Link REIT said to be frontrunner to buy Singapore shopping malls

(Source: NGUC Enterprise/ Facebook)

Link Real Estate Investment Trust, Asia’s biggest REIT, has emerged as the frontrunner to buy a portfolio of assets from Singapore shopping mall owner NTUC Enterprise Co-operative, multiple sources told Reuters on Monday.

Acquisition of the assets in what would be Southeast Asia’s biggest real estate transaction of 2022 could boost Link REIT’s valuations, analysts have said.

The deal value has been trimmed to about US$1.8 billion from roughly $2.2 billion after one more of the Singapore assets was removed from the proposed sale, said two of the sources, who did not wish to be identified due to the confidentiality of the matter.

Reuters reported last month that Mercatus Co-operative, an NTUC unit managing the assets and exploring options for the possible sale, had removed at least one asset from it.

On Monday sources said the winning bidder could be announced in a few weeks. If Link REIT does buy, the assets will be its first in Singapore.

The assets to be sold by NTUC include retail malls Jurong Point and Swing By @ Thomson Plaza, the sources said.

Mercatus and Hong Kong-listed Link REIT declined to comment on the matter.

A successful sale, even after the offered portfolio has been further trimmed, would still rank ahead of all other property deals in Southeast Asia this year, Refinitiv data showed.

CapitaLand Integrated Commercial Trust (CICT), part of Singapore-based CapitaLand Investment, and Frasers Property, part of Thai billionaire Charoen Sirivadhanabhakdi’s group, have also been in the fray to buy the assets.

Frasers Property declined to comment to Reuters while CICT did not respond to a request seeking comment.

Sources said potential buyers for the assets, called a prized retail portfolio by analysts and first offered about six months ago, had turned cautious because of a sharp rise in interest rates and a worsening outlook for economic growth.

Link REIT’s market value of $14 billion is the largest in Asia. The many assets that it owns and manages include retail properties, car parks and offices. Nearly three-quarters of its portfolio value is in Hong Kong. It has also expanded into mainland China, Australia and Britain.

“If Link REIT turns out on top, we believe that investors will reward Link REIT with higher valuations, given its pivot back to retail, while improving the overall resilience of its earnings profile,” DBS analysts said in a report in August.

Link REIT has been on the prowl for assets in Singapore and other countries to diversify its portfolio.

“While this portfolio will represent Link REIT’s first foray into Singapore, the pivot to more retail exposure is expected to be positive overall, as Link REIT has significant scale and expertise managing such assets in Hong Kong,” DBS analysts said.

Last week, Singapore projected growth in its gross domestic product would slow to between 0.5 per cent and 2.5 per cent next year, down from about 3.5 per cent this year because of persistent inflation and weak demand.

  • Reporting by Anshuman Daga and Yantoultra Ngui; Editing by Bradley Perrett, of Reuters.

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