Beach Rd building sold for $70m

Business Times - 07 May 2008

Beach Rd building sold for $70m

Hirsch Bedner and Irish private equity firm turning asset into boutique offices

By KALPANA RASHIWALA

AN Irish private equity firm and renowned international interior design firm Hirsch Bedner Associates have bought 700 Beach Road, currently a small office, home office development named In-City Lofts, for a total $70 million.

The duo will pump in a further $3.5 million to upgrade the eight-storey building and reposition it as a boutique office block.

The building has 8,500 to 12,000 sq ft floor plates, 4.5-metre ceiling heights and a roof terrace with a full-sized lap pool and gym facilities. When the refurbishment is completed in August this year, the property - located between Golden Mile Tower and Golden Mile Complex - will be renamed 700 Beach.

The spruce-up will increase the building's existing net lettable area by about 5,000 sq ft to 67,000 sq ft - of which 12,000 sq ft will be owned by Hirsch Bedner and 55,000 sq ft by Fine Grain Property Consortium (Singapore) Pte Ltd.

The all-in investment of $73.5 million by the two parties works out to $1,097 per square foot of the enlarged total net lettable area. Hirsch Bedner has taken about one-and-a-half floors while Fine Grain has bought the remaining six-and-a-half levels.

The site's lease was extended to 99 years starting April 2004, after the building was completed.

The interior design process of the refurbishment for the entire building is being handled by Hirsch Bedner, which will also move into the space it has bought. This will be the Los Angeles-based firm's regional office, housing its 80-strong design team.

Fine Grain has appointed Jones Lang LaSalle to lease its space in the building. 'The gross monthly per square foot asking rent is in the high single-digit range and we're targeting MNCs who're sensitive to high office rents in the CBD,' says JLL regional director and head of markets Chris Archibold. JLL is in talks with three potential tenants for areas of various sizes, Mr Archibold added.

Assuming an average rent in the high-single digit range, the net property yield would be about 8 per cent, analysts say.

Fine Grain is 65 per cent controlled by Ireland-based investors led by Ronald Bolger, Singapore's Honorary Consul General in Ireland and former managing partner of KPMG Ireland.

The other 35 per cent is controlled by Singapore- based investors led by Colin MacDonald and Wan Fook Kong. (Mr MacDonald is also managing director of McCraic Holdings, owner of Molly Malone's Irish pub and BQ Bar). Mr MacDonald, his brother Alastair (a chartered accountant), Mr Bolger and Mr Wan are directors of Fine Grain.

700 Beach Road is Fine Grain's first property acquisition in Singapore and the firm has allocated about $70-80 million more for further property purchases here in the next six months or so. 'We're targeting undervalued assets, overlooked by investors perhaps because of the properties' current use or the way they're being managed. We can refurbish and reposition such assets and seek to add value to existing buildings rather than build something from scratch,' says Mr MacDonald, who is also Fine Grain's CEO.

Fine Grain's portion of the acquisition will be funded by 70 per cent debt, provided by Munich-based Hypo Real Estate Group.

700 Beach Road was sold by In-Space Pte Ltd, whose shareholders include Wee Chwee Heng of Kumpulan Akitek.

700 Beach: The total investment of $73.5m works out to $1,097 psf of the enlarged total net lettable area

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved

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