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(SINGAPORE) United Overseas Bank has sold a smallish freehold office building at 60 Robinson Road, opposite Lau Pa Sat, for $42.9 million or $1,000 per square foot (psf) of existing net lettable area.

OUB Building: The buyer plans to spend $12m refurbishing it to increase its net lettable area

The buyer intends to spend $12 million refurbishing the property - now known as OUB Building - to substantially increase its net lettable area.

Including stamp duty, interest and fees, the all-up investment cost will be about $60 million or $915 psf of future net lettable area after refurbishment.

The buyer is CP Grace III Pte Ltd, a special purpose vehicle (SPV) owned equally by Asia Equity Partners - a boutique investment and fund management outfit set up by former DTZ Debenham Tie Leung executive director Yusof Wahid - and CP Grace Capital, whose shareholders include low-profile Indonesian investors.

However, the investment will subsequently be funded by Injaz AsiaEquity Property Fund I, which is substantially owned by Injaz Mena, an investment bank in Abu Dhabi that manages the wealth of high net-worth Middle Easterners including royal families. AsiaEquity's fully-owned unit AsiaEquity Partners (Cayman) is general partner to the Injaz fund.

This is the second major deal structured by Asia Equity Partners to be announced recently.

Last month an SPV called CP Grace One - controlled by Asia Equity Partners and the Indonesian investors - sold 55 Market Street, formerly known as Sinsov Building, for $72.5 million.

This was 18 months after it was acquired for $34.1 million and refurbished, taking the all-up investment to $54 million.

The buyer was Allco Commercial Real Estate Investment Trust.

Asia Equity Partners has been granted exempt fund manager and exempt corporate finance adviser status by the Monetary Authority of Singapore under the Securities and Futures Act.

The acquisition of OUB Building will be completed in December, around the same time that UOB - which occupies the entire building except the ground floor - will vacate the property.

Refurbishment is expected to start in January next year and is slated for completion 18 months later.

Asia Equity Partners managing director Yusof Wahid said: 'Our property advisers have indicated achievable rentals in the region of $7 psf a month based on our refurbishment plan and specifications if the property is ready and available for lease today.'

Market watchers say that assuming the average rental the building can achieve when it is ready in two years is about $8 psf - given tightening office supply until late 2009, when the first phase of the mega Business & Financial Centre will be ready - the net yield for the investors works out to around 8 per cent.

The refurbishment will boost the building's net lettable area 53 per cent, from 42,893 sq ft to 65,580 sq ft, while the gross floor area will increase on a smaller scale, from 81,822 sq ft to 84,253 sq ft.

The 16 storeys in the existing building will be reduced to 15 storeys.

The top level will be demolished but the existing void on the fifth level will be converted to usable floor area and double-volume public space will be created at the first storey.

A mechanical carpark stacking station with 20 lots will be incorporated, doing away with the existing basement car park.