SINGAPORE (Reuters) - CapitaLand Commercial Trust (CCT) said on Thursday it would buy a 46-storey office tower in Singapore's financial district for S$2.1 billion ($1.55 billion) from BlackRock Inc, the world's largest asset manager.
The deal for Asia Square Tower 2 marks Singapore's second-largest office building sale after that of 43-storey Tower 1, which BlackRock sold last year to the Qatar Investment Authority for $2.5 billion. (http://reut.rs/2fkbeBb)
CCT will buy Tower 2, whose tenants include National Australia Bank and Vodafone, for S$2,689 per square foot. The acquisition excludes the Westin hotel, which is located in the building.
"Buildings of this quality and prominence are hard to come by, but we expect to see increased interest in Grade A office assets in Singapore off the back of this deal," Stuart Crow, head of Asia Pacific capital markets at consultancy JLL, said in a statement.
The building has a combined net lettable area of 778,719 square feet, while the larger Tower 1 had over 1.25 million square feet.
"(The deal) provides another pricing benchmark which reconfirms that the recovery in office rents and prices is well underway," said Jeremy Lake, executive director, capital markets at the CBRE real estate services firm. CBRE and JLL advised BlackRock.
He said CBRE has been receiving increasing enquiries over the last few months from local and overseas investors about office opportunities in Singapore.
A deal for the 28-storey PwC Building in Singapore's financial district and a stake sale in TripleOne Somerset near the Orchard Road shopping belt mark some of the other recent commercial transactions.
CCT said it will fund the acquisition through a combination of a rights issue to raise gross proceeds of S$700 million, external bank borrowings and proceeds from divestment of some properties.
"Market statistics have shown that Singapore's office market rents have reached a trough; hence, the acquisition will position CCT to benefit from the expected market uptick in Grade A office rents," Lynette Leong, CCT's chief executive officer, said in a statement.
Real estate services firm Cushman and Wakefield said in a June report that, overall, Grade A central business district rents rose 1.7 percent in the second quarter, the first increase in nine quarters. It forecast a full-year rental increase of up to 5 percent for the overall Grade A market in the central business district.
Trading in units of CCT, Singapore's largest commercial real estate investment trust by market capitalisation, were halted on Thursday ahead of the news.
($1 = 1.3523 Singapore dollars)
(Reporting by Aradhana Aravindan; Editing by Raju Gopalakrishnan and Stephen Coates)
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