consideration translates to $2,570 psf on the net lettable area of Duo’s office and retail components.
Duo Tower is a 20-storey tower with 557,972 sq ft of Grade-A office space and has floor plates of 26,000 to 31,000 sq ft. It is leased to several multinational corporations and local companies. Duo Galleria is a 59,873 sq ft retail mall that is 97% occupied, and connects to Bugis MRT Interchange Station on the East-West and Downtown Lines.
The entire development also includes the 660-unit Duo Residences, as well as the five-star luxury hotel Andaz Singapore which occupies the top 15 floors of Duo Tower. These two components of Duo are not part of the sale.
Allianz Real Estate is acting on behalf of several companies in the Allianz group, while real estate private equity firm Gaw Capital is acting on behalf of a sovereign wealth fund account. Allianz will own 60% of the acquired assets, while the remainder will be owned by Gaw. The assets will be jointly managed by Allianz and Gaw.
“Duo has enormous potential given its fantastic location and connectivity, and [the transaction] marks an important milestone for Gaw Capital in the Singapore real estate market,” says Kenneth Gaw, president and managing principal of Gaw Capital Partners.
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“With the office and retail assets performing well beyond expectations, we are delighted that the proposed transaction of $1.575 billion at a record price for this area, has presented the opportunity to maximise returns for our shareholders,” says Kemmy Tan, CEO of M+S.
M+S is a 60:40 joint-venture company owned by Malaysia’s sovereign wealth fund Khazanah Nasional and Singapore’s sovereign wealth fund Temasek Holdings, respectively. It was set up in 2011 to develop Duo and Marina One, two integrated developments in central Singapore.
M+S will continue to own Andaz Singapore and its Marina One assets. “We continue to see tremendous growth opportunity for our hotel Andaz Singapore, especially as Bugis continues its transformation journey as a vibrant, eclectic, and complementary leisure and business district to the existing CBD,” says Tan.
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Gaw’s acquisition marks its second major office transaction in Singapore this year, following the acquisition of 77 Robinson Road in January. That transaction amounted to $710 million, or about $2,300 psf on the net lettable area of 301,567 sq ft of office space and 6,018 sq ft of retail space.
The acquisition of Duo Tower and Duo Galleria also expands Allianz Real Estate’s presence in the city-state, and comes on the back of its $537.3 million acquisition of a 20% stake in the Grade-A office tower, Ocean Financial Centre, in November last year. “Singapore is an established 24/7 city and has one of the most institutionalised commercial real estate markets in the world, given its position as a key headquarter location for corporations in Asia,” says Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate.
Separately, Commerz Real has sold 71 Robinson Road, a 15-storey office building in the CBD, to SV Robinson for $655 million. The buyer is a member of Sun Venture group of companies, and the deal was co-brokered by CBRE.
“The top bids were all very close, reflecting the positive outlook which local and foreign investors have for the office investment market. 71 Robinson Road is a very-high-quality building with blue-chip tenants – attributes which investors identified very quickly. The net yield in Year 1 is in the region of 3.5%,” says Jeremy Lake, managing director of capital markets at CBRE.
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