SINGAPORE – Hong Kong-listed Link Reit is buying a big chunk of Singapore shopping space for $2.16 billion from NTUC Enterprise Co-operative in its first foray here.
The deal is for the acquisition of Jurong Point mall and Swing By @ Thomson Plaza, which occupies levels one and three of Thomson Plaza, from NTUC unit Mercatus Co-operative, it was announced on Wednesday.
The transaction is expected to be completed on March 31.
Mercatus also entered into a long-term partnership with Link Reit for the asset and property management of AMK Hub in Ang Mo Kio. The mall will remain under Mercatus’ ownership.
Reuters reported in November that Link Reit was the front runner to buy the assets from Mercatus for $2.5 billion, in what would be South-east Asia’s biggest real estate transaction of 2022.
With AMK Hub, Link Reit will become the sixth-largest shopping centre operator by footprint in Singapore once the deal is completed.
The real estate investment trust will also be among the top 10 retail asset owners in Singapore, covering a catchment of almost 10 per cent of Singapore’s population.
“This transaction allows us to build a dedicated team in Singapore and provides a base for Link to expand further into other asset classes and strategies in Asia-Pacific,” said Mr George Hongchoy, chief executive officer of Link Asset Management.
The Reit manager said the acquisition will be fully funded through its cash resources and debt facilities. But it is open to bringing in capital partners for the assets, and is in active discussions with “reputable like-minded investors” to further this.
Mercatus said its divestment is a result of a strategic review, and is in line with its strategy to refocus on certain types of core assets. It will continue to retain ownership of assets that are substantially used by the National Trades Union Congress, NTUC Enterprise and its portfolio of social enterprises.
Jurong Point, with a net lettable area of 720,000 sq ft, and Swing By @ Thomson Plaza, with a net lettable area of 110,000 sq ft, are considered “non-core assets”, it noted.
Mr Seah Kian Peng, deputy chairman of Mercatus and group CEO of NTUC Enterprise, said Mercatus’ strategic review is an example of how it continually reshapes its portfolio to deliver “greater social impact” and generate long-term sustainable returns.
“The divestment will allow us to unlock some value and redeploy capital to specific areas where we can make a difference in the lives of families in Singapore in a more direct and meaningful way, such as by scaling services in healthcare and education.”
Mr Seah also said Mercatus appreciates Link Asset Management’s willingness to retain talent and will work together with the Singapore Industrial and Services Employees’ Union to support Mercatus’ employees throughout this exercise.
Link Reit, which has a market value of US$15.3 billion (S$20.6 billion), has been on the prowl for assets in Singapore and other countries to diversify its portfolio.
The Reit owns and manages assets including retail properties, carparks and offices.
Nearly three-quarters of its portfolio is in Hong Kong, but it has expanded into mainland China, Australia and Britain.
Reuters reported in November that CapitaLand Integrated Commercial Trust and Frasers Property, part of Thai billionaire Charoen Sirivadhanabhakdi’s group, had also vied for the assets.
Mr Hongchoy said Jurong Point and Swing By @ Thomson Plaza are sizeable suburban retail assets, with high occupancy rates and stable rents that are “traditionally tightly held and do not often come to market”.
Both properties are close to full occupancy and had generated an annualised net property income of $106 million as at October.
Units of Link Reit closed 0.6 per cent higher at HK$56.60 on Wednesday. THE BUSINESS TIMES, REUTERS
