One Finlayson Green sold for $227m or $2,520 psf of NLA. According to media reports, One Finlayson Green, a 19-storey freehold office block located near Raffles Place MRT station, has been sold to a group of private investors registered under a Bristish Virgin Islands vehicle for $227m. This translates to $2520 psf based on a net lettable area of 89,950sf. It was also reported that K-Reit was looking at this building and was said to have offered $221m but the deal did not materialize. The Vendor, Lucrum APS100 (a fund initiated by Norman Winata) paid about S$145m or $1629 psf for the building in March last year.
Price looks a little high, cap rates continue to tighten. We think that price paid is slightly high compared to the $2300 psf paid for Capital Square (done yesterday) and the $2250 psf that NTUC Income paid for the 49% stake of 16 Collyer Quay earlier this year given the smaller floor plate. Based on today's Grade A spot rents of about c$12 psf, net yield will be about 4 - 4.3%. However, we believe average passing rents could be much lower and actual net yield at sub 3%.
Interest high, despite the optimistic pricing. In the last two days, we have seen 3 office deals. We think buyers' interest for office buildings remains strong given the high prices paid, ample liquidity and optimistic expectations on rents. This transaction further reinforces our view that the capital values will continue their upward trend this year. We continue to prefer exposure to the office sector and believe that commercial landlords are likely to see faster reflation in RNAVs. Maintain our buy for Keppel Land ((Buy.S$5.09), UOL (Buy.S$5.31) and SingLand (Buy.S$8.72).
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