UEL and SPH built the mall in 2014 (Image: Seletar Mall)
Seletar Mall in northeastern Singapore has moved one step closer to new ownership after SGX-listed Paragon REIT declined to buy the asset for S$550 million ($409 million), paving the way for its potential acquisition by Robert Kuok’s Allgreen Properties.
The offer to sell the shopping centre in the Sengkang area to Paragon was made to honour a right of first refusal extended to the REIT by its sponsor, Temasek Holdings-backed Cuscaden Peak, according to a Thursday announcement.
Mingtiandi reported in January that Allgreen, part of the Kuok Group headed by Malaysia’s richest man, was in exclusive due diligence to acquire the 188,000 square foot (17,466 square metre) Seletar Mall from a joint venture of Cuscaden Peak and Yanlord Land’s United Engineers Ltd (UEL) unit.
Market sources familiar with the talks confirmed to Mingtiandi on Thursday that negotiations with Allgreen were ongoing at the S$550 million price point. JLL and Cushman & Wakefield are understood to be assisting in the transaction but have declined to comment.
Suburban Shopping
The offer price values Seletar Mall at S$2,926 per square foot of net lettable area and would translate to a 14.5 percent increase from the mall’s 2021 carrying value of S$480.5 million, which is based on Singapore Press Holdings’ last annual report before the media giant’s real estate business was spun off and acquired by Cuscaden Peak the next year.
Robert Kuok and his clan own three Singapore malls through Allgreen Properties
Paragon’s right of first refusal dates to July 2013, when the trust then known as SPH REIT entered into the agreement with then-sponsor Singapore Press Holdings. Cuscaden Peak holds a 61 percent stake in the renamed Paragon REIT, whose properties include Paragon, Clementi Mall, Rail Mall and other retail assets.
Cuscaden Peak and UEL own the Seletar Mall through a 70:30 joint venture after Singapore Press Holdings developed the property together with UEL in 2014. With six levels including two basement floors, tenants include a FairPrice Finest supermarket, an NTUC Foodfare food court and a Shaw Theatres cinema, with the mix catering to families and other residents in the Fernvale residential area.
Located on the corner of Fernvale Road and Sengkang West Avenue at 33 Sengkang West Avenue, the property connects directly to Fernvale LRT station.
Retail Vacancy Eases
Disposing of Seletar Mall would leave Cuscaden Peak — a consortium of hotel tycoon Ong Beng Seng and his SGX-listed Hotel Properties, along with Temasek-controlled CapitaLand and Mapletree — with the Woodleigh mall and residential complex as its remaining directly owned properties in Singapore.
The move to acquire Seletar Mall would add to an Allgreen retail portfolio that includes the Great World and Tanglin Mall in the Orchard area, with the company set to open the Pasir Ris Mall in northeastern Singapore in the second quarter.
Islandwide vacancy for retail space eased 0.7 percentage points to 6.5 percent in the fourth quarter of 2023 — the lowest rate since 2014, according to the latest research by Savills Singapore. Average rents in Orchard Road are expected to rise by 3 to 5 percent this year, boosted by tourist spending, while suburban retail rents are seen remaining flat as cost-push inflation is offset by weaker domestic spending.
“It may be a tale of two regions as the continued improvement in tourist arrivals and spending benefits Orchard Road malls while outbound travel may rein in spending in suburban malls,” said Alan Cheong, an executive director heading the research and consultancy team at Savills.
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