Metro JV acquires Grade-A Tampines office building

Singapore

METRO Holdings unit Metrobilt Construction has entered a 50:50 joint venture to acquire 7 and 9 Tampines Grande, a premium Grade-A office property, the group said on Thursday night. While the purchase price was not disclosed, sources put the figure to be S$395 million. Metro's 50 per cent capital commitment for the investment is about S$45.6 million.

Metro said the investment is in the ordinary course of its property investment and development business. Through the investment, Metro aims to gain exposure to Singapore's Grade-A decentralised office market.

"The Singapore commercial market, particularly the decentralised office micromarket, is at an inflection point and is poised to deliver strong growth over the next few years," said Cushman & Wakefield capital markets group executive director Shaun Poh. The sale "demonstrates investor confidence in this tightly-held Grade-A micromarket", he added.

Cushman & Wakefield brokered the sale to Metro and the other 50 per cent partner, Evia Real Estate.

The property will immediately contribute to Metro's stable income stream with potential positive rental reversion from upcoming lease renewals. Strata-subdivision approval has been received, giving flexibility for it to be held as a whole for long-term investment or for sale as individual strata units, said Metro.

The investment is not expected to have any significant effect on the consolidated net tangible asset per share and the consolidated earnings per share of the group for the current financial year ending March 31, 2020.

Via the newly-incorporated joint venture firm Ascend TGrande, Metro and Evia have entered into a shares sale agreement with independent third party Golden Crest Holdings to purchase all the shares of T-Grande Investment Holding, which in turn owns all the shares of T-Grande Property Holding, which owns and operates the property.

Of the purchase consideration for 50 per cent of the issued shares, about S$19.4 million comprises the consolidated net asset value of the target company and the property company, while S$26.2 million is to acquire related shareholder loans.

The consideration will be subject to adjustments upon completion. It was arrived at on a willing buyer, willing seller basis, taking into account the expected net income to be derived from the property. Metro's commitment and expenses relating to the transaction will be funded from internal cash resources and external borrowings.

Situated in Tampines Regional Centre, the property comprises two blocks of eight-storey office towers linked by an entrance lobby with retail, as well as food and beverage outlets on the ground floor. It has a site area and gross floor area of approximately 86,110 square feet (sq ft) and 361,660 sq ft respectively. It has a total net lettable area of approximately 288,000 sq ft and has achieved a committed occupancy rate of about 91 per cent.

Tenants include conglomerates and firms from the technology, financial services and insurance industries, including Hitachi Asia, Aldwych International, NCR Asia-Pacific, AIA Singapore and Sysmex Asia-Pacific.

Metro shares closed unchanged at S$1.04 on Thursday before the announcement.