Singapore’s Mercatus Said Marketing Stake In $790M Sydney Office Tower

Singapore’s Mercatus Co-operative is continuing to sell down its real estate portfolio, with sources familiar with the company’s plans saying that it is preparing to sell off a one-third interest in a Sydney office tower which it acquired just over a year ago.

The property arm of NTUC Enterprise Co-operative is understood to have appointed JP Morgan to market its 33.3 percent share in 1 Bligh, an A$1.14 billion ($790 million) commercial complex in Sydney’s central business district, after holding the asset for about 14 months alongside partner and asset manager Dexus. News of the planned disposal was reported earlier in the Australian.

No target price has been disclosed for Mercatus’ piece of the 29-storey asset located just a few blocks west of the Royal Botanic Garden Sydney, with news of the marketing effort reported just two months after NTUC Income, the insurance division of NTUC Enterprise sold an office building in Singapore for around S$1 billion ($717.2 million).

Mercatus is also marketing a four-asset mall portfolio in Singapore for around S$4 billion as the firm disposes of the majority of its S$5.6 billion ($4 billion) commercial real estate portfolio.

In Search of a New Partner

Valued at A$1.14 billion ($790 million) as of end-2021, Mercatus’ deal to purchase the one-third stake in the 2011-vintage building in March last year was the firm’s first foray outside its home turf.

The company made the investment through a 90:10 joint venture with Australian fund manager Dexus with the Mercatus Dexus Australia Partnership agreeing to pay A$375 million to purchase the stake in the elliptical cross-section office tower from Cbus Property, a subsidiary of Australia’s pension fund for the construction industry, in a deal which closed in July 2021.

Dexus, which co-developed the 43,000 square metre (462,848 square foot) project with Cbus, directly holds another third of the property, with the remaining stake held by Dexus Wholesale Property Fund, a private fund managed by the ASX-listed firm.

Dexus is now working with JP Morgan to find a buyer for Mercatus’ equity in the building, according to the Australian.

Based on Mercatus’ 2021 annual report, the property yielded A$28.8 million in total revenues in the second half of last year at 96 percent occupancy.

A Mercatus spokesperson declined to comment on the reported initiative, but clarified that the firm still holds the 7.6 percent stake it has in Brookfield Place – a  27-storey office tower within a 10 minute walking distance from 1 Bligh. Mercatus invested A$79 million in the building at 2-12 Carrington Street last year.

Dexus had not responded to Mingtiandi’s queries by the time of publication.

NTUC Pares Portfolio

The report from Sydney marks a continuation of NTUC’s sell-down of its property holdings, with the Singaporean institution still working through the disposal of its mall portfolio.

In July, Bloomberg reported that Capitaland Integrated Commercial Trust, the primary commercial property REIT of Singapore’s CapitaLand Group, and Hong Kong’s Link REIT are among the players bidding for the massive retail portfolio, which includes a half-stake in the S$1.96-billion NEX mall in the city’s Serangoon district.

A report by DBS Group Research last month painted CICT as the “strongest contender” among Singapore’s listed retail property trusts given the scale of its existing mall portfolio, which accounts for 16 percent of Singapore’s retail property market by NLA.

While Mercatus is busy marketing , Mercatus’ corporate cousins at NTUC Income in July agreed to sell 16 Collyer Quay near Raffles Place to Bright Ruby Resources, an investment firm backed by controversial Chinese billionaire Du Shuanghua.

Bright Ruby is said to be paying all cash for its S$1 billion purchase of the trophy asset, which occupies a 999-year leasehold plot and benefits from direct access to Raffles Place MRT Station.