CapitaLand Commercial Trust said to be in talks to acquire $1.5b Duo office tower

Duo Tower, the 39-story office building on the right with the connected Duo Galleria mall, could be valued at more than $1.5 billion.
Duo Tower, the 39-story office building on the right with the connected Duo Galleria mall, could be valued at more than $1.5 billion.PHOTO: M+S

KUALA LUMPUR (BLOOMBERG) - CapitaLand Commercial Trust, Singapore's biggest office landlord, is among suitors in talks about a potential acquisition of the Duo office and retail development in the city, people with knowledge of the matter said.

The real estate investment trust has been negotiating the purchase of a 39-story office building called Duo Tower, along with the connected Duo Galleria mall, according to the people. The property could be valued at more than $1.5 billion, one of the people said, asking not to be identified because the information is private.

Other parties also remain interested in the asset, which is located in the Bugis area on the fringe of Singapore's central business district, the people said. The project's owner is separately seeking a buyer for the hotel portion of the development in a deal that could fetch as much as $500 million, according to the people.

The development is owned by M+S Pte, a joint venture set up in 2011 between Malaysian sovereign fund Khazanah Nasional Bhd and Singapore state investment firm Temasek Holdings. No final agreements have been reached, and there's no certainty the talks will result in a transaction, the people said.

Singapore's strong office rental growth is expected to extend into 2019, driven by limited new completions and a strong labor market, according to Bloomberg Intelligence. The supply of new office space in the city-state will shrink to a 12-year low in 2019, Bloomberg Intelligence analysts wrote in December.

Duo Tower has 568,000 square feet (52,800 square meters) of Grade-A office space with tenants including Abbott Laboratories Inc, Chevron Corp and Mastercard Inc. The connected shopping plaza comprises 56,000 sq ft of retail and restaurant space, according to the project's website.

A representative for the manager of CapitaLand Commercial Trust said it "continually evaluates opportunities" that have a strategic fit with the Reit and can create value. A representative for M+S declined to comment.