Link splurges S$2.16b on two malls in Singapore

Karen Ng

Link Real Estate Investment Trust (0823) splashed S$2.16 billion (HK$12.5 billion) to buy two shopping malls in Singapore and will be among the top 10 retail landlords there. This will be Link's biggest acquisition deal and its first venture in Southeast Asia.

The largest REIT in Asia bought Jurong Point and Swing By @ Thomson Plaza from Mercatus Co-operative with a 6.1 percent discount from its last valuation and has a slightly positive impact on future dividend payouts, said the scheme's management. The two shopping centers are worth HK$12 billion.

Jurong Point is one of the largest lifestyle malls in suburban Singapore with 720,000 square feet of net lettable area. Swing By @ Thomson Plaza occupies levels 1 and 3 of the Thomson Plaza covering a net lettable area of 110,000 sq ft.

Both malls are in proximity to transportation hubs and the former attracts an average of 5 million visitors a month.

"The two properties have occupancy rates of nearly 100 percent," said George Hongchoy, chief executive of Link Asset Management. "Most of the tenants there sell necessities or provide catering services, which matches with Link's business strength."

The contribution of overseas ventures in Link's portfolio will increase from 6 percent to roughly 11 percent upon acquisition, said Ronald Tham, chief corporate development officer of Link Asset Management.

Link Asset Management's chairman Nicholas Allen said the acquisition is aligned with the REIT's growth strategy to diversify its portfolio across geographies.

"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," said Hongchoy, adding that Link will also retain its existing teams totaling about 140 staff members to manage the properties after the transaction.

As part of the transaction, Link will also enter a 10-year asset and property management service agreement for AMK Hub, another suburban retail mall owned by Mercatus, at a market standard rate.

Hongchoy remarked that it will be Link's first time to manage a shopping mall that is outside of its own properties, adding that it may provide a new stream of revenue through earning asset management fees.

Link will fund the acquisition through its cash resources and debt facilities. The transaction is expected to be completed on March 31, 2023.