Buyer is Basil Property Trust, managed by Singapore-based AEPim; net yield said to be 5.5%
JUL 7, 2015 5:50 AM
BLACKSTONE has sold StarHub Green, a light industrial building along Ubi Avenue 1, to a recently minted private property fund managed by Singapore-based AEP Investment Management (AEPim).
The price is believed to be close to S$260 million, translating to a net yield of around 5.5 per cent. The site is on a balance lease term of about 42 years.
Anchor tenant StarHub has renewed its lease in the building for a 10-year term starting January. It occupies some 220,000 square feet, or 54 per cent of the building’s 405,386 sq ft net lettable area.
Located near MacPherson MRT Station, the property enjoys prominent visibility from the Pan Island Expressway. It was completed in late 2008 and awarded Building and Construction Authority’s Green Mark Gold certification the following year.
StarHub Green comprises two towers, one that is six storeys and the other, seven storeys. Besides StarHub, other tenants include Infocom and Security Systems, a subsidiary of Stanley Black & Decker; IBM unit International Application Solutions; Quest Laboratories and Alstom Transport.
Occupancy is close to 90 per cent, which presents potential for an increase in rental income from leasing out the balance space.
Officials from AEPim declined to confirm the pricing, beyond saying that it was “in excess of S$250 million”. However, they did highlight the long lease expiry profile of the asset.
StarHub Green is the maiden acquisition for Basil Property Trust, for which AEPim is the trustee manager. At the fund’s initial closing in April, US$100 million in equity was raised from six investors – four Brunei institutions, AEP Capital (which has the same shareholders as AEPim), and a family office from Riyadh. The six have agreed to contribute a further US$50 million in equity.
In addition, discussions are ongoing with a couple of new investors to pump in US$100 million, which would take the fund’s total equity to US$250 million.
By the end of next year, Basil Property Trust aims to own a property portfolio of about US$600 million (reflecting almost 60 per cent gearing) – comprising three to four properties in the Asia-Pacific including Australia, said AEPim CEO Yusof Wahid.
“We’re looking at suburban office type and business park assets with long leases inked with quality tenants in stable sectors like telcos and pharmaceuticals,” he told BT when contacted.
The fund is targeting an internal rate of return of 12-15 per cent per year. The fund life will be five years, with options for two extensions of a year each.
Set up in 2008, AEPim is a Singapore-based real estate investment management company. Mr Yusof, its founder, described the purchase of StarHub Green as part of a larger strategy to assemble a portfolio of business park/suburban office-type properties globally. “Singapore has always been on our radar but it is extremely difficult to acquire a long lease asset such as this.”
Last year, AEPim, acting on behalf of a family office client, bought a business park, Trident Place, in Hatfield, UK; all 470,000 sq ft of space is on a long lease to Everything Everywhere, the country’s biggest mobile network operator. The purchase price was £135 million (S$283.6 million).
In December 2014, AEPim exited its maiden fund, Securus Data Property Fund, through a real estate investment trust listing on the Singapore Exchange which is now trading as Keppel DC Reit. Securus Fund was jointly managed with Keppel T&T during its private equity fund stage.
Mr Yusof was formerly a shareholder and executive director in DTZ Singapore; before that, he was with the former Jones Lang Wootton. In 2004, he teamed up with the Tjandra family of Indonesia to set up Asia Equity Partners (AEP), a property fund management outfit.
AEP bought Sinsov Building in Market Street and refurbished it into what is currently 55 Market Street and owned by Frasers Commercial Trust; AEP also picked up the former OUB Building in Robinson Road, which was refurbished and sold to its current owner, Bank of East Asia.
In Kuala Lumpur, AEP also acquired and refurbished Kenanga International Building before selling it to Malaysian asset management giant Permodalan Nasional Bhd.
The Tjandras formed their family office in Singapore in 2007, paving the way for Mr Yusof to launch AEPim, of which he controls 25 per cent; his fellow shareholder is the family office from Riyadh.
StarHub Green was developed by Boustead, which built it on a site that it won at a state tender in 1997. It later sold the completed project to SEB, which in turn sold the property to Blackstone for S$215 million in 2012.