SingPost – BT
SingPost HQ up for sale with $850m tag
Terms of any leaseback deal could determine price it fetches: observers
THE buzz created by recently unveiled plans to develop the Paya Lebar area into a commercial hub may get a boost from Singapore Post’s planned sale of its landmark headquarters building next to Paya Lebar MRT Station.
BT understands the listed group has launched an expression of interest for the 14-storey building and the price tag is said to be around $850 million based on the existing use of Singapore Post Centre.
SingPost is expected to lease back the space it currently occupies – which is roughly half the building’s one million sq ft net lettable area – for both its corporate office and operations, including the mail processing centre.
The rest of the property is leased to a mix of retail and office tenants, including NTUC FairPrice, Kopitiam, Barang Barang, This Fashion, HSBC Insurance, Northwest Airlines and Symantec Corporation.
CB Richard Ellis is understood to be handling the sale of SingPost Centre.
The current approved use for the site is around 60 per cent industrial and 40 per cent commercial, based on an earlier report.
However, potential investors may seek the authorities’ approval to convert the use to full commercial, to optimise the site’s commercial zoning under both the 2003 and 2008 (draft) Master Plans.
A differential premium would have to be paid to the state in exchange for realising the enhancement in use.
SingPost Centre’s existing gross floor area of 1.48 million sq ft has already tapped the 4.2 maximum plot ratio allowed under the two Master Plans.
The property is on a 352,389 sq ft site with a remaining lease of about 73 years. The 14-storey building, which also has three basement levels (mostly for retail), has 587 carpark lots.
Industry observers say the terms of SingPost’s leaseback arrangement with the potential buyer will be a critical factor in determining the price the building fetches.
Banks have also tightened lending for property acquisitions but core funds and core-plus funds, which rely less on debt and more on their own equity when making property purchases, are still interested in making acquisitions.
BT also reported recently that some of the big overseas funds which have been buying office properties in Singapore in the past few years are now also looking at industrial, logistics and business park assets, which offer higher yields.
Against this backdrop, SingPost Centre’s potential buyer may well continue with the existing industrial/commercial use of the property.
SingPost has also been selling some of its smaller properties, for instance, at Clementi Central, Boon Lay, Marine Parade and Hougang South. The group is still left with a dozen properties, including two in the prime districts – Tanglin and Killiney Road post offices.