NTUC unit said to have put 18 properties in HDB estates up for sale at $265m guide price

SINGAPORE – NTUC Enterprise’s real estate unit Mercatus Co-operative is understood to have quietly put on the market a portfolio of 18 commercial properties in Housing Board estates.

The 18 properties have a total indicative price of around $265 million, The Business Times understands.

They add up to about 170,000 sq ft of space in HDB shops, shophouses and low-rise commercial blocks, and the portfolio has full occupancy.

About 80 per cent of the space is leased to FairPrice, which is set to keep its long-term tenancies in the properties.

The properties are in locations such as Bukit Merah Central, Kallang Bahru, Bishan, Hougang, Serangoon North, Holland Drive, Tampines, Bedok, Buona Vista, Clementi, Choa Chu Kang, Jurong East and Jurong West.

The balance tenures for the properties vary, but average at around 57 years.

Three bundles

Word in the market is that the 18 properties have been split into three bundles; prospective buyers may submit offers for individual bundles, or the whole portfolio.

Mr Clemence Lee, executive director of capital markets for Singapore at CBRE, said: “Mercatus is exploring a sale of a portion of its assets via an expression of interest exercise. CBRE has been appointed as the agent.”

He confirmed that the assets would be sold with existing long-term tenancies in place, but said that “we are unable to disclose details of the portfolio due to commercial sensitivities”.

“There is no certainty or assurance that this exercise will lead to a transaction, and we cannot speculate on the outcome of the exercise,” he added.

A spokesman for Mercatus said it regularly reviews its portfolio to deliver greater social impact and generate long-term sustainable returns for its stakeholders.

For now, it is business as usual and Mercatus remains committed to safeguarding the interests of all stakeholders, including its tenants and their customers, it added.

Over the past nine months, Mercatus has sold a chunk of its Singapore retail assets for a total of slightly more than $3 billion.

In late December 2022, it entered a deal to sell Jurong Point and Swing By @ Thomson Plaza to Hong Kong-listed Link Real Estate Investment Trust for $2.16 billion.

In late January 2023, it struck a deal to sell its half stake in Nex mall in Serangoon Central to Frasers Centrepoint Trust and Frasers Property that valued the prime suburban mall (100 per cent interest) at $2.08 billion.

Market watchers noted that the 18 properties being offered via expression of interest are in mature HDB estates, with a captive catchment of heartlanders shopping for daily necessities.

The assets may appeal to prospective investors focused on stable income with built-in rental increases.

The smallest property is a 797 sq ft first-floor shop unit in Hougang Avenue 3 occupied by a Cheers outlet. This is the convenience retail format of FairPrice.

The other 17 properties are anchored by FairPrice supermarkets. FairPrice is part of the FairPrice Group, which comprises FairPrice, NTUC Foodfare, Kopitiam and NTUC Link.

Larger assets

Among the more centrally located assets is a space of about 30,700 sq ft at 71 Kallang Bahru, a two-storey commercial block a stone’s throw from Geylang Bahru MRT station.

Besides a FairPrice supermarket that occupies the bulk of this space, there are some shops on the first floor.

Another sizeable asset, of about 45,000 sq ft, is in a three-storey commercial block at 510 Bishan Street 13, about 100m from Bishan Bus Interchange and MRT station.

FairPrice occupies about 21,000 sq ft of this space; Mercatus also has other tenants for this asset.

Both these properties have potential for enhancement in value, for instance, by reconfiguring and repositioning some areas to cater to tenants that can pay higher rents.

Other assets among the portfolio of 18 that are in HDB commercial blocks include the FairPrice supermarket spaces of about 13,500 sq ft at Block 166 Bukit Merah Central and 10,000-plus sq ft at Block 114 Aljunied Avenue 2.

First-floor HDB shops

First-floor HDB shops owned by Mercatus that are among the 18 assets earmarked for sale include a 7,000-plus sq ft unit in Holland Drive and a 6,200 sq ft unit in Bedok Reservoir Road.

There is also a 13,000 sq ft corner first-floor shop at Block 135 Jurong Gateway Road near Jurong East MRT station

The NTUC Enterprise group of social enterprises are: FairPrice Group, NTUC First Campus, NTUC Health, Income Insurance, NTUC LearningHub, Mercatus and MoneyOwl, which is shutting by the end of 2023. THE BUSINESS TIMES