A western Singapore mall has become Firmus Capital’s second acquisition in the city-state, boosting the local private equity firm’s newly-launched Firmus Opportunity Fund VCC to S$200 million ($147.8 million) in assets under management.
The single-storey Le Quest Mall in Bukit Batok, a residential area just east of Singapore’s planned eco-city project in Tengah, is the retail element of the mixed-residential Le Quest project developed by the seller, Qingjian Realty, a local unit of Chinese builder Qingjian Group.
The mall has a gross floor area of 64,584 square feet (6,000 square metres) and also holds potential as a last-mile fulfilment hub for retailers and restaurants offering delivery and click-and-collect services as consumers stay closer to home during the COVID-19 era, Firmus Capital said in a release. The acquisition is believed to value the asset, which was Qingjian’s first commercial project in Singapore, at over $103 million.
The purchase of the recently-completed mall follows Firmus Capital’s acquisition of a north-central Singapore industrial building that the firm leased to electric car maker Tesla, in a deal announced in late July. The offshoot of Singapore’s Rockworth Capital Partners had previously focused on real estate in Australia.
All About the Neighbourhood
“With global risk tolerance on an unprecedented downtrend, there is a capital flight to assets deemed secure with strong income generation capabilities,” said Lim Su Kiat, chief executive of Firmus Capital and manager of Firmus Opportunity Fund VCC. “Le Quest Mall is a convenience centre that is well-located, with good accessibility serving a dense and growing catchment population.”
Le Quest is only the second shopping mall in Bukit Batok, which was formerly served solely by the 22-year-old West Mall. Located in the Bukit Batok West residential district, Le Quest can serve about 10,000 households within a 500 metre (547 yard) radius, Firmus Capital said.
The mall was officially completed in March 2020, but due to the pandemic, two of its anchor tenants were unable to open until November of last year. With the mall now 80 percent occupied by tenants including a FairPrice Finest supermarket, a Guardian pharmacy and fast-food mainstays McDonald’s, KFC and Pizza Hut, Firmus still sees the project as a value-add play.
“Our strategy is to curate a strong tenant mix focusing on necessities, essential services and F&B, and to position Le Quest Mall as top-of-mind for convenience-based shopping for the nearby residents,” Lim said.
Mingtiandi understands that Firmus Capital intends to stabilise occupancy at the mall, which now accounts for more than 70 percent of the the firm’s assets under management in the city. The local private equity player plans to enhance the neighbourhood mall’s investment and is said to already be on the lookout for additional community retail assets in the city.
Forest Access on the Way
Property analysts see the purchase as a play on the durable returns available from retail assets that provide local residents with daily necessities in one of Asia’s wealthiest cities.
“Malls located in suburban locations have been resilient through the pandemic, which makes them appealing to investors,” said Galven Tan, deputy managing director of investment sales and capital markets at Savills in the city. “Singapore remains an important market for real estate investors. We have observed some foreign investors making arrangements to visit Singapore in the coming weeks and expect more activities to take place.”
The property is a five-minute walk from the future Tengah Park and Tengah Plantation MRT stations and has a bus connection from the Bukit Batok and Bukit Gombak MRT stations. Tengah is Singapore’s first planned community to be introduced in more than 20 years, and the government is making it a living lab for green design.
Planned to provide more 42,000 new homes, the 700 hectare (2.7 square mile) forest town is set to incorporate centralised cooling, automated trash collection and a 100-metre-wide forest corridor running through the centre of town.
Firmus Capital was spun off from Rockworth Capital Partners in 2017 as a private equity and investment management firm. Before Lim left his former shop to establish the new fund manager, Rockworth had amassed a portfolio of A$1 billion (now $730 million) in commercial office and retail assets in Australia.
In addition to having co-founded Rockworth, Lim had previous experience as an investment manager at Frasers Centrepoint Commercial. The new firm plans to buy more Singapore real estate, building on an initial portfolio of Australian properties transferred from Rockworth.
Firmus Opportunity Fund VCC, the firm’s first Singapore-focused investment vehicle, was launched under the central bank’s Variable Capital Companies framework, a flexible legal structure aimed at making the city-state a hub for investment funds.
For the fund’s maiden transaction, Firmus acquired a building in Toa Payoh with a gross lettable area of 59,049 square feet, announcing in July that US automaker Tesla had signed a 20-year lease to use the property as its corporate office, showroom and service centre.
Both of the fund’s first two deals were brokered by local advisory OrangeTee. Aside from the opportunity fund, Firmus Capital has established four core-plus and separate investment mandate funds with assets under management in excess of S$300 million.