THE Singapore Exchange (SGX) has sold its stake in SGX Centre to United Overseas Bank (UOB) for $271 million.
The SGX said in a statement yesterday that the sale of its premises, at 2 and 4 Shenton Way, includes a leaseback agreement for an initial term of seven years.
The bourse operator has an option to renew this leaseback arrangement for another three years.
The sale price works out to about $1,600 per sq ft (psf) of net lettable area - a price regarded as top notch in the current market.
The sale, which is subject to shareholders’ approval, is expected to be completed in about 12 weeks.
SGX owns and occupies a net lettable area of about 169,500 sq ft in SGX Centre.
It owns the 19th to 29th floors of the 29-storey SGX Centre 1, as well as the second and third levels of the podium at the centre.
UOB and Singapore Land (SingLand) own the rest of the space in the tower.
The property stands on a site with a remaining lease of about 87 years.
SGX said that the premises are ‘considered a non-core asset of its business’ and the sale is part of the exchange’s efforts to ‘better manage its capital’.
It decided to sell its stake after a successful exercise to find interested buyers conducted by SGX’s real estate adviser Jones Lang LaSalle.
The latter had valued the property at $257 million.
SGX chief executive Hsieh Fu Hua said: ‘In view of the buoyant market conditions in the commercial real estate market, it makes sense for SGX to divest itself of its interest in the building.’
He added that the net sale proceeds of about $266.4 million ‘can be better redeployed for future growth of our core businesses’.
SGX’s premises attracted top bids of $1,600 psf of net lettable area, The Business Times reported in an article early last month.
It cited industry sources saying that UOB and SingLand probably had a right of first refusal to buy the space owned by SGX.
Other bidders for the site were said to be primarily overseas parties from countries such as Germany, the Netherlands and Australia.
The price that UOB paid for the premises is considered a new high for prime office space in the central business district in the current property cycle.
However, the price still falls short of the $2,200 psf record paid by Prudential Assurance Company Singapore in January 1996 for seven floors of what is now known as Prudential Tower in the China Square area.
Prudential bought the space from Straits Steamship Land, or Keppel Land as it is now called, at the height of the last major property boom in Singapore.
Source : Straits Times - 13 Mar 2007
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