Hong Kong’s Link REIT Selling Singapore Shopping Centre for $196.3M

With interim management in place since the start of this year, Hong Kong’s Link REIT is reshaping its portfolio with the sale of Singapore retail property for S$250 million ($196.3 million), according to an announcement by the Hong Kong-listed trust on Wednesday. 

Link Asset Management, the manager of Link REIT, has agreed to sell Swing By @ Thomson Plaza, a section of the Thomson Plaza mall in Singapore’s Upper Thomson area, the company said, with sources familiar with the transaction identifying the buyer as a local private investor surnamed Han, who also owns the Leisure Park Kallang shopping centre.

Asia’s largest REIT is divesting the mall at a premium to its most recent book value, according to the statement and at a S$77.5 million markup from the S$172.5 million it paid to acquire the property in a deal which closed in March 2023.

“While Link continues to focus on its core strength of retail malls in Asia Pacific and is keen to increase its exposure in Singapore, asset recycling remains an integral part of our active portfolio optimisation strategy,” Link chief investment officer John Saunders said, “We regularly screen our assets to assess whether we believe we have maximised near term value with a decision to hold being effectively a decision to buy again at today’s price.”

Piece of a Mall

Link reportedly put Swing By @ Thomson Plaza on the market just before the lunar new year holiday, engaging brokerages Savills and Cushman & Wakefield to find a buyer for the asset. 

At the stated compensation, Jack Investment Pte Ltd and Pangjwee Development Pte Ltd, two private companies said to be controlled by Han, are paying the equivalent of S$2,273 per square foot for the property, which measures 110,000 square feet (10,219 square metres), according to Mingtiandi calculations

The sale comes just a few months after Saunders, said at the company’s earnings conference that Link REIT would access markets such as Singapore and Australia, “to improve earnings and diversify where we have our superpower of managing malls.” Link REIT announced in January that, with CEO George Hongchoy having stepped down late last year, Saunders, together with group chief financial officer Kok Siong Ng, will be leading the REIT’s manager on an interim basis, while a search for a new top executive is carried out. 

Analysts suggested that, while Link REIT is aiming to focus both on Singapore and on retail assets, its manager may see limited upside for Swing By @ Thomson Plaza, due to the property being a segment of a larger shopping centre. Without the autonomy of owning a property en bloc, Link REIT does not have a clear path to redeveloping the 1979-vintage property, and any benefits from upgrades to the property will be limited by the status of the larger mall.

Link REIT had acquired Swing By @ Thomson Plaza together with the Jurong Point shopping centre in western Singapore, as its entry to Singapore, with the two properties remaining as its sole assets in the city-state.

Drip Campaign

In June last year Link REIT was reported to be exploring a Singapore-listed REIT of some of its properties outside of Greater China, with the REIT’s manager acknowledging “certain media reports” speculating about a spinoff plan while affirming that it routinely conducts feasibility studies of various transactions, including potential spinoffs.

Since that time, Link REIT seems to have adopted an approach of selling assets individually, with Australian media reports in February indicating that the trust had put its first-ever asset in that country on the market. The Hong Kong heavyweight is said to have been seeking A$550 million ($388 million) for the 100 Market Street office block in Sydney, as it chooses to focus on its traditional strength in retail.

In November last year Link REIT confirmed that it had made an offer to acquire a set of half-stakes in three Australia malls with a total value of over A$1.5 billion held by a Lendlease fund. Lendlease described that offer as opportunistic, with Cbus Property, the real estate division of Australia’s Cbus Super, later taking a cornerstone stake in that fund in a move that closed the door on Link REIT’s offer.