Blackstone keen on bulk purchases of high-end residences

Global investment and advisory giant Blackstone is said to be keen on bulk purchases of high-end residential units in Singapore. It is understood to be doing due diligence for a potential acquisition of 18 four-bedroom apartments at Paterson Suites as well as an en bloc purchase of 21 Anderson Royal Oak Residence. Both are completed freehold developments.

When contacted, Blackstone declined to comment.

Blackstone is said to be doing due diligence on 21 Anderson at around S$159 million or nearly S$1,860 psf based on the total strata area of 85,552 sq ft.

The 10-storey property comprises 34 units. It is owned by Arch Capital, set up by Ayala Group. The pricing is significantly lower than the S$250-260 million indicative price early last year, when the property was put up for sale through an expression of interest exercise.

The S$159 million pricing is also below the S$200 million or S$2,337 psf that Arch paid for the asset in 2010. Located in the Anderson/Walshe roads locale, Anderson 21 underwent a major revamp in 2009.

Blackstone is also said to be in talks to buy the balance 18 units in Paterson Suites held by a fund in the Real Estate Capital Asia Partners (Recap) series managed by SC Capital Partners. Observers expect the pricing to be around S$2,100 psf.The 18 units are part of the stack of 20 totalling 43,927 sq ft that the Recap fund bought in 2010 for S$118.61 million or S$2,700 psf from the project’s developer, Bukit Sembawang.

Last year, Recap divested two of the units (each 2,196 sq ft) at S$2,775 psf and S$2,596 psf. Located in the Paterson Road/Lengkok Angsa area, Paterson Suites received Temporary Occupation Permit (TOP) in Q3 2010. Recap’s 18 balance units add up to 39,535 sq ft.

Market watchers expect the bulk purchases at Paterson Suites and 21 Anderson to be effected through the sale of shares in the companies that own the units.

There is also talk of other potential bulk sales in upmarket condos, either by the projects’ developers or funds that had acquired units in theprojects. One of them could be at 111 Emerald Hill, for the remaining 16 units in the 40-unit freehold project developed by a fund managed by LaSalle Investment Management. The project received TOP in 2011.

Based on URA Realis caveats data, the other 24 sold units in the 12-storey project were transacted between November 2010 and January this year, at prices ranging from S$2,214 psf (for a fourth floor unit in January 2014) to S$3,030 psf (for an 11th floor unit in January 2013).

BT understands that a bulk sale involving all 48 units at Hiap Hoe’s Treasure on Balmoral project was under negotiations until as recently as three weeks ago at around S$1,700-plus psf on 103,439 sq ft total strata area. However, Hiap Hoe is understood to have halted discussions. It received TOP for the project on Nov 1, 2012 and therefore would have had up to last Saturday to finish selling all the units under the Qualifying Certificate (QC) rules.

Market watchers are wondering if Hiap Hoe will now use a subsidiary to buy up Treasure on Balmoral, similar to what it did in September to mop up the unsold units on the top floors of two of the group’s projects – Skyline 360° at St Thomas Walk, and Signature at Lewis – to satisfy QC conditions.

Alternatively, Hiap Hoe could be seeking the government’s approval for an extension of the sale period in exchange for extension charges, reckon analysts.

Century 21 CEO Ku Swee Yong said: “Funds making bulk purchases in residential projects would be expecting to buy at between 30 and 40 per cent off the current market. This is to account for the 15 per cent ABSD (additional buyer’s stamp duty), the very low LTV (loan-to-value) of 20 per cent on their investment, plus their profit margin. So the consequent market valuation around these locations will drop. Technically on paper this is very negative for the market.”

Blackstone also owns StarHub Green along Ubi Avenue 1, which it bought for S$215 million in 2012 and is said to be in the process of selling.

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