Six Prudential Tower Floors Sold For $141m

Source : The Business Times, October 16, 2007

Owner Prudential to be paid in units of property fund

PRUDENTIAL Assurance Company Singapore is said to have sold six of the seven office floors it owned at Prudential Tower to a property fund for $141 million in exchange for units in the fund. The transacted price works out to just under $2,100 per square foot based on a net lettable area of about 67,000 square feet.

High pitch: Prudential Assurance bought 7 floors in the development in 1996 for $183 million, or $2,200 psf

However, based on a total floor area of about 72,200 sq ft, the $141 million price works out to a lower $1,952 psf.

Prudential Assurance bought seven floors in the development in early 1996 for $183 million, or $2,200 psf, but according to media reports at the time, the psf price was based on a total floor space of 83,000 sq ft. The net lettable area was not reported.

Nevertheless, the price at which Prudential has sold the six floors (the 20th to 25th levels of Prudential Tower) appears to be lower than its 1996 acquisition price, which set a benchmark for office space which held until this June, when 1 Finlayson Green was sold for around $2,650 psf of net lettable area.

Prudential Assurance Co Singapore is said to have sold the six floors to the fund in exchange for units in the fund.

After the latest transaction of the six floors at Prudential Tower, Prudential Assurance is said to be left with the 30th floor of the building.

The buyer of the six floors in the transaction, concluded this August, was the open-ended Asia Property Fund, sponsored by LaSalle Investment Management and PruPIM. Prudential Assurance Co Singapore and PruPIM are part of the Prudential UK group.

'In terms of a conflict of interest arising from a related-party transaction, LaSalle Investment Management conducted the acquisition process and PruPIM abstained from any voting on the acquisition,' LaSalle regional director Marc Montanus said when contacted by BT. 'The pricing was also supported by third-party valuation.'

Discussion on the acquisition is said to have begun 11/2-years ago.

LaSalle and PruPIM yesterday announced the completion of three acquisitions totalling a gross investment of over US$1.4 billion by the Asia Property Fund, including the six floors at Prudential Tower, although the quantum of the Singapore deal was not specified. 'There is significant potential for the fund to realise immediate value by increasing the existing rents to much higher market levels,' LaSalle and PruPIM said in their news release.

The other two assets bought were a 50 per cent interest in Westfield Doncaster mall being redeveloped in Melbourne by Westfield Group, and Tennoz First Tower, an A-Grade office block in Tokyo's Shinagawa ward.