Mercatus said to have put 18 assets in HDB estates up for sale at S$265m guide price

Citi Commercial Pte Ltd

NTUC Enterprise unit Mercatus is understood to have quietly put on the market a portfolio of 18 commercial properties in Housing and Development Board (HDB) estates.

The properties have a total indicative price of around S$265 million, The Business Times understands.

The 18 properties add up to about 170,000 sq ft of space in HDB shops, shophouses and low-rise commercial blocks. The portfolio has full occupancy. About 80 per cent of the space is leased to NTUC FairPrice, which is set to keep its long-term tenancies in the properties.

The properties are in locations such as Bukit Merah Central, Kallang Bahru, Bishan, Hougang, Serangoon North, Holland Drive, Tampines, Bedok, Buona Vista, Clementi, Choa Chu Kang, Jurong East and Jurong West.

The balance tenures for the properties vary, but average around 57 years.

Market watchers estimate the entry net yield at slightly above 4.5 per cent.

Three bundles

Word in the market is that the 18 properties have been split into three bundles; prospective buyers may submit offers for individual bundles, or the whole portfolio.

Clemence Lee, executive director of capital markets for Singapore at CBRE, said: “Mercatus is exploring a sale of a portion of its assets via an expression of interest exercise. CBRE has been appointed as the agent.”

He confirmed that the assets would be sold with existing long-term tenancies in place but said that “we are unable to disclose details of the portfolio due to commercial sensitivities”.

“There is no certainty or assurance that this exercise will lead to a transaction and we cannot speculate on the outcome of the exercise,” he added.

A spokesperson for Mercatus said that it regularly reviews its portfolio to deliver greater social impact and generate long-term sustainable returns for its stakeholders.

For now, it is business as usual and Mercatus remains committed to safeguarding the interests of all stakeholders including its tenants and their customers, it added.

Over the past nine months, Mercatus has sold a chunk of its Singapore retail assets for a total of slightly above S$3 billion. These were Jurong Point, Swing By @ Thomson Plaza and a half-stake in NEX, which is integrated with the Serangoon bus interchange and MRT station.

Market watchers noted that the 18 properties being offered via expression of interest are in mature HDB estates, with a captive catchment of heartlanders shopping for daily necessities.

The assets may appeal to prospective investors focused on stable income with built-in rental increases.

The smallest property is a 797-sq ft ground-floor shop unit in Hougang Avenue 3 occupied by a Cheers outlet. This is the convenience retail format of NTUC FairPrice. The other 17 properties are anchored by FairPrice supermarkets. NTUC FairPrice is part of the FairPrice Group, which also includes NTUC Foodfare, Kopitiam and NTUC Link.

Larger assets

Among the more centrally located assets is a space of about 30,700 sq ft at 71 Kallang Bahru, a two-storey commercial block a stone’s throw from Geylang Bahru MRT station. Besides a FairPrice supermarket which occupies the bulk of this space, there are some shops on the ground floor.

Another sizeable asset, of about 45,000 sq ft, is in a three-storey commercial block at 510 Bishan Street 13, about 100 metres from the Bishan bus interchange and MRT station. FairPrice occupies about 21,000 sq ft of this space; Mercatus also has other tenants for this asset.

Both these properties have potential for enhancement in value, for instance, by reconfiguring and repositioning some areas to cater to tenants that can pay higher rents.

Other assets among the portfolio of 18 that are in HDB commercial blocks include the FairPrice supermarket spaces of about 13,500 sq ft in Block 166 Bukit Merah Central and 10,000-plus sq ft in Block 114 Aljunied Avenue 2.

Ground-floor HDB shops

Ground-floor HDB shops owned by Mercatus that are among the 18 assets earmarked for sale include a 7,000-plus sq ft unit in Holland Drive and a 6,200 sq ft unit in Bedok Reservoir Road.

There is also a 13,000 sq ft corner ground-floor shop at Block 135 Jurong Gateway Road near Jurong East MRT station.

The NTUC Enterprise group of social enterprises are: FairPrice Group (comprising NTUC FairPrice, NTUC Foodfare, Kopitiam and NTUC Link), NTUC First Campus, NTUC Health, Income Insurance, NTUC LearningHub, Mercatus and MoneyOwl.

In late December 2022, Mercatus entered a deal to sell two retail assets – Jurong Point and Swing By @ Thomson Plaza – to Hong Kong-listed Link Real Estate Investment Trust (Link Reit) for S$2.16 billion.

In late January this year, Mercatus struck a deal to sell its half stake in Nex mall in Serangoon Central to Frasers Centrepoint Trust and Frasers Property in a deal that valued the prime suburban mall (100 per cent interest) at S$2.08 billion.

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