TripleOne Somerset sold for $970m

A CONSORTIUM led by Perennial Real Estate Holdings has finally secured TripleOne Somerset. The price is understood to be $970 million in a deal concluded over the weekend.

This is $10 million less than the $980 million amount that Perennial, headed by Pua Seck Guan, was earlier doing due diligence to buy the asset under a letter of intent granted by the building's owner, a fund managed by Pacific Star. However, in late September, Perennial aborted the proposed transaction after the fund raised the asking price to $1 billion.

At least one other potential buyer, Lend Lease, is understood to have been approached. The Australian property giant did due diligence but when no deal materialised, Perennial was brought back into the picture.

The $970 million transacted price for Triple One Somerset works out to about $1,714 psf on the property's net lettable area (NLA) of around 566,000 sq ft. This includes some 60,000 sq ft of retail space, with offices making up the rest. Formerly known as the Singapore Power Building, the 17-storey property is on a site with a balance lease term of about 61 years. It is located opposite Somerset MRT Station, Jones Lang LaSalle and CBRE brokered the transaction.

Singapore-based Pacific Star's Asia Real Estate Income Fund (AREIF) paid $1.01 billion or $1,836 psf on NLA in early 2008 for the property, which it picked up from Singapore Power and Public Utilities Board. AREIF is said to have later invested about $80 million sprucing up the asset, including converting its first two levels to retail space and revamping the entrance and lobby.

AREIF's investors are said to include Great Eastern, Qatar Investment Authority and German funds.

TripleOne Somerset's office tenants include AXA Life Insurance, WorleyParsons, Parkway Group, International Air Transport Association and Petra Foods. Healthway Medical Group operates several clinics in the building.

Its retailer tenants include NTUC FairPrice which runs gourmet supermarket FairPrice Finest, Chinese restaurant group Imperial Treasure, Atlas Sound and Vision, and The Orientalist Carpets.

The building has 403 basement carpark lots.

Based on an earlier BT report, TripleOne Somerset generates annual net property income of around $40 million - which would translate to around 4 per cent net yield based on the $970 million.

Talk in the market is that China interests are likely to take part in Mr Pua's consortium. It would also not be surprising if some of Perennial's familiar partners such as George Quek's BreadTalk Group and Ron Sim join forces with Perennial on its latest acquisition.

Mr Pua is also reported to be looking at further asset enhancement for TripleOne Somerset, including converting even more of the office space to higher-yielding retail space. Another possibility would be to lease out more office units as medical suites.