Asia’s Largest Real Estate Investment Trust Buys Singapore Shopping Malls For $1.6 Billion

Hong Kong’s Link REIT is venturing into Singapore with a S$2.16 billion ($1.6 billion) acquisition of two shopping malls in the country’s suburban area from Mercatus Co-operative.

Link REIT announced on Wednesday that it will purchase Jurong Point and Swing By @ Thomson Plaza from the property arm of NTUC Enterprise Co-operative in a transaction that’s expected to be completed in March 2023. The deal will propel Link REIT into becoming one of the top 10 retail asset owners in Singapore, the company said.

The transaction will also involve a 10-year asset and property management service agreement for a third suburban shopping center, AMK Hub, which will remain under the ownership of Mercatus.

“Properties such as these, sizable suburban retail assets with high occupancy rates and stable rents, are traditionally tightly held and do not often come to market,” George Hongchoy, CEO of Link, said in a statement. “This transaction allows us to build a dedicated team in Singapore and provides a base for Link to expand further into other asset classes and strategies in Asia Pacific.”

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Shopping centers in Singapore’s suburban areas have shown resilience during the pandemic. With their close proximity to residential areas and retail offerings that include essential goods, suburban malls have been attracting more foot traffic than malls that cater to tourists in prime shopping districts. Average gross rents of suburban malls recorded a 0.7% increase year-on-year in the third quarter, compared to a 0.3% drop in the Orchard Road shopping strip during the same period, according to Knight Frank.

Located in Jurong West, one of the most densely populated residential areas in Singapore, Jurong Point has a 720,000 square feet of net lettable area, according to the statement. Meanwhile, Swing By @ Thomson Plaza has a net lettable area of 110,000 square feet. Link REIT said the two properties are close to full occupancy and have generated an annual net income of S$106 million ($78.6 million) as of October.

The company said it will fully fund the acquisition through cash and debt, adding that it is in active discussions with investors and is open to bringing in capital partners for the properties.

Listed in Hong Kong in 2005, Link REIT owns a HK$234 billion ($30 billion) real estate portfolio that includes shopping malls, car parks and offices. Nearly 80% of the properties it owns are located in Hong Kong, with the rest spread across mainland China, Australia and the U.K. The company has grown into Asia’s largest REIT with a market cap of $15.4 billion as of Wednesday.