Consortium mulls en bloc sale of AXA Tower for at least $1.65b

 AXA Tower along Shenton Way.

Some investors led by Perennial Real Estate Holdings are considering a collective sale of AXA Tower in Shenton Way for at least $1.65 billion after having received a number of inquiries regarding the property.

Perennial said yesterday that interest in the tower is a "result of the improved Singapore office market environment and strong interest in the commercial office segment".

The price of $1.65 billion works out to about $2,150 per sq ft (psf), based on a total strata area of about 767,358 sq ft after renovation work, which will be completed in 2019. It noted that the 767,358 sq ft space excludes strata areas that have been sold since it launched sales of selective floors at the end of last year.

Perennial said taking into account the renovation cost of $140 million that is fully debt-funded - to be borne by the potential new owner - the strata value post-renovation would be about $2,333 psf.

AXA Tower, a predominantly office integrated development, is 41.3 per cent owned by Perennial and HPRY Holdings, an investment vehicle wholly owned by Perennial chairman Kuok Khoon Hong. The remaining stakes are owned by investors who did not want to be identified.

The Perennial-led consortium plans to appoint JLL and CBRE as joint marketing agents, it noted.

Mr Jeremy Lake, executive director of capital markets, Singapore at CBRE, noted: "The sentiment towards the Singapore office investment market has been improving as witnessed by the rising prices paid for office buildings and commercial land tenders.

"Developers and investors are actively looking for opportunities to position themselves for the recovery."

Mr Greg Hyland, head of Singapore capital markets at JLL Singapore, said: "There is also an increased interest from foreign buyers who see the relative value of the Singapore commercial market.

"Although the transaction size is relatively large at $1.65 billion, the pricing on a per sq ft basis is attractive, given that AXA Tower is an iconic Singapore building."

AXA Tower is undergoing refurbishment work, including increasing the retail podium to about 60,000 sq ft, building a new 32,000 sq ft two-storey annexe block fronting Maxwell Road to house medical suites, and upgrading lifts.

The 99-year leasehold 50-storey tower - its lease expires in July 2081 - is connected via an underground link to Tanjong Pagar MRT station and the upcoming Prince Edward station, set to be completed in 2025.

A version of this article appeared in the print edition of The Straits Times on August 01, 2017, with the headline 'Consortium mulls over selling AXA Tower en bloc'. Print Edition | Subscribe