Blackstone confirms Sandcrawler purchase in Singapore

Fiona Lam
Published Wed, Apr 21, 2021 · 11:03 AM

FUNDS managed by Blackstone Real Estate have agreed to acquire The Sandcrawler, an iconic Grade A business-park building in Singapore, for S$176 million from Lucas Real Estate.

The US private equity giant's announcement on Tuesday confirms The Business Times' (BT) report on the transaction back in January. The transaction was brokered by CBRE.

The investment comes under Blackstone Real Estate's "core plus" strategy and expands the group's South-east Asia footprint, said Alan Miyasaki, head of Asia real estate acquisitions, in a press statement. Its "core plus" strategy invests in "substantially stabilised" real estate globally through regional open-ended funds.

Blackstone Group plans to invest in more properties in Singapore. In response to BT's queries, Mr Miyasaki said: "We're committed to expanding our presence in Singapore, and we continue to see compelling opportunities for high-quality office spaces."

This demand is driven by a growing influx of global technology companies setting up their regional headquarters in the city-state, "encouraged by the government's initiatives to create a transparent, business-friendly environment and build the best-in-class infrastructure", he noted. 

The firm's global strategy is to focus on sectors with strong tailwinds. "Our highest-conviction investment themes include logistics, life sciences, technology and content creation – trends that have accelerated over the last couple of years – and we’ll also look to focus on these investment themes in Singapore," Mr Miyasaki told BT.

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Blackstone has also observed ongoing demand for business parks that offer a "unique campus-style experience". Technology companies are keen to take up office space in low-rise buildings in business parks, and not necessarily skyscrapers in the financial district, Mr Miyasaki noted.

He separately told Bloomberg: "It used to be that the tall skyscrapers were really cool...If we can buy five more Sandcrawlers, we'd do that."

Located within the Fusionopolis cluster in Buona Vista's one-north research and business park, The Sandcrawler sports a futuristic, horseshoe-shaped design that was inspired by the Star Wars series' giant fictional vehicles with the same name.

CBRE's head of industrial and logistics Singapore, Rimon Ambarchi, who brokered the deal, told BT that the property is "one of the best-designed business-park buildings in Singapore". High-quality tenants are drawn to the building due to its iconic design and prime location, he added.

While business parks are highly sought after by investors, they are a tightly held asset class and rarely traded on the open market, Mr Ambarchi said. This stems from a broader investment trend of surging demand for industrial assets since H2 2020, boosted by the resilience of the manufacturing and logistics sectors during the Covid-19 pandemic.

"This demand is expected to continue growing amid an expanding pool of buyers and a lack of institutional-grade industrial properties," Mr Ambarchi noted.

The Sandcrawler was built in 2013 and spans 173,000 square feet of office space with state-of-the-art facilities and outdoor areas with greenery and walking trails. It also has a metallic external facade and a 100-seat theatre.

The property houses global corporations in the technology and media sectors, including Lucasfilm and Disney, as well as Singapore's Government Technology Agency.

BT reported in January that The Sandcrawler's occupancy rate was said to be in the high-90 per cent range, and market watchers estimated that the price tag reflected a net yield of about 4 per cent based on the building's existing rental income.

The site has a 30-year leasehold tenure, which started from September 2010, with an option to renew for a further 30 years, BT understands. Blackstone did not comment on the land tenure in its statement on Tuesday.

Blackstone is one of the leading investors in Asia. The firm said it is the largest owner of offices in India, where about half of its office portfolio is leased to global technology companies. And in China, Blackstone last year announced the acquisition of a majority stake in the biggest logistics park in the Greater Bay Area.

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