CDL Sells Commerce Point For $2,200 PSF

Source : The Business Times, June 20, 2008

Morley Fund Management said to be paying $181m for 19-storey building

CITY Developments Ltd (CDL) is believed to have sold the 19-storey Commerce Point near Raffles Place MRT Station for about $181 million or $2,200 psf of net lettable area. The buyer is said to be Morley Fund Management, part of the Aviva group.

The $2,200 psf achieved is lower than the $2,736 psf fetched for One Phillip Street next door in February. Both buildings are 999-year leasehold.

Industry observers attribute the lower price to greater caution in the Singapore office market. Arguably, One Phillip Street has a more prominent frontage, at the corner of Phillip and Chulia streets. 'Perhaps CDL sees an office glut building up in future and does not mind selling a fairly peripheral asset in its office portfolio,' an observer said.

BT understands that Jones Lang LaSalle brokered the Commerce Point sale. The building, completed about 10 years ago, has a total net lettable area of 82,160 sq ft.

It is the second office block that Singapore's Hong Leong Group, parent of CDL, has sold in the past 12 months. In June last year, Hong Leong sold the freehold 1 Finlayson Green for about $231 million or $2,650 psf based on its existing net lettable area of about 86,500 sq ft. The buyer was a unit of UK-based property fund group Develica.

Develica has since refurbished the building for $2 million and increased net lettable area by 7 per cent by leasing to one tenant per floor. Seller Hong Leong is understood to have deliberately kept the building roughly half vacant when it sold it, to allow the new owner to tap rising office rents as it signs new leases. Develica is said to be leasing space in the building at a monthly rent of about $13 to $16 psf.

1 Finlayson Green is more than 80 per cent leased and negotiations are taking place to lease the rest of the space.

Back on Phillip Street, Lippo unit Auric Pacific sold One Phillip St to UK-based New Star International Property Fund for $99.02 million or $2,736 psf of NLA in February this year. That price was about 2.6 times the $37.6 million Auric paid for the 16-storey building about two years earlier when it bought it from Kewalram Group. Interestingly, Kewalram bought One Phillip Street from Lippo in early 1996 for $76.8 million.