Singapore Office - DBS Research 2019-12-04: A Store Of Value

SUNTEC REAL ESTATE INV TRUST (SGX:T82U) | SGinvestors.io SUNTEC REAL ESTATE INV TRUST (SGX:T82U) KEPPEL REIT (SGX:K71U)

Singapore Office - A Store Of Value

  • Robinson Centre is reportedly close to being sold to ARA private fund by Homax group, controlled by the Tsai family from Taiwan.
  • Expected to transact at c.S$340m (S$2,550-2,600 psf), implying an estimated yield of 3.2%, within the range of recent transactions.
  • Robust office transactions expected to continue with office rental rates set to remain steady.
  • Potential pipeline for Suntec REIT in the future.



Robinson Centre is reportedly close to being sold to ARA private fund.

  • According to Business Times, Robinson Centre, a 20-storey office building in the CBD, is close to being sold to ARA Real Estate Partners Asia II, a private fund managed by ARA Asset Management. It was also reported that the fund could be teaming up with a partner, which some sources suggest could be M&G.
  • Robinson Centre sits on a remaining land tenure of 76 years. The seller is an entity connected to Homax group, which is controlled by the Tsai family from Taiwan, which they acquired in 2011 for c.S$293m from a fund managed by Alpha Investment Partners.


Expected price at c.S$340m (S$2,550-2,600 psf), at an estimated yield within the range of recent transactions.

  • The sale is expected to be transacted at c.S$340m (S$2,550- 2,600 psf). The price implies an estimated yield of c.3.2%, which is within the range of past recent transactions of 2.9- 3.5%. The price psf seems to have moderated marginally compared to the closest transaction, the sale of 71 Robinson Road (with remaining 74-year lease) in July 2019 to Sun Venture Group for S$2,760 psf.


Robust office transactions to continue; office rental rates to remain steady.

  • Transactions in the office space remains robust, with some S$6bn of big-ticket office transactions closed this year, as interest rates remain low and conducive while the strong liquidity has brought investors to Singapore’s commercial real estate sector for its strong store of value.
  • While the outlook for growth in office rental rates has moderated, we believe that headline CBD office rental rates will unlikely see a correction and hence remain stable in FY20. We believe the robust office transactions will continue and thus support valuations. The addition of Robinson Centre into ARA’s private fund could be a pipeline for SUNTEC REIT (SGX:T82U) when the fund looks to recycle the asset in the longer term.





Rachel TAN DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2019-12-04
SGX Stock Analyst Report BUY MAINTAIN BUY 2.150 SAME 2.150
BUY MAINTAIN BUY 1.450 SAME 1.450



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