Perennial and SPH Sell Singapore Mall to Mitsubishi-CLSA Fund in S$520M Deal

Singapore’s Perennial Real Estate Holdings and a consortium of investors including Singapore Press Holdings (SPH) have agreed to sell a retail complex in the city’s Chinatown precinct for S$520 million ($383.28 million), the listed companies announced on Monday.

Under the terms of a sale and purchase agreement outlined in the announcement, Perennial and its co-investors are selling their entire interests in the Chinatown Point Mall and an accompanying set of four strata office units in the office tower element of the project to a subsidiary of Pan Asia Realty Advisors, a joint venture fund invested by Mitsubishi Estate and CLSA Real Estate Partners.

The sale of the complex at 133 New Bridge Road comes two and a half years after SPH joined with Perennial to buy out a 60 percent stake in the 205,000 square foot (19,000 square meter) property not already held by the developer at a value of S$442.5 million.

Transaction Involves Cash Compensation of S$225M

“The transaction is a testament to Perennial’s ability in identifying quality assets, creating value via enhancement initiatives, and ultimately unlocking value via divestment for all stakeholders,” Pua Seck Guan, CEO of Perennial, said in a statement.

Under the terms of the agreement, the consortium will receive S$225 million in cash for their shares in the company holding the assets as well as for assignment of shareholder loans. Perennial, which holds a 50.64 percent effective interest is expected to receive approximately S$125.3 million of that amount, subject to final adjustments.

The transaction price of S$520 million translates to S$2,450 per square foot of net lettable area in the Chinatown Point mall, and the seller consortium was advised in the transaction by the Singapore capital markets team at JLL. The transaction is expected to close on or about June 6.

Perennial explained that the transaction is in line with its “active capital recycling strategy to rebalance its portfolio, enhance its financial flexibility, and maximise its returns to shareholders.”

SPH Liquidates 31% Stake

In a separate filing to the Singapore bourse on Monday, SPH said its wholly owned subsidiary, CT Point Investments Pte Ltd, has a direct stake of 30.68 percent in the holding company that owns the Chinatown Point Mall which it expects to liquidate in its entirety through the sale. The company expects to record its share of gain of approximately S$10 million in its books pursuant to the transaction.

SPH, which is best known for publishing Singapore’s Straits Times and only last week acquired £133.7 million ($175.3 million) worth of student housing assets in the UK.

The remaining stakeholders in the selller consortium were not identified.

The buyer, Pan Asia Realty Advisors, was set up by Mitsubishi Estate and CLSA in 2017 to invest in core Asia Pacific real estate opportunities.

Perennial Sells Out After a Decade in Chinatown Point

Constructed in 1993, the Chinatown Point project includes a 25-storey strata-title office tower next to the mall, which was previously acquired by a Perennial-led consortium for S$250 million in 2010 and later renovated at a cost of over S$91 million.

In 2016, Perennial brought in SPH to jointly buy a 60 percent stake in the mall not already held by the developer at a value of S$442.5 million, with Perennial taking a 40 percent stake in that acquisition.

Following completion of this latest transaction, Perennial’s wholly owned subsidiary, Perennial (Singapore) Retail Management, will continue in its role as the property manager of Chinatown Point Mall.

Separately, Perennial on Monday noted in a profit guidance that it expects to post a first-quarter net loss for the three months ended March 31, primarily due to weaker operating performance of its newly operational assets, as well as higher financing costs.

The group expects to turn profitable in the second quarter of this year, on completion of the disposal of its stake in Chinatown Point Mall. It added that further details of the group’s performance will be disclosed when it releases its first quarter results in May.