Warburg, Lendlease buy S$1.6 billion in industrial assets from Blackstone-Soilbuild private Reit
They comprise business parks and high-tech industrial facilities tenanted to blue-chip companies
LENDLEASE and US private equity giant Warburg Pincus have acquired a S$1.6 billion portfolio of assets in Singapore from a Reit owned by Blackstone and Lim Chap Huat, Soilbuild ’s executive chairman, in a megadeal showing solidifying interest in industrial real estate.
The assets, spanning a total gross floor area of 4.5 million square feet, comprise business parks and high-tech industrial facilities tenanted to blue-chip companies across the life sciences, technology, advanced manufacturing and logistics sectors, the acquiring parties said on Tuesday (Aug 27).
The properties were held by the Soilbuild Business Space Reit, which was taken private by Blackstone and Lim in 2021 after Soilbuild faced difficulties in growing its portfolio and undertaking distribution per unit-accretive acquisitions.
Lim teamed up with Blackstone Real Estate to buy out minority investors at S$0.55 per unit, which was close to Soilbuild Business Space Reit’s book value. The transaction was valued at about S$700 million.
The Business Times understands that the assets changing hands in the S$1.6 billion deal are West Park Bizcentral, 2PS1, Solaris @ Kallang 164, Solaris @ one-north, Qualcomm Building, Eightrium @ Changi Business Park, and Tuas Connection.
Lendlease and Warburg are said to have outbid two other parties for the acquisition, including EZA Hill, an investor backed by East Asian private equity firm Hillhouse Capital.
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One market observer noted that the pricing on the sale appeared rich, with the yield “very compressed”. Latest available data shows industrial rents in Singapore continued to rise 1 per cent in the second quarter of 2024, but are easing after climbing for 15 straight quarters.
Justin Gabbani, chief executive officer, investment management, at Lendlease, said: “This strategic acquisition underscores our commitment to the rapidly expanding life sciences and R&D real estate market in Asia-Pacific. The platform is well-positioned to capture opportunities in the sector. We look forward to building momentum and further scaling the business, as well as driving performance for our investment partners.”
The acquisition marks the first transaction for the joint-venture platform between Lendlease and Warburg Pincus since it was launched on Jul 31. The platform focuses on life sciences, and research and development real estate in Asia-Pacific.
Takashi Murata, managing director, co-head of Asia real estate and head of Japan at Warburg Pincus, said buying the portfolio would give it “immediate scale in the tightly held Singapore market, cementing our position as one of the top industrial asset owners in Singapore and reiterating our conviction in the life sciences and R&D sector”.
Blackstone Real Estate said on Tuesday that following the sale, it will continue its partnership with Soilbuild Group through investments in other assets.
Tan Peng Wei, senior managing director in real estate, Blackstone, said: “This has been a terrific investment where we privatised high-quality assets and positioned them for long-term success.”
The blockbuster deal was brokered by a CBRE team led by Rimon Ambarchi, head of South-east Asia industrial and logistics, and Loh Lee Fen, head of Singapore industrial capital markets.
“We find that both public and private real estate funds are seeking stable, income-based returns and the Singapore industrial market provides that alongside a favourable debt market and a strong currency. In Singapore, investor demand is consistent for logistics, business parks, and industrial assets alike,” said Loh.
Ambarchi added: “We continued to see outsized investor liquidity for Singapore industrial properties. In particular, large industrial portfolio opportunities are in high demand as investors look to build scale in what they consider to be one of Asia’s strongest industrial markets.”
The market is seeing investors pivot away from the office sector to go into niche sectors like life sciences, cold storage, data centres, and build-to-rent, said Christine Li, head of research, Asia-Pacific, at Knight Frank.
“Interest for industrial assets in Singapore has been strong, but at this scale is rare, considering borrowing cost is still high,” said Li.
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