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ARA, Chelsfield acquire Manulife Centre in Singapore for S$555.5m

ARA Asset Management and British property group Chelsfield have jointly acquired Manulife Centre at 51 Bras Basah Road for around S$555.5 million.

That's about S$2,305 per sq ft for the 11-storey commercial building with a net lettable area of over 241,000 sq ft.

The vendors are City Developments (CDL) and Alpha Asia Macro Trends Fund II (AAMTF II), which is managed by Alpha Investment Partners.

ARA and Chelsfield made the purchase in a 50:50 joint venture. Chelsfield Asia will add the asset to its Chelsfield Asia Fund 1, ARA to one of its private real estate funds.

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Manulife Centre is being sold on a remaining leasehold tenure of 96 years. It spans over 241,000 sq ft in office and retail space, and comprises a ground floor retail podium and a large efficient floor plate of 23,000 sq ft on average, a distinctive competitive advantage over the other office buildings in the sub-market, the buyers said.

The property has an attractive city-fringe location near the Orchard corridor in the Bras Basah precinct, flanked by two MRT stations – Bencoolen station on the Downtown Line and Bras Basah station on the Circle Line.

Through asset enhancement and tenant repositioning, the joint venture plans to transform the property into a unique lifestyle-based workplace asset to "unlock potential upside through positive rental reversion", the buyers said.

The Business Times had earlier reported that anchor tenant Manulife Singapore's lease of about 100,000 sq ft – roughly half the building's office space – will be expiring soon, creating an opportunity for the incoming owners to potentially refurbish the property.

Manulife Centre is one of three properties that CDL sold to its joint venture with AAMTF II under a "profit participation securities" or PPS exercise in December 2015. The consideration paid for Manulife Centre then was S$487.5 million.

ARA and Chelsfield Asia said on Friday: "Prime office rents are expected to rise between 20 per cent and 25 per cent from 2018 to 2020 on the back of stable demand and tightening supply."

Ng Beng Tiong, chief executive of ARA Private Funds, said: "With the tightening of quality office supply, coupled with rising demand from occupiers, we believe that the Singapore commercial market is poised to deliver robust growth over the next few years."

Nick Loup, Chelsfield Asia chief executive, said: "The Singapore office market is experiencing strong rental growth and the acquisition represents an attractive cyclical buying opportunity in a market environment where high-quality assets are difficult to source."

Separately, CDL said it will realise a pre-tax gain of S$144.3 million which relates to the deferred gain on the sale of the property by CDL to Golden Crest in 2015.

Golden Crest, which owned Manulife Centre, is a joint venture company in which CDL indirectly owns an 80 per cent interest and has entered into a sale agreement.

The gain represents a contribution of 13 Singapore cents to the basic earnings per share of CDL. The transaction does not have any material impact on the net tangible assets of CDL.

CDL shares rose 14 Singapore cents or 1.76 per cent to S$8.08 on Friday.