JP Morgan, Nuveen Complete $944M Purchase of SG Office Tower From CICT and FWD 

JP Morgan Asset Management and Nuveen Real Estate have announced the acquisition of their respective half-stakes in a Singapore office building for $472 million each, confirming a mid-November Mingtiandi report.

The pair of US-based fund managers picked up their partial interests in the 23-storey One George Street tower in Raffles Place for a combined $944 million through the JP Morgan Global Alternatives arm and Nuveen’s Asia Pacific Cities vehicle, according to separate press releases issued Monday.

News of the done deal comes after SGX-listed CapitaLand Integrated Commercial Trust and insurer FWD Group revealed plans last month to sell out of the 2004-vintage asset, with a Mingtiandi source at the time naming the buyer as a joint venture of JP Morgan Asset Management and Nuveen Real Estate.

“One George Street exemplifies the type of differentiated properties in which we invest — well located, easily accessible, highly amenitised and sustainably designed and operated — that attract both quality occupiers and the talent that wants to work for them,” said David Chen, chief investment officer and head of real estate for Asia Pacific at JP Morgan Global Alternatives.

Upswing in Demand

The Grade A tower had more than 50 multinational tenants and was 97 percent occupied as of September, said the investment management division of the US banking giant. Tenants have included German insurer ERGO, which originally developed the building with CapitaLand, as well as distiller Diageo, plastics maker Borouge, Lloyds of London, Royal Bank of Scotland and Fitness First. The property’s 445,735 square feet (41,410 square metres) of net lettable area also houses Canada’s embassy in Singapore.

Grade A office rents in Singapore’s central business district continued to recover in the third quarter, rising 0.5 percent from the previous three months to an average of S$9.64 ($7.12) per square foot per month, according to a Cushman & Wakefield report.

In Raffles Place, third-quarter rents averaged S$9.57 ($7.07) per square foot per month, up 0.3 percent from the previous quarter, with a vacancy rate of 8.8 percent and no new office space planned or under construction.

“Singapore’s attractiveness as an investment destination in the region, combined with increasing office demand from the technology and financial services sectors, as well as a moderate level of new supply, provide the backdrop for a unique opportunity to capitalise on a cyclical upswing which began earlier this year,” Chen said.

Core Asia Fund Bulks Up

The One George Street purchase follows Nuveen’s September announcement of an additional $213 million capital raise for its Asia Pacific Cities strategy, with the company having named Singapore, along with Seoul and Sydney, as among its target markets.

The acquisition represents the 14th asset for the core Asia Pacific fund, whose portfolio now has more than $1.2 billion in assets under management, including multi-family properties in Japan, an office asset in Sydney and three logistics facilities in Greater Tokyo and Seoul, according to Nuveen Real Estate, which has $144 billion in global AUM.

“Having raised over $925 million since launch in November 2018, we will be looking to maintain our current pace of acquisitions, seeking durable income and capital appreciation from a balanced and diversified portfolio of real estate investments,” said Louise Kavanagh, chief investment officer and head of fund management for APAC at Nuveen Real Estate.

On Monday, Nuveen said it was drawn to the Raffles Place building’s 30,000 square foot column-free floor plates and 9.8 foot ceiling heights, as well as its Green Mark Gold Plus credentials as certified under Singapore’s green building rating system. Notable amenities include flexible working space, a fitness centre with swimming pool and beverage outlets.

“The premium office space sector will remain relevant post-pandemic as we see ongoing demand for office space, coupled with the limited Grade A supply supporting office rental growth in the near term,” Kavanagh said. “The strong in place tenant covenants and strategic location should provide stable income to our investors over time.”