M&G Completes $248M Purchase of Four Singapore Auto Facilities From Cycle & Carriage 

M&G Real Estate has completed its purchase of four car showrooms in Singapore from auto distributor Jardine Cycle & Carriage (JC&C) for a combined S$333 million ($248 million), in the city-state’s largest industrial deal in nearly four years.

“The attraction of this investment for the fund is to increase its exposure to the tightly held logistic sector in Singapore through a sale-and-lease back arrangement providing strong and robust income with annual step up over a long lease term from a high quality tenant,” Richard van den Berg, fund manager of M&G’s Asia core property strategy told Mingtiandi.

M&G lodged caveats on 14 February claiming rights to two industrial assets along Alexandra Road in Bukit Mera and another two properties in the Pandan area of western Singapore, which it purchased through a sale-and-leaseback deal which allows the auto distributor to continue occupying them for an extended period.

“This portfolio sale and leaseback marks the largest industrial transaction registered in Singapore since 2019 and highlights the robust demand for industrial assets in any market cycle,” Rimon Ambarchi, CBRE’s industrial and logistics head for Southeast Asia, told Mingtiandi on Tuesday. “In the current market, where interest rates are high and economic growth is facing headwinds, investors are placing greater focus towards high yielding, income-based investments to generate their returns.”

Industrial in the City

M&G’s newly acquired portfolio generated S$25.9 million in total annual rental income in the 12 months ending May 2022 and has 12 years in weighted average period to lease expiry, based on documents seen by Mingtiandi. The properties span a combined leasable area of 889,354 square feet (82,623 square metres).

The filings, which confirm news first reported by Mingtiandi in October, shows that M&G paid S$142 million for the biggest asset in the portfolio, 239/241 Alexandra Road, which serves as Cycle and Carriage’s regional headquarters, and shelled out S$131 million for the Mercedes-Benz Center a few blocks away at 301 Alexandra Road.

Purchasing the two Alexandra properties, which accounts for nearly 70 percent of the yearly rental income, comes with a 10-year leaseback term with an option to extend for another 5 years. The area is located about a 10-minute walk from the Queenstown MRT station and around 15 minutes’ drive to the central business district.

Broken down, the London-based fund manager paid S$706 per square foot of floor area for JC&C’s 201,057 square foot headquarters. With offices on the upper three floors, the ground level is a showroom for luxury and mass-market car brands like DS Automobiles of France, Kia and Mitsubishi.

The second Alexandra property is used exclusively as a showroom for Mercedes-Benz vehicles and also features a workshop, cafe, ancillary office space and a car park. The 200,000 square foot block was sold for the equivalent of S$655 per square foot.

To the west, M&G’s leaseback terms for the properties in Clementi and Jurong East will be expiring once their land tenures end in 2038.

The properties include 209 Pandan Gardens, which M&G purchased for S$46 million, or about S$129 per square foot of the 356,803 square foot industrial complex. The campus comprises a two-storey building and a pair of four-storey facilities housing showrooms, service workshops, car parks and ancillary offices.

The fund manager paid S$14 million for the fourth asset, 188 Pandan Loop, which translates to S$106 per square foot of the two-storey building’s total floor area of 132,150 square feet. The property is situated within an industrial estate near Singapore’s west coast, used as a service centre and a warehouse.

CBRE brokered the portfolio sale.

Betting Big on Asian Sheds

M&G sealed its Singapore deal a month after it raised its stake in a mega warehouse in Japan as part of its goal of boosting investments in Asia Pacific.

In January, the fund manager announced that its Asia core property strategy spent JPY 34 billion (then $267 million) for an additional one-third interest in the ESR Ichikawa Distribution Centre in Chiba prefecture, raising its shareholding in the 2.16 million square foot facility to 58.3 percent.

The investment in the Ichikawa project follows an earlier partnership between M&G and ESR when the two announced a long-term partnership last August to develop a portfolio of logistics assets across Tokyo, Osaka and Nagoya. M&G committed to invest up to $350 million in fresh equity into the venture.