Credit Suisse fund likely to buy Lippo Centre

A PROPERTY fund managed by Credit Suisse is likely to be the buyer of Lippo Centre at 78 Shenton Way. Sources say that the fund is currently doing due diligence on an acquisition for close to $350 million or $1,163 per square foot (psf) of existing net lettable area (NLA).

The price is about 20 per cent higher than the $290 million at which a Macquarie-linked fund was negotiating to buy the property a few months ago. There was a preliminary arrangement for the deal but it lapsed before it could be finalised.

Sources told BT recently that a property fund managed by Credit Suisse had been narrowed down as the party that has entered the due diligence phase. This followed an expression of interest that closed in the second half of November and which is said to have drawn interest from five or six parties.

This is said to be Credit Suisse’s first major property acquisition in Singapore.

CB Richard Ellis and Jones Lang LaSalle are marketing the property - on a site with a remaining lease of about 76 years - which has about 301,000 square feet of NLA.

The property has upside as it has unutilised plot ratio which would allow roughly 40,000 sq ft of additional NLA of offices to be built, or a 10 per cent-plus addition to the building’s existing NLA.

Market watchers note that the $1,163 psf price for Lippo Centre is close to the $1,165 psf that SIA Building in Robinson Road fetched in June. SIA Building is on a better-located site with a longer remaining lease - 87 years.

Lippo Centre offers greater upside as it has unutilised plot ratio.

In addition, the office market has improved in the past six months, say market watchers.
Lippo Centre is owned by Ferrell Realty, which in turn is fully owned by a property fund in which Lippo is a major investor.

Ferrell Realty stands to book a handsome profit from selling the building, which it bought for $151 million or about $505 psf of NLA from MCL Land in August 2004.

The building has a three-storey podium with a basement level, housing a spa, retail facilities and 323-space carpark, and a 31-storey office tower.

Lippo has said that it is considering moving its Singapore headquarters to the new 18-storey office block that will be developed on the Overseas Union House site.

The new tower is expected to be ready by the end of 2009.

Source : Business Times - 21 Dec 2006