Mercatus Marketing Singapore Community Retail Portfolio for $194M

After opening the year selling a trio of mall properties for more than S$2.8 billion, Mercatus Co-operative has headed back to the market with a set of community retail assets carrying a price tag of S$265 million ($194 million).

Marketing documents seen by Mingtiandi on Tuesday showed that Mercatus, the property investment arm of NTUC Enterprise Co-operative, is marketing a portfolio of 18 neighbourhood shopping hubs anchored by NTUC FairPrice supermarkets within public housing estates across Singapore.

A flyer prepared by CBRE touts the portfolio as being “strategically located across prime heartland locations with prime frontages and high footfall,” while also promoting it as a source of “secure, predictable, turnkey, income-generating assets.”.

The expression of interest exercise is being rolled out just months after Mercatus disposed of three suburban mall properties in separate deals with Frasers Property and Frasers Centrepoint Trust and Hong Kong’s Link REIT.

Shopping Supermarkets

The expression of interest exercise, which Mingtiandi understands will close around mid-October, offers the portfolio split into three clusters of six to eight assets each, with a value  per cluster of at least S$85 million.

In total the portfolio spans 174,409 square feet (16,203 square metres) of strata-titled retail area, and is currently 100 percent occupied.

The properties are located in Housing Development Board (HDB) public housing estates in Jurong, Clementi, Buona Vista, and Choa Chu Kang in the western region, as well as along Holland Drive and in Bukit Merah in Central Singapore. The clusters also include properties in Kallang, Geylang, Bishan, Hougang, Serangoon, Bedok and Tampines in the east coast and northeastern Singapore, as well as in Yishun to the north.

The assets provide opportunities for value-add strategies, according to the flyer, which confirms news first reported by the Business Times.

A 53,627 square foot cluster of nine assets is being made available at a guide price of S$84.5 million and includes a property at 166 Bukit Merah Central as well as a hub at 114 Aljunied Avenue 2 in Geylang East.

The second cluster offers six assets spanning 52,529 square feet for S$86.25 million and includes a FairPrice at 71 Kallang Bahru, located within an HDB complex near the Geylang Bahru MRT station.

The three remaining assets are clumped in the third cluster measuring a total of around 68,250 square feet with an asking price of S$94.25 million

At the target pricing, Mercatus is valuing the portfolio at just less than S$1,520 per square foot of retail area. A successful divestment will leave the firm with 12 supermarkets in its portfolio with a combined strata floor area of 185,000 square feet.

Clemence Lee, an executive director with the capital markets team at CBRE confirmed that the property agency has been engaged by Mercatus to manage the EOI, but declined to comment further. Mercatus had not responded to inquiries from Mingtiandi by the time of publication.

Close-Out Sale

Mercatus is marketing the grocery-anchored portfolio as sales at Singapore supermarkets and hypermarkets have been sliding from their pandemic-powered peak in 2020.

A government index of supermarket and hypermarket sales in the Lion City jumped from 99.5 in 2019 to 130.3 in 2020, before sliding to 127.6 in 2021 and 124.2 last year.

Since NTUC began liquidating much of its real estate portfolio a year ago, Mercatus, together with the group’s insurance arm, have disposed of three retail assets and an office tower in Singapore for a total of S$3.8 billion.

Before Mercatus sold its half-stake in the NEX mall to Frasers Property in January, and divested Jurong Point and Swing By @ Thomson Plaza to Link REIT last December, Income Insurance, formerly known NTUC Income, cashed in its 16 Collyer Quay office tower in Raffles Place in a  S$1 billion deal with Bright Ruby Resources in July 2022.