CapitaLand Integrated Commercial Trust (CICT) has agreed to sell a mall in western Singapore’s Jurong Lake District to CapitaLand for S$340 million ($253 million), the second disposal of a local asset announced by the SGX-listed REIT in less than three months as it expands its holdings into Australia.
“As part of the Manager’s value creation strategy to deliver stable and sustainable returns to unitholders, the Manager proactively reviews its asset and portfolio plans,” CICT’s manager said in a statement to the exchange. “This includes assessments of the highest and best use of each asset, in terms of value and yield, under various market cycles.”
Located just a few minutes’ walk from the CICT’s Westgate mall and one kilometre (0.6 miles) from the trust’s IMM Building, both of which are newer than JCube, the manager also noted that the property is the trust’s smallest Jurong asset in terms of net leasable area.
During December CICT, which owns a portfolio of 23 properties, with 96 percent of its assets by value in Singapore, entered the Australian market for the first time, buying three assets in the final month of 2021.
Icing the Deal
JCube occupies a 99-year leasehold site granted since March 1991 and yields a net lettable area of 210,038 square feet (19,513 square metres). That shopping space, which includes a rooftop garden and an IMAX theatre, shares the same structure with Singapore’s only Olympic-sized ice rink — an element that helped give JCube its name.
At the stated compensation, CapitaLand, the development giant owned by state holding firm Temasek, is paying roughly S$1,619 ($1,205) per square foot of NLA for the six-sided complex.
Located across the street from Jurong East MRT station, the five-storey mall was developed by CapitaLand Mall Trust and in 2005 was formally acquired by that REIT, which merged with CapitaLand Commercial Trust to form CICT in 2020.
The planned sale is expected to generate net proceeds of S$334.7 million and a net gain of S$56.7 million, said CICT, whose manager is a wholly owned unit of the trust’s sponsor, SGX-listed CapitaLand Investment, which in turn is controlled by CapitaLand.
More Singapore Opportunities
“This sale is in line with the Manager’s portfolio reconstitution strategy to unlock value and reinvest the proceeds into other investment opportunities being assessed in Singapore,” CICT said.
CapitaLand’s consideration of S$340 million represents a 22.3 percent premium to a Savills valuation of S$278 million and a 21.4 percent markup to a Colliers assessment of S$280 million, according to the SGX filing.
The mall had a committed occupancy of 95.5 percent as of 31 December 2021, and the net property income yield based on the sale price is less than 4 percent. Key tenants include Japanese supermarket and department store Don Don Donki, cinema operator Shaw Theatres and a Haidilao Hot Pot restaurant.
The JCube sale follows the November announcement of CICT’s disposal of its half-stake in One George Street at Raffles Place for $472 million, in a transaction completed in December.
The planned disposal of JCube comes as CICT increasingly embraces Australia as a new engine of growth for the trust, whose portfolio contains 23 properties with a total value of S$21.8 billion.
In late December, CICT announced that it would buy a half stake in a North Sydney commercial complex from fund management giant Nuveen for A$422.0 million ($305 million), marking the trust’s third acquisition of an Aussie asset within one month.
The complex, which includes the 101 Miller Street office project and the Greenwood Plaza retail development, is just a 10-minute drive from 66 Goulburn Street and 100 Arthur Street, a pair of Sydney office properties that the trust had agreed to purchase for a combined A$330.7 million a few weeks earlier.
Upon completion of the December acquisitions, some 9 percent of CICT’s portfolio will be located outside of Singapore, with the company having previously purchased a pair of Frankfurt assets.