IN THE first transaction of an entire Singapore office building this year, DBS Group announced on Friday evening that it is selling PwC Building at 8 Cross Street to an indirect subsidiary of Manulife Financial Corp.

This confirms an earlier BT report.

The deal values the 28-storey office block at S$747 million, which works out to S$2,100 per square foot based on its net lettable area of 355,704 sq ft.

The property is on a site with a balance lease term of 78 years.

Upon completion of the sale (which is scheduled to take place by the end of next month), DBS is expected to book about S$350 million net profit from the transaction. The sale is also expected to result in a contribution of the same quantum to the group's consolidated net tangible assets, DBS said in a filing with Singapore Exchange after the close of trading on Friday.

CBRE brokered the transaction.

Savills Singapore research head Alan Cheong described the transaction as a "plain vanilla deal". "Insurance companies have to abide by very strict investment criteria which leave very little room for structuring," he added.

Manulife did not respond to BT's queries by press-time.

The transaction is understood to be an investment-driven purchase though the Canadian insurer is expected to occupy part of the building, which is at the corner of Cross and Telok Ayer streets.

Manulife currently operates at a few locations on the island, but principally at Manulife Centre in Bras Basah Road, where it is understood to have a lease for about 100,000 sq ft which runs out later this year.

What makes PwC Building a good acquisition for Manulife is that close to half of the building will be vacated when anchor tenant PricewaterhouseCoopers (PwC) moves to Marina One, where it has signed a lease for around 180,000 sq ft.

Observers say that for Manulife, having a physical presence in Singapore's financial district would be in sync with the increased market share that it is eyeing in the Republic following its 15-year exclusive bancassurance partnership with DBS which kicked in on Jan 1 last year.

DBS's sale of PwC Building is being effected through a sale of the entire equity interest in DBS China Square (DCS), which owns the asset. DCS has accounted for the buildling on a historical cost basis, DBS Group said in its announcement. "The building was constructed by DCS in 1999 and is currently held for investment purpose," South-east Asia's largest bank said.

Giving details of the transaction, DBS Group said that its fully-owned subsidiary DBS Bank has agreed to sell its entire equity interest in DCS to an indirect subsidiary of Manulife Financial Corp for about S$358 million in cash.

The consideration was arrived at on a "willing-buyer willing-seller" basis and takes into account the unaudited book value of DCS as at Dec 31, 2016, adjusted based on an agreed property value of S$747 million for the building as well as the repayment by the purchaser of the shareholder's loan of S$402.6 million to DCS.

"The consideration is subject to certain post-completion adjustments which are not expected to be material," the group said.