112 Katong owners evaluating offers; mall expected to fetch S$500m

Local as well as overseas parties have expressed interest for the mall owned by Alpha Asia Macro Trends Fund and Keppel Land

June 22, 2017

Kalpana Rashiwala


KEPPEL Group has put 112 Katong, a mall at the junction of East Coast Road and Joo Chiat Road, on the market. The property is expected to fetch around S$500 million.

The Business Times understands that a private expressions of interest exercise is being conducted for the sale by property consulting groups CBRE and JLL on behalf of the mall's owners Alpha Asia Macro Trends Fund (AAMTF) and Keppel Land.

The initial closing for the EOI was last month, followed by a subsequent closing earlier this month. The owners are said to be evaluating the "handful of offers" from local and overseas parties that were submitted for the second closing, with the aim of shortlisting a party with whom they will then negotiate a sale.

When contacted, a Keppel spokesman said: "We will make an announcement if any transaction takes place."

The mall, which is on a site with a balance lease term of about 61 years, has close to 207,160 sq ft net lettable area (NLA) of retail space across six levels (Basement 1 to Level 5), with 308 car park spaces in Basements 2 and 3.

Golden Village operates a cineplex on Level 5 and part of Level 4. Other tenants include Katong Market Place operated by Cold Storage, food court chain Food Republic, and a host of restaurants.

AAMTF, managed by Alpha Investment Partners - a fully-owned unit of Keppel Capital, the asset management arm of listed Keppel Corporation - owns 77.6 per cent of 112 Katong. It acquired its stake in 2010 as part of a consortium assembled by Perennial Real Estate, which bought the property then known as Katong Mall from Tuan Sing Holdings for S$247.6 million. The consortium invested a further sum of about S$60 million to revamp the property, building additional levels to increase the NLA and carpark capacity.

Last year, Keppel Land acquired a 22.4 per cent stake in the property from BHG Holdings, BreadTalk Group and Perennial.

Talk in the market is that KepLand and AAMTF put the asset on the market in April, with an asking price of S$2,700 psf of NLA, which would translate to an absolute price of S$559.3 million. But observers expect the sale could take place in the range of S$2,400 psf to S$2,500 psf - or S$497.2 million to S$517.9 million.

The mall's occupancy rate is around 84 per cent - some units have been kept empty to facilitate a planned refurbishment programme that is being pitched to potential buyers as offering some upside potential. The proposed asset enhancement works are subject to planning approval from the Urban Redevelopment Authority.

The last major retail mall sale in Singapore was Mercatus Co-operative's S$2.2 billion purchase of Lee Kim Tah Holdings and Guthrie GTS's space in Jurong Point in April. The price works out to S$3,343 psf on the 658,000 sq ft of commercial NLA.

Separately, on Tuesday, CapitaLand Commercial Trust announced the completion of its sale of a half-stake in One George Street to insurer FWD Group, based on an agreed value of S$1.1832 billion, or S$2,650 psf on NLA, for the 23-storey office building. CBRE brokered the deal by private treaty.

FWD is the insurance arm of Richard Li's Hong Kong-based Pacific Century Group.

Data from Savills Singapore Research shows that the tally for investment sales of properties in Singapore of S$10 million and above this quarter (up to June 20) stands at S$8.8 billion - higher than the S$5.3 billion in Q1 this year as well as the S$7.3 billion in Q2 2016.