CapitaLand drops Asia Square bid

The listed Singaporean property developer has ceased negotiations to acquire one of the region’s largest office properties from BlackRock Real Estate.  

The Singapore-listed property developer CapitaLand has pulled out of negotiations to acquire the Asia Square Tower 1 from the New York-based asset management giant BlackRock Real Estate.

In a statement released this morning, CapitaLand said that the “parties for now have ceased negotiations regarding the potential acquisition”. It went on to add that “CapitaLand would continue to explore opportunities which fit in the group’s strategy, and the terms of which allow the group to generate the required returns.”

CapitaLand did not respond to requests for further comment. However, PERE has learned from a market source that concerns with regards to certain representations and warranties within the contract to buy the asset, was the deal-breaker.

The recently developed 1.285 million square foot office tower in Singapore’s Marian Bay area was put on market by BlackRock earlier this year in what is to be one of the largest and most-anticipated property deals in the region. The asking price for the asset is reportedly thought to be between S$3.5 billion (€2.2 billion; $2.4 billion) and S$4 billion.

According to multiple sources, a consortium of CapitaLand and the Norges Bank Investment Management (NBIM), the manager of the Norwegian Government Pension Fund Global, had ultimately emerged as a preferred bidder after the bidding process was completed in October.

CapitaLand had confirmed its interest in jointly acquiring the asset with a partner in mid-October, though it did not specifically name other parties involved.

In a statement issued on its website, the property developer said previously: “As negotiations with the vendor of Asia Square Tower 1 and the other parties on the terms of the potential transaction are still on-going, there is no certainty or assurance that any transaction for Asia Square Tower 1 will materialize or that any definitive or binding agreement will result from such negotiations. If the transaction proceeds, CapitaLand anticipates drawing upon internal sources of funds and available credit lines to finance it.”

It is unclear at this point what CapitaLand’s exit means for NBIM, or the sale of Asia Square Tower 1.

In an emailed statement to PERE following CapitaLand’s announcement, John Saunders, head of Asia Pacific for BlackRock Real Estate said: “Asia Square is a trophy grade A office building in Singapore, often considered as one of Asia’s best such developments, and negotiations with potential buyers of this asset continue. While we are not in a position to comment on the details, we are pleased to have received significant global interest in this high-quality asset and are currently working to achieve the best outcome for our investors.”