Perennial leads consortium to acquire AXA Tower for S$1.17b

Singapore

PERENNIAL Real Estate Holdings Limited (PREH) has syndicated a consortium of investors to acquire AXA Tower at a property purchase price of S$1.17 billion, translating to S$1,735 per square foot (psf) of net lettable area.

PREH's 31.2 per cent equity investment in the property amounts to about S$117.9 million. Its major shareholder Kuok Khoon Hong, a Singapore business tycoon who is also Wilmar International's chairman and CEO, will take up another 10.1 per cent interest in AXA Tower.

The transaction between the consortium and the seller BlackRock is expected to be completed by April.

MGPA Fund II, which came under BlackRock in 2013, bought the office tower (then known as Temasek Tower) in March 2007 for S$1.039 billion or S$1,550 psf of net lettable area.

Pua Seck Guan, PREH chief executive officer, noted that there is "strong upside potential" in this asset.

AXA Tower, a 50-storey Grade-A office tower with some retail space in Singapore's Central Business District, enjoys three major frontages along Shenton Way, Anson Road and Maxwell Road.

The property has a total net lettable area of about 674,000 sq ft and a total current gross floor area of about 1.03 million sq ft with over 610 car park lots. It has a 99-year lease from 1982.

Currently, AXA Tower has unutilised plot ratio that translates to an additional GFA of over 212,000 sq ft. The property is also allowed to house medical suites amounting to no more than 32,000 sq ft.

The consortium comprising PREH, Mr Kuok and some other investors will explore options to utilise the additional GFA and permissible medical suite usage to maximise the value of the asset. The strata-sale of the office space in the property will also be explored, PREH said on Friday.

In conjunction with the proposed investment, PREH will be appointed as the asset manager, property manager and project manager of the property. This will provide an additional stream of management fee income for the group.

"In addition, the prime asset presents a unique opportunity to maximise and create value for shareholders through the execution of asset enhancement initiative and potential strata-sale strategy," Mr Pua said.

PREH will fund its share of the acquisition through existing and new borrowings.