Singapore’s NTUC Enterprise Co-operative Ltd is close to selling off the majority of its Singapore real estate portfolio with its property arm marketing S$4.15 billion ($3 billion) in suburban malls at the same time that its insurance division is mulling offers for at least one office tower in the city, Mingtiandi has learned.
The trade union federation’s real estate arm, Mercatus Co-operative has hired JP Morgan to market its 2.13 million square foot (197,880 square metre) portfolio of four malls for an undisclosed sum, including a half-stake in a shopping centre which it co-owns with PGIM Real Estate, China’s CIC and a unit of Prudential, according to sources familiar with the discussions, which were first reported by Bloomberg.
In a separate transaction, NTUC Income, the insurance arm of the co-operative, this month concluded a tender for its 37-storey Income at Raffles office tower. That process drew offers from 10 players with the top bid coming in at over S$950 million ($687 million), based on an account by the Business Times. Competitors in that contest included a joint venture between BlackRock and City Developments Ltd, as well as local private equity firm TE Capital, Mingtiandi has learned.
Should Mercatus succeed in selling its mall portfolio, the disposal would rank at the largest property transaction in Singapore so far this year, with the reported amount equivalent to nearly half of the S$9.9 billion in properties that have changed hands since January, based on independent research.
Mall Heavyweight Wants Out
Deliberations on the potential sale of the mall portfolio are still ongoing but assets might fetch around S$4 billion Bloomberg reported late Thursday, citing anonymous sources.The reported price tag on that deal roughly matches the S$4.15 billion valuation for the mall portfolio which Mercatus listed in its 2021 annual report.
All four malls are at least 99 percent occupied and yielded S$323.7 million in combined revenues last year, which was down by 4.5 percent from the S$339 million that the portfolio generated prior to the pandemic in 2019.
Dubbed as one of the largest sets of suburban shopping centres in Singapore, the biggest asset in Mercatus’ portfolio is Jurong Point, a S$2 billion mall located in the western portion of the city-state which spans 720,000 square feet of net lettable area.
Next largest on the list by valuation is the S$1.96-billion NEX mall in Serangoon district, where it maintains a 50 percent stake alongside partners PGIM Real Estate, Chinese sovereign wealth fund CIC and a subsidiary of US giant Prudential Financial.
Also in the portfolio is the 320,000 square feet big AMK Hub that connects directly to Ang Mo Kio MRT station and was valued at S$846 million as of last year, as well as the S$203 million Swing By @ Thomson Plaza shopping mall on Upper Thomson Road that spans 110,000 square feet in NLA.
Mingtiandi reached out to representatives of JP Morgan and Mercatus for comment with neither party having responded by the time of publication.
Headquarters Set to Stay
While Mercatus is marketing its entire retail portfolio, it is being more selective in disposing of its office assets as the Lion City experiences a boom in demand for desk space.
Market sources said Mercatus is planning to keep its One Marina Boulevard property in the downtown core, a 31-storey building which serves as headquarters for the real estate manager as well as for its parent, NTUC Enterprise.
Also called NTUC Centre, One Marina Boulevard is located near the Raffles Place MRT station and houses corporate tenants including law firm Allen & Gledhill.
The fate of Mercatus sole Australian property, 1 Bligh Street in Sydney appears more uncertain.
After teaming up with Australia’s Dexus to jointly purchase a 33.3 stake in the 29-storey downtown office tower for A$375 million (then $288.1 million) in March of last year, market sources informed Mingtiandi that Mercatus intends to retain its sole asset Down Under. However, a report from the Business Times stated that JP Morgan is also gauging interest on a potential sale of 1 Bligh Street.
While the co-op plots the sale of its en-bloc properties, it has yet to make any public moves regarding its portfolio of strata-titled assets, which measure 360,000 square feet in net lettable area. Spread out across 33 locations, those strata assets yielded S$30.8 million in total revenues last year and were valued at S$437 million as of end-2021.
Carrying over S$10 billion in assets under management, the co-op saw its profit attributable to its members dip by 10 percent to S$53 million last year from S$58.6 million in 2020 partly due to the continued impact of pandemic-induced travel curbs on its retail holdings.
“With many of our tenants adversely impacted by the various COVID-19 measures and restrictions, we had reached out to them with targeted rental, operational and marketing support to help them tide over this difficult time,” Mercatus chairman Soong Hee Sang said in the firm’s annual report. “We can all look forward to steady recovery and growth in 2022 as Singapore transits to living with COVID-19.”
Offices Assets Near Sale
While its sister firm is busy looking for new owners for its malls, industry sources told Mingtiandi that NTUC Income is nearing a sale of its office tower at 16 Collyer Quay in Raffles Place and that its 11-storey Prinsep House commercial block near Bencoolen MRT station has also received offers.
Income at Raffles received bids around S$950 million during the closed expression of interest exercise that ended earlier this month, according to the Business Times, an amount that translates to S$3,436 per square foot of its 276,450 square feet in leasable area.
The 999-year leasehold property garnered 10 offers with the sellers having since narrowed the field to just three shortlisted bidders including the CDL-BlackRock JV, Chinese investment firm Bright Ruby Resources and Sukanto Tanoto, an Indonesian tycoon who founded the Royal Golden Eagle (RGE) group conglomerate which purchased the Tanglin Shopping Centre in February of this year.
Other reported bidders were SGX-listed builder GuocoLand, a tie-up between TE Capital Partners and KKR, and a Angelo Gordon-TCRE Partners joint venture.
Located in the heart of Singapore’s central business district with direct access to Raffles Place MRT station, NTUC Income first purchased a 49 percent stake in the building for S$101 million in 2011, and then went on to buy the remaining stake in 2013 for S$660 million.
Market sources said the insurer has also received offers for the 1992-vintage Prinsep House for an undisclosed sum. That 47,215 square foot property is part of an NTUC Income office portfolio which also includes NTUC Income Tampines Junction and NTUC Income Tampines Point in northeastern Singapore.
Just one MRT stop east of Prinsep House, another Singapore office tower is the subject of negotiations.
Industry sources confirmed to Mingtiandi that Hong Kong’s Baring Private Equity Asia (BPEA) is in exclusive due diligence to buy the 24-storey Parkview Square office building for S$900 million, confirming earlier news reports.
Company representatives declined to comment on the reported discussions.