Frasers Property announced on Monday that it has agreed to acquire a 17.8 percent stake in a retail real estate fund managed by UK real estate investment manager PGIM for S$356.4 million ($262.7 million).
Frasers chairman Charoen Sirivadhanabhakdi is buying a stake in the PGIM retail fund
The deal would give Frasers, which develops and invests in properties through divisions in Australia, China and Thailand in addition to its Singapore-listed operation, an interest in PGIM Real Estate Asia Retail Fund Limited, a non-listed vehicle managed by the real estate affiliate of Prudential.
The fund owns and manages six Singapore malls and the Central Plaza office building, as well as at least two Malaysian retail properties.
Frasers is purchasing 94,013 shares in the fund from an unnamed shareholder at a price close to their book value of S$355.5 million as of 31 December 2018, including the fourth quarter dividend, according to the announcement. The fund had 24 beneficial shareholders 31 December.
The pricing for the transaction, which was declared in an announcement to the Singapore stock exchange by Frasers, is still subject to final dividends to be paid by the privately held fund for its fourth quarter performance.
The investment by the developer controlled by Thai liquor and property magnate Charoen Sirivadhanabhakdi, comes soon after the PGIM fund, the assets for which are managed by the AsiaMalls platform, had sold some of the Malaysian shopping centres in its portfolio.
Expanding Singapore Mall Investments
In its statement to the Singapore exchange, Frasers explained that, “The Acquisition is in line with the Group’s strategy to grow recurring income sources in one of the Group’s key asset classes. The assets in the Company are primarily suburban retail properties in Singapore, an asset class in which the Group has significant experience.”
The Liang Court shopping centre along Clarke Quay is part of the AsiaMalls portfolio
The Singapore properties held by PGIM Real Estate Asia Retail Fund Limited include the Tiong Bahru Plaza, a mixed-use complex which includes the Central Plaza building; the White Sands mall in northeastern Singapore’s Pasir Ris area; the Liang Court mall near Clarke Quay; the Hougang Mall near the Hougang bus interchange and Hougang MRT station; as well as Century Square and the Tampines 1 mall which are also in the northeastern part of the city-state.
Frasers Property already has 12 Singapore retail properties in its portfolio, according to its website, including The Centrepoint on Orchard Road, Valley Point on River Valley Road and China Square Central on Cross Street.
Frasers Deal Follows Sale of Malaysian Malls
The PGIM fund’s tie-up with Frasers follows within months of the sale of part of the retail vehicle’s portfolio of five Malaysian retail properties.
In September 2018 Malaysia’s KIP Real Estate Investment Trust announced to the country’s stock exchange that it had agreed to purchase the AEON Mall Kinta City in the country’s Perak state from PGIM Real Estate Asia Retail Fund Limited for RM 208 million ($51 million).
That transaction was followed by reports in the Malaysian press later that month that AsiaMalls had agreed to sell the Setapak Central Mall in Petaling Jaya to Singapore’s ARA Asset Management for an undisclosed sum. During the same week PGIM Real Estate Asia Retail Fund was said to be selling the SStwo Mall in Kuala Lumpur to local developer DK Group for around RM 180 million.
The PGIM retail fund also owns the Island Plaza mall in the northern Malaysian island city of Penang and the Seremban Prima shopping centre in Negeri Sembilan, between Port Klang and Malacca.
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