Singaporean real estate investment trust CapitaLand Integrated Commercial Trust (CICT) has recently completed the sale of its office building, 21 Collyer Quay, for a total price of $688 million. In a statement to the Singapore Exchange on November 12, CICT’s management revealed that the 999-year leasehold property was sold to a third-party buyer.
The sale price translates to approximately $3,230 per square foot based on the building’s net lettable area of 213,000 square feet. This price was determined based on an independent valuation conducted by Savills, and is in line with the willing-buyer-willing-seller principle.
The transaction is expected to yield a net profit for CICT, with an exit yield of below 3.5% based on the consideration and the building’s annualized net property income for the period ending on September 30, 2024. The trust is expected to generate net proceeds of approximately $681.7 million from the divestment.
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Located in the central business district (CBD), 21 Collyer Quay is a 21-storey building that was previously occupied by co-working operator WeWork. After taking over the lease from HSBC in 2021, WeWork officially opened its flagship location at the building in September 2022 following a design and fit-out of the space.
However, following WeWork’s bankruptcy filing in the US in November 2023, the company announced in April this year that it had reached new lease agreements with its Singapore office landlords. As a result, WeWork plans to continue operating in its current buildings in the city-state for the foreseeable future. According to CICT’s website, WeWork Singapore has a seven-year lease for 21 Collyer Quay until 2028.
In summary, CICT’s divestment of 21 Collyer Quay marks a successful transaction for the trust, with a high selling price and anticipated net proceeds. The building’s prime location in the CBD and its tenancy with a prominent co-working operator make it an attractive investment opportunity for the buyer.