50% Interest In Lazada One Office Bldg Sold For S$362.4mil
SINGAPORE – Property firm ESR’s unit ARA Asset Management has sold its 50 percent stake in the 11-storey Lazada One office building at 51 Bras Basah Road for S$362.4 million, reported Mingtiandi on Tuesday evening (7 March, SGT).
The news outlet has learned that the half-stake in the commercial property was acquired by a fund backed by Japanese conglomerate Sumitomo Mitsui Finance and Leasing Company (SMFL). The fund’s majority owner is SMFL Mirai Partners. Another owner is Kenedix, which is jointly owned by SMFL and ARA. Interestingly, the fund is also managed by ARA, which will continue to be the building’s asset manager.
“Owing to the fact that Singapore has a competitive advantage in Asia and its real estate market is expected to pick up on the back of economic recovery, the three companies decided to jointly invest in Lazada One as the second property in their partner strategy with ARA being the fund manager,” commented the investors in a joint statement published on Tuesday.
As for Chelsfield Asia, which jointly purchased the office building with ARA in 2019, it is retaining its 50 percent stake in the commercial property.
In light of the deal, Lazada One is valued at around S$725 million, which represents a 9.4 percent discount from ARA and Chelsfield’s initial asking price of S$800 million for the asset in 2022.
Nonetheless, it’s 30 percent higher than the S$555.5 million they paid for the commercial property in 2019. Back then, they bought it as Manulife was set to vacate the premises. The partners also took out a S$385.8 million green loan in 2020 to fund the acquisition and enhance the asset.
Based on Lazada One’s net leasable area of 259,800 sq ft, the selling price works out to S$2,790 psf. Sources also revealed that office rents there average about S$9.00 psf to S$9.50 psf. Consequently, the asset generates an overall rental income of about S$2.4 million per month, which translates to a rental yield of 3.2 percent.
Furthermore, ARA is divesting its half-stake in the office property after concluding major renovations in early-2022 and after signing up Alibaba and its subsidiary Lazada as anchor tenants.
At present, Lazada One is 98 percent occupied. Among its other tenants are online apparel marketplace Zalora and streaming giant Spotify.