PGIM unit buys Jurong building for S$194m

Singapore

US-based PGIM Real Estate, which owns a string of shopping malls in Singapore, is acquiring a cold store logistics facility in Jurong for S$193.8 million.

Located at 1 Buroh Lane, the property is within a government-approved food zone, where food manufacturing and related businesses are permitted.

The site has a 2.5 plot ratio, which is the ratio of maximum gross floor area (GFA) to land area.

Built about 18 months ago, 1 Buroh Lane has GFA of 645,538 square feet, the maximum allowed for the 258,215 sq ft site. The site's 30-year leasehold tenure started on Feb 21, 2013.

The acquisition is being made by a special purpose vehicle owned by a fund managed by PGIM Real Estate.

The seller, Warehouse Logistics Net Asia (WLNA), to whom JTC Corporation issued the lease for the site under a direct allocation, will lease back the property for 10 years at a rental rate that translates to slightly above 7 per cent net yield, BT understands. It will pay the maintenance charges and property tax.

As an end-user, WLNA currently pays a monthly land rent to JTC; however, because the entity to which it is selling the property is owned by a fund and hence considered a third-party facility provider, the buyer will have to pay JTC an upfront land premium, estimated at S$11 million, for the balance term of the lease.

The rationale for the rule is that JTC's land rental scheme serves as a form of financing to help end-user industrialists in their cashflow and lower their business costs. However, third-party facility providers can go to the market to raise funding.

The 1 Buroh Lane deal will be subject to JTC approving a lease assignment by the seller to the buyer.

A requisite condition for JTC's nod in such transactions is that the seller, which is an end-user, has to stay on as an anchor tenant when the property is sold to a third-party facility provider.

CBRE is understood to be brokering the 1 Buroh Lane deal; its executive director of industrial logistics services, Rimon Ambarchi, declined to comment when contacted by BT.

WLNA is a diversified logistics company based in Singapore and a leader in cold supply chain, according to its website. The company, which is owned by a Png family, also owns 32 Quality Road.

PGIM Real Estate, through another of its funds, is understood to own two other warehouses in Singapore - in Jurong West and Pioneer Road.

Formerly known as Pramerica Real Estate Investors, PGIM Real Estate also owns a portfolio of malls and an office building here under the Asia Retail Fund, which it manages. This portfolio includes Tiong Bahru Plaza, White Sands in Pasir Ris, Century Square in Tampines, Hougang Mall, Liang Court along River Valley Road and Tampines One as well as the Central Plaza office block in Tiong Bahru.

PGIM Real Estate is a business unit of PGIM, the asset management arm of New York Stock Exchange-listed Prudential Financial Inc.