CDL divestment accelerates with sale of strata units at Fortune Centre and Sunshine Plaza

/ EdgeProp Singapore |

April 12, 2024 9:00 AM SGT

CDL is releasing its 27 remaining strata commercial units at Fortune Centre for sale to the tune of $63.6 million (Photo: Samuel Isaac Chua/EdgeProp Singapore)

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This month, City Developments Ltd (CDL) has mounted a divestment programme across multiple fronts in its sprawling real estate investment portfolio. This is in keeping with the $1 billion divestment target set for 2024 outlined by group CEO Sherman Kwek at CDL’s FY2023 results briefing on Feb 29.

On April 12, CDL rolled out for sale a portfolio of 27 strata-titled commercial units at Fortune Centre and another 20 strata-titled commercial units at Sunshine Plaza.

CDL is divesting its remaining 20 strata office units at Sunshine Plaza for around $32 million (Photo: Samuel Isaac Chua/EdgeProp Singapore)

The sales value of the Fortune Centre portfolio is $63.6 million, while that of Sunshine Plaza is $32 million, bringing the combined total to $95.6 million. CDL has appointed Savills Singapore and Edmund Tie as joint marketing agents for these strata commercial units.

It comes on the back of CDL’s divestment of the remaining 53 warehouse units at Citilink Warehouse Complex for $86.95 million and 44 factory warehouse units at Cititech Industrial Building for $62.31 million. Both industrial buildings were developed by CDL in 1995.

CDL’s Yong: The divestment of the remaining strata units is in line with our continued focus on capital recycling to unlock value from our asset portfolio (Photo: CDL)

Together with the $95.6 million worth of strata commercial units at Fortune Centre and Sunshine Plaza, the combined aggregate sales value will climb to $244.86 million or nearly 25% of the $1 billion divestment target.

Following the launch of these strata commercial and industrial units, CDL intends to launch the sale of the remaining strata retail units and strata carpark at The Venue Shoppes, says Gerald Yong, CDL’s chief investment officer. “This is in line with our continued focus on capital recycling to unlock value from our asset portfolio.”

The release of these units for sale offers investors and end-users “an attractive opportunity to secure high-quality, well-located, strong-performing assets with a stable yield”, Yong adds.

Four of the 27 strata commercial units for sale at Fortune Centre are F&B and retail units across the three levels of the retail podium (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Rejuvenation, redevelopments

Developed by CDL in 1980, Fortune Centre sits at the junction of Middle Road and Bencoolen Street. It has 55 years left on its 99-year lease from 1980. The 20-storey complex has retail and F&B units on the first three floors, a carpark on the fourth to sixth floors, and office units from the seventh to the 20th.

Directly opposite the cross-junction is Sunshine Plaza, which CDL also developed. The mixed-use project has four 12-storey blocks: a commercial block with offices on the upper floors and retail on the first level, with double frontage along Bencoolen Street and Middle Road; and three 12-storey residential blocks with 160 apartments fronting Prinsep Street. Sunshine Plaza’s office and retail block was completed in 1997, and the three residential blocks were completed in 2001. The residential units have been fully sold. The property has a 99-year lease from 1997, with 72 years left.

Savills' Lim: The sale of the strata units at Fortune Centre and Sunshine Plaza is timely, with the ongoing transformation of the Bras Basah-Bugis precinct and several redevelopments underway (Photo: Savills Singapore)

Both Fortune Centre and Sunshine Plaza sit within the Bras Basah area. “The sale of the strata units at Fortune Centre and Sunshine Plaza is timely, with the ongoing transformation of the Bras Basah-Bugis precinct and several redevelopments underway,” says Sophia Lim, director of investment sales and capital markets at Savills Singapore.

In February 2023, LHN Group purchased the nearby GSM Building en bloc for $80 million and will convert it into a Coliwoo-branded co-living space. Keppel purchased the commercial and retail complex of Wilkie Edge on Selegie Road for $348 million earlier this year. Meanwhile, a joint venture between Weave Living and BlackRock paid $148 million for the Citadines Mount Sophia at 8 Wilkie Road next door. The property will be converted into Weave Suites serviced residences.

Just across the road from Fortune Centre is Hotel Gin (formerly Hotel G), which is being refurbished into Lyf Bugis Singapore and scheduled to reopen sometime in the middle of the year. The property was purchased by The Ascott and CapitaLand Wellness Fund for $238 million in January. On April 1, property development and investment company Midview Group acquired 30 Prinsep Street from Income Insurance for $142 million, according to a property title search.

Edmund Tie’s Swee: As the precinct continues to evolve, purchasers of these strata units can look forward to the prospect of capital ap- preciation in the foreseeable future (Photo: Edmund Tie)

‘Transition into vibrant commercial hub’

“The strata commercial units at Fortune Centre and Sunshine Plaza are poised to attract buyers keen on capitalising on the area’s transition into a vibrant commercial hub,” says Swee Shou Fern, Edmund Tie’s executive director of investment advisory services.

The 27 strata units at Fortune Centre that CDL is offering for sale comprise 23 office units and four retail and F&B units. All the units are fully leased. One of the 23 office units is on the 10th floor, with two on the 11th. The remaining office units are on the top three floors: CDL holds five of the seven office units on the 18th floor and the entire 19th and 20th floors, which have also been leased to different tenants.

The office units are available for sale individually or collectively. Prices start from $1.74 million ($1,617 psf) for a 1,076 sq ft unit to $3.54 million ($1,518 psf) for a 2,239 sq ft unit on the 19th floor. All the units are currently leased, with existing tenancies at gross monthly rents ranging from $3.78 psf to $5.20 psf. Gross rental yields are from 2.87% to 4.11%. The units have different expiry dates. Hence, Savills’ Lim says, buyers can choose to renew the existing lease, find a new tenant, or occupy the units themselves when the lease expires.

Long-term tenant 190 Middle Road co-working space occupies a 3,229 sq ft space across two units on the 19th floor of Fortune Centre (Photo: Samuel Isaac Chua/EdgeProp Singapore)

The 19th level has a floor area of 11,614 sq ft, while the 20th has a floor area of 11,377 sq ft. “They are available for sale to investors and business occupiers who wish to buy an entire floor,” according to Savills’ Lim.

The retail and F&B units for sale at Fortune Centre are on various floors, too: one of the retail units is on the first level, two are on the second level, and the fourth is on the third level. They range in size from 269 to 689 sq ft, with prices from $965,120 ($3,587 psf) to $1.756 million ($2,548 psf). The units are fully leased, with prevailing monthly gross rents in the range of $4.05 psf to $5.30 psf, based on existing tenancies.

The latest resale transaction at Fortune Centre was for a 1,356 sq ft office unit on the 10th floor that changed hands for $2.07 million ($1,526 psf) in January. The last transaction of a retail unit at Fortune Centre was in June 2023, when two adjacent units on the first level changed hands: a 732 sq ft unit fetched $3.83 million ($5,231 psf), while the other unit of 377 sq ft fetched $1.97 million ($5,231 psf), based on caveats lodged.

Office tenants of Sunshine Plaza can also use the facilities of the apartment blocks, including the pool, gym and function room (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘Palatable quantum’

Over the years, CDL has been progressively selling down the strata office units it owns at Sunshine Plaza. Last October, 12 office units at Sunshine Plaza were offered for sale. Units were sized from 484 to 1,346 sq ft, with prices from $932,000. The entire portfolio had a price tag of $18.4 million.

In the latest release, CDL is offering the final 20 office units it still holds at Sunshine Plaza for sale. The units are spread across the second to 12th floors. Each unit is sized from 484 to 1,410 sq ft, with prices from $931,700 ($1,925 psf) to $2.49 million ($1,767 psf). The units are tenanted at monthly rental rates of $5.13 psf to $6.23 psf. Based on existing tenancy, gross yields are estimated at between 3.41% and 3.98%.

Savills’ Lim expects strong interest from investors and end-users owing to “the strata units’ palatable quantum, attractive gross yield of 3%–4%, and excellent connectivity with five MRT stations within 700m of the two properties”.

Recent strata commercial transactions at Fortune Centre (Source: EdgeProp Landlens)

Recent strata commercial transactions at Sunshine Plaza (Source: EdgeProp Landlens)

The five MRT stations are Bencoolen (Downtown Line), just 200m away; Rochor (Downtown Line), 350m away; Bras Basah (Circle Line), 400m away; Bugis Interchange (for Downtown and East-West Lines), 500m away; and Dhoby Ghaut Interchange (Circle, North East and North-South Lines), 600m away. The CBD and Orchard Road are within a 10-minute drive of Sunshine Plaza and Fortune Centre.

“The [Bugis-Bras Basah] area offers unparalleled convenience, boasting easy access to an extensive range of dining, retail, lifestyle, and cultural amenities,” says Edmund Tie’s Swee. “As the precinct continues to evolve, purchasers of these strata units can look forward to the prospect of capital appreciation in the foreseeable future.”

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