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Thread: Mercatus close to sealing Jurong Point purchase

  1. #1

    Default Mercatus close to sealing Jurong Point purchase

    Mercatus close to sealing Jurong Point purchase

    The NTUC co-op is expected to pay S$2.2b or S$3,343 psf. Net yield works out to 4.2%

    Monday, April 3, 2017

    by Kalpana Rashiwala
    kalpana@sph.com.sg
    @KalpanaBT


    IN THE biggest property investment sales transaction so far this year, Mercatus Co-operative, an NTUC social enterprise, is close to sealing a deal to buy Jurong Point for S$2.2 billion, BT understands. The price reflects a net yield of about 4.2 per cent. It also translates to S$3,343 per square foot based on the 658,000 square feet of commercial net lettable area (NLA) in Jurong Point to be sold by an equal joint-venture between Lee Kim Tah Holdings and Guthrie GTS.

    The mall, which is nearly fully let, stands on two sites; one has a balance lease term of about 75.5 years and the other, 88 years. Their combined land area is 557,288 sq ft. The property was completed in two stages - in 1995 and 2008.

    Mercatus declined to comment when contacted by BT.

    Commenting on the pricing for Jurong Point, Cushman & Wakefield executive director of capital markets Shaun Poh said: "Assuming the acquisition is based on 4.2 per cent net yield, this would be a decent entry yield given that a prime mall with such a large floor area is rarely available for sale, and considering that office yields are trending below 3.5 per cent levels.

    "In comparison, smaller malls and individual shop units have transacted at around 4.5 per cent yield or even lower over the past year." C&W is not involved with the transaction.

    Mercatus was incorporated in May 2011. Based on information on its website, the co-operative's vision is to "own and manage strategically-located shopping malls in the heartlands of Singapore to provide NTUC (National Trades Union Congress) social enterprises with retail space to serve the daily needs of working families".

    "Through its investments, Mercatus also aims to 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 CBD as well as 50 per cent of Nex mall above the Serangoon Circle Line MRT Station. 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 will sell 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 (CSFS), 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. Market watchers 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.

    Market watchers say that acquiring Jurong Point would be in sync with Mercatus' strategy, noting among other things that FairPrice Xtra is an anchor tenant in the mall.

    Other major tenants for the space to be sold by Guthrie and Lee Kim Tah include Courts, Harvey Norman, BHG, Uniqlo and Kiddy Palace, in addition to three food courts.

    A high-performing shopping centre, Jurong Point is deemed "fortress retail". Seamlessly linked to Boon Lay MRT Station and Bus Interchange, the mall draws an average of six million visitors a month. It has a catchment of 150,000 households within a five-kilometre radius. There is also potential for growth as the new town planned in Tengah is progressively developed.

    Jurong Point has about 1,000 car park lots available for the use of shoppers. Although its total gross floor area of 1.07 million sq ft is already the maximum allowed for the site, there is scope for an incoming investor to boost its yield from the mall through repositioning the tenant mix while creating more activity areas to increase footfall, for instance, by catering to families and young children, suggested Cushman's Mr Poh.

    Another analyst highlighted the potential to convert some of the carpark lots into retail space (subject to regulatory approvals) in the longer term as the car-lite trend takes root.

    Jurong Point was put on the market in the fourth quarter of last year through an expressions of interest exercise that closed in November. That exercise is said to have drawn a good number of submissions, following which Blackstone, Frasers Centrepoint and Macquarie were shortlisted for due diligence. However, by February, Mercatus surfaced as the new front runner.



  2. #2

    Default Mercatus buys Guthrie-Lee Kim Tah stake in Jurong Point

    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

    Friday, April 7, 2017

    by Kalpana Rashiwala
    kalpana@sph.com.sg
    @KalpanaBT


    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.



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