Chinese e-commerce giant Alibaba Group has bought a half stake in Singapore’s AXA Tower from a consortium led by Singapore-listed Perennial Real Estate Holdings in a deal that values the property at S$1.68bn (US$1.18bn).
The AXA Tower is a grade-A office development located in Singapore’s CBD, with 1.05m sq.ft. of gross floor area and building approvals for potential extensions.
“The divestment of AXA Tower aligns with our capital recycling strategy to deliver a divestment gain, while retaining our involvement to create value via the redevelopment of the prime property which is strategically sited within the Greater Southern Waterfront with breathtaking sea views,” said Perennial CEO Pua Seck Guan.
“Alibaba is already an anchor tenant at AXA Tower, and we are pleased to have their support in creating an iconic landmark in Singapore’s CBD.”
The deal will see Alibaba Singapore, a subsidiary of Alibaba Group Holding Limited, acquire a 50% interest in the Perennial-led entity, which indirectly owns the 50-storey AXA Tower.
Under the terms, Alibaba Singapore will also be transferred half of the shareholders’ loan outstanding, according to Perennial.
The deal comes at a critical time for Asia Pacific commercial real estate markets, which are under significant pressure as a result of the COVID-19 pandemic.
“Investors have remained optimistic throughout this uncertain environment and stayed active in their pursuit of core assets in Singapore,” said Ting Lim, executive director, head of capital markets, Singapore at JLL.
“This transaction will provide a confidence boost to the Singapore market and reaffirm investor appetite for CBD assets.”
AXA Tower has already secured an approved uplift in its gross plot ratio, which would increase the property’s existing GFA of 1.05m sq.ft. to 1.24m sq.ft.
The property also has approval to increase its GFA to 1.55m sq.ft. should it integrate hotel and residential usage under the CBD incentive scheme.
The transaction comes after Perennial Real Estate Holdings and a consortium of investors, including Singapore Press Holdings, agreed to sell their stakes in the Chinatown Point Mall in Singapore in a deal worth S$520m (US$383.2m) last year.
The sale is expected to close in June this year.