Mercatus buys Guthrie-Lee Kim Tah stake in Jurong Point

Price of S$2.2 billion works out to S$3,343 psf on commercial NLA; deal reflects about 4.2% net yield

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JURONG Point has been transacted at S$2.2 billion, with a sale and purchase agreement signed on Thursday. This is the biggest property investment sales deal so far this year.

Buyer Mercatus Co-operative, an NTUC social enterprise, is paying S$3,343 per square foot based on the 658,000 square feet of commercial net lettable area (NLA) in the mall that has been sold by an equal joint-venture between Lee Kim Tah Holdings and Guthrie GTS. The two companies were delisted a few years ago.

The estimated net yield based on the transacted price is 4.2 per cent.

The sale is the culmination of an expressions of interest (EOI) exercise that was launched in the fourth quarter of last year.

JLL worked with sole marketing agent Array Realty to conduct the EOI exercise.

The transaction is expected to be completed by July.

When contacted by BT, a spokeswoman for Mercatus confirmed the sale and purchase agreement had been entered into, but declined to comment on the pricing or other details.

Mercatus, incorporated in May 2011, is the real estate subsidiary of NTUC Enterprise. Its vision is to own and manage a portfolio of commercial properties to provide NTUC (National Trades Union Congress) social enterprises with access to commercial space and generate sustainable, long-term returns for the labour movement.

It currently owns AMK Hub (next to Ang Mo Kio MRT Station) and One Marina Boulevard in the financial district as well as a half-stake in Nex mall above the Serangoon Circle Line MRT Station.

Its portfolio also includes space at Thomson Plaza, strata shop units in Coronation Plaza and Bukit Timah Plaza, and HDB shop units across the island.

In recent years, some of the properties held by other NTUC social enterprises have been transferred to Mercatus.

At Jurong Point, the Guthrie and Lee Kim Tah tie-up has sold to Mercatus a total NLA of 702,000 sq ft - comprising the 658,000 sq ft commercial NLA and 44,000 sq ft under the government's Community/Sports Facilities Scheme, which is being used by occupiers such as NTUC First Campus Co-operative's My First Skool and voluntary welfare organisations.

There is another 59,000 sq ft in the mall that Guthrie and Lee Kim Tah divested about two decades ago to Golden Village, NTUC FairPrice and POSB (part of DBS).

Earlier this year, NTUC FairPrice sold its space - around 21,500 sq ft in Jurong Point's basement occupied by a FairPrice supermarket - to Mercatus.

Analysts expect Mercatus to try and buy out DBS's and Golden Village's space to gain full ownership of Jurong Point.

The property's total NLA of 761,000 sq ft makes it Singapore's largest suburban mall.

The EOI exercise for Jurong Point closed last November - following which Blackstone, Frasers Centrepoint and Macquarie were shortlisted for due diligence.

However, by February, Mercatus - which had also participated in the EOI though it was not in the original short-list - surfaced as the new front runner.

Seamlessly linked to Boon Lay MRT Station and Bus Interchange, Jurong Point draws an average of six million visitors a month. It has a catchment of 150,000 households within a 5km radius.

The mall is almost fully let; major tenants include FairPrice Xtra, Courts, Harvey Norman, BHG, Uniqlo and Kiddy Palace, in addition to three food courts.

Source: Business Times, 7 Apr 2017