SC Capital Buys Singapore Shopping Mall From AEW for S$230M

SC Capital Partners has agreed to purchase a community shopping centre in northeastern Singapore from a fund managed by AEW for S$230 million ($169.53 million), according to sources familiar with the transaction who spoke with Mingtiandi.

Singapore-based SC Capital, which invests under both core and opportunistic real estate strategies across Asia, has made the Rivervale Mall in the city’s Sengkang area the latest addition to its portfolio, picking up the asset, which measures 81,193 square feet (7,543) by net lettable area at the equivalent of S$2,833 per square foot.

The transaction between the pair of private equity real estate specialists is the latest in a series of investments by international institutions in the city-state’s retail real estate assets, as investors regain confidence in the market segment.

SC Buys Mid-Market Mall

Upon closing of the deal, SC Capital Partners will take possession of the 99-year leasehold property, which still has more than 77 years remaining on its lease term. The three-storey Rivervale Mall is located within the Sengkang housing estate, adjacent to the light rail line which connects the middle class residential neighbourhood to the rest of the city.

The mall, which is served by a four-storey car park, is anchored by a 22,000 square foot supermarket and is also home to other mid-market lifestyle tenants including an Anytime Fitness, hair salons and one of Singapore’s ubiquitous BreadTalk shops.

Given the mall’s current leasing, the investment is estimated to have a yield of over four percent. SC Capital Partners had approximately $6.1 billion in assets under management as of June 2018, and the firm is said to have acquired the mall through its core-plus fund.

Divesting From an Opportunistic Fund

AEW had purchased the Rivervale Mall from CapitaLand Mall Trust in October 2015 for S$190.5 million, with the Boston-based firm having achieved an increase in capital value of nearly S$40 million on the asset during just over three years of ownership.

The US firm had purchased the asset through its AEW Value Investors Asia II fund which reached a final close at over $640.2 million, including $50 million of co-investment capital, in June 2016. The fund made its final acquisition in June 2017, and by June of last year had divested nearly half of its investments, including the RMB 1.35 billion ($200 million) sale of the 686 Jiujiang Lu office building to Ascendas-Singbridge in March of 2017.

After purchasing the Rivervale Mall, AEW invested in renovating the asset, including upgrading flooring and lighting in the common areas, according to a report in Singapore’s Business Times.

The company also pursued a new leasing strategy which helped to shift the mall’s tenant mix to 30 percent food and beverage providers, from the previous 20 percent level.

Buying Up Singapore Retail Assets

SC Capital, which is headed by Thai-Chinese entrepreneur Suchad Chiaranussati, has also acquired the Mosaic mall in Osaka, Japan in 2015 and had earlier invested in retail assets in Phuket and Bangkok under its opportunistic strategy.

The firm’s purchase of the Rivervale Mall comes less than one month after Frasers Property, a Singapore-listed developer controlled by Thai-Chinese billionaire Charoen Sirivadhanabhakdi had agreed to acquire a 17.8 percent stake in a PGIM retail real estate fund which holds a set of Singapore community malls for S$356.4 million.

At the end of February, Frasers Centrepoint Trust, which is managed by a unit of Frasers Property, entered into agreements to acquire an additional 17.1 per cent stake in the same PGIM retail fund.