THE office market can be expected to continue teeming with deals, with the latest offering said to be the Singapore Power Building behind Somerset MRT

THE office market can be expected to continue teeming with deals, with the latest offering said to be the Singapore Power Building behind Somerset MRT Station. The 30-year-old building, once known as PUB Building, is being marketed through an expression-of-interest exercise, BT understands.

Market watchers expect the leasehold property to fetch about $1,800 per sq ft of net lettable area (NLA), which works out to $990 million based on the 17-storey building’s NLA of around 550,000 sq ft.

SingPower Building, completed in 1977 and refurbished last year, is on a site with a remaining lease of 67 years.

The building is being put up for sale by owners SingPower and Public Utilities Board. The latter moved out earlier this year. SingPower occupies some 200,000 sq ft, while the rest of the space is leased to other tenants.

SingPower is expected to structure a deal to lease back the space it occupies from the new buyer

Industry sources say SingPower Building’s existing gross floor area reflects a 7.0 plot ratio - the ratio of maximum potential gross floor area to land area. This exceeds the 4.9 plot ratio indicated in Master Plan 2003. The site area is about 110,000 sq ft.

However, there may be a possibility of redeveloping the property in the medium term by building a more efficient modern structure, after existing leases expire.

SingPower Building has two basements with a total of 530 parking lots. There is also an auditorium for public use.

The building was originally developed for $32 million. It was clad in silvery metal when refurbished last year.

The building was described as a ‘ground-scraper’ - two parallel slab blocks facing north and south connected by a lift and stair core - in an article in The Straits Times in August this year. Between the two blocks is a landscaped court.

If SingPower Building changes hands for around $990 million, it will be one of the biggest office deals so far this year, along with the $1.04 billion sale of Temasek Tower to a fund managed by Macquarie Global Property Advisors in March, and the sales of separate one-third stakes in One Raffles Quay to K-Reit Asia and Suntec Reit for $941.5 million each.

In late August, CapitaLand, IP Property Fund Asia and NTUC Income Insurance Co-op sold the leasehold Chevron House, formerly Caltex House, at Raffles Place, for $730 million or a record $2,780 psf of NLA. The buyer is understood to be a Goldman Sachs-linked fund.

The Goldman Sachs group is also understood to be finalising a deal to buy the next-door Hitachi Tower, a 37-storey office tower on a 999-year leasehold site facing Collyer Quay.

The price is expected to be around $3,000 psf.

Hitachi Tower is 50:50 owned by CapitaLand and National University of Singapore.

Source : Business Times - 18 Oct 2007