SINGAPORE (BLOOMBERG) - A consortium of Norway's sovereign wealth fund and developer CapitaLand Ltd. was chosen as the preferred bidder for a Singapore tower being sold by BlackRock Inc., in what could become the biggest office deal in the city-state, people with knowledge of the matter said.
The bidding group will start exclusive talks with BlackRock about a purchase of Asia Square Tower 1, and could reach an agreement in the next month, according to the people. It beat ARA Asset Management Ltd., which also submitted a final bid for the building, they said, asking not to be identified as the information is private.
The 43-story tower, located in the new financial district at Marina Bay, could be valued at more than S$3.5 billion, according to the people. BlackRock, the world's largest asset manager, said earlier this year that it had received expressions of interest for Asia Square Tower 1 and could get more than S$4 billion for the building, whose tenants include Citigroup Inc.
CapitaLand shares fell as much as 3.8 per cent Tuesday, the most in more than seven weeks, and were down 3.2 per cent to S$3.03 at 4:28 p.m. The benchmark Straits Times Index fell 1.2 per cent.
Office rents in Singapore's central business district fell in the three months through September, the first quarterly drop since 2012, according to DTZ Holdings Plc. Rents may fall as much as 7 percent this year and a further 8 percent in 2016, as demand and the economy both slow, Nai Jia Lee, regional head of research for Southeast Asia at DTZ, said earlier this month.
A deal of at least US$2.5 billion would be the largest office transaction in Singapore, surpassing Keppel Land Ltd.'s 2011 sale of a controlling stake in Ocean Financial Centre, according to data from New York-based research firm Real Capital Analytics Inc.
CapitaLand, Singapore's largest developer, owns properties including homes, shopping malls, offices and serviced residences. The Norway wealth fund, which gets its capital from the country's oil and gas production, is mandated to hold about 5 percent of its portfolio in real estate and said in March it was making preparations for its first Asian property deal.
A spokeswoman for Norges Bank Investment Management, as the Norwegian fund is known, declined to comment, as did a representative for BlackRock. A spokeswoman for CapitaLand said she couldn't immediately comment, while an investor-relations official at ARA didn't immediately answer a phone call and e- mail seeking comment.
