July 14 (Bloomberg) -- CapitaLand Ltd. and Mitsubishi Estate Co. said they will tie up in a S$1.4 billion ($1.15 billion) venture to redevelop a downtown Singapore parking lot structure into a 40-story office building.
CapitaLand, Southeast Asia’s biggest developer, its property trust CapitaCommercial Trust, and Mitsubishi Estate, Japan’s second-largest developer, will turn the Market Street Car Park into an 887,000-square-foot office tower, they said. CapitaLand will hold a 50 percent stake, the trust will own 40 percent and Mitsubishi Estate will have 10 percent, they said.
The 245-meter (804-foot) building will match the height of new office towers including One Raffles Quay and Marina Bay Financial Centre, according to the website of Council on Tall Buildings and Urban Habitat. The new property is expected to generate a 6 percent annual return when it’s completed by the end of 2014, they said in a statement to the Singapore exchange.
“Investing in the Market Street office development is aligned with our strategy to strengthen our pipeline of commercial properties in Singapore and to lend support to our sponsored commercial REIT, CapitaCommercial Trust,” said Chong Lit Cheong, chief executive officer of CapitaLand’s commercial property unit.
The parking lot is now owned by CapitaCommercial and will be sold to the joint venture for S$56 million, 15 percent higher than its valuation in December, according to the statement. CapitaCommercial needed the partners because the project exceeded 10 percent of its total asset size, a limit set by Singapore for new developments by real estate investment trusts.
The building would be among five properties in Singapore with that height, according to Council on Tall Buildings. The three tallest in the city stand at 280 meters, CapitaLand’s headquarters Capital Tower is 254 meters in height, followed by the Altez apartment block at 250 meters.
CapitaLand dropped 0.3 percent to S$2.94 at 9:25 a.m. in Singapore, and CapitaCommercial lost 0.3 percent at S$1.46. Mitsubishi Estate fell 0.2 percent to 1,454 yen in Tokyo.
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