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Local Consortium Buys Over TripleOne Somerset

Over the weekend, a consortium led by Mr. Pua Seck Guan, head of Perennial Real Estate Holdings (PREH in short), has successfully purchased the property known as TripleOne Somerset in a deal tagged at an estimated S$970 million. He is also the CEO of Perennial China Retail Trust (SGX: N9LU), which owns shopping malls and associated railway stations in China as part of its portfolio.

Formerly known as the Singapore Power Building, the 17-storey TripleOne Somerset is on a site with a balance-lease term of about 61 years. With a total gross floor area of around 766,550 square feet, it comprises two office towers with two floors of retail space and is located close to the Somerset MRT Station in the prime Orchard Road shopping precinct.

TripleOne Somerset’s office tenants include AXA Life Insurance, Parkway Group, and Petra Foods among others,while its retail tenants include NTUC FairPrice, Imperial Treasure, and many more. A previous Business Times report pegged TripleOne Somerset’s annual net property income at around S$40 million, which would translate to a 4% net-yield based on the S$970-million purchase price.

In any case, several asset enhancement works will be carried out to improve the building’s rental yields. These include converting even more office space into higher-yielding retail space and improving the quality of the office towers. Mr. Pua is also looking into the possibility of constructing an underground pedestrian link between TripleOne Somerset and Somerset MRT due to the close proximity of both locations.

While the acquisition was led by Mr. Pua from PREH and its shareholders, the group itself consisted of his usual partners who were revealed to be Mr. George Quek from BreadTalk Group (SGX: 5DA), Mr. Wong Fong Fui from Boustead Singapore (SGX: F9D), and Mr Ron Sim – CEO of OSIM International (SGX: O23) – in his own personal capacity. It has been reported that they had joined forces with Perennial on several previous property forays before. Meanwhile, it appears that SingHaiyi (SGX: 5CE) has also joined in the party with a 20% stake in the consortium.

Madam Chen, SingHaiyi’s group managing director, announced her reasons to be part of the consortium in a media briefing last Thursday. She said, “We saw potential in its prime location and viewed it as an opportunity since it has not doing so well at the moment.” She added that Singhaiyi is confident in Mr Pua’s professionalism and experience throughout his decades-long real estate development career.

Shares of SingHaiyi last traded at $0.022 on Monday, selling for 31 times historical earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.