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3 Heartland Mall levels, 2 Havelock II units sold

Alpha Investment Partners fund sells properties to Master Contract Services for S$250m
Friday, December 2, 2016 - 05:50
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The first three floors of Heartland Mall with a total net lettable area of 86,000-plus sq ft, are believed to have fetched a price which translates into about 4.2 per cent net yield.

Singapore

THE lower three levels of the four-storey Heartland Mall-Kovan and two strata retail units at Havelock II near Chinatown are being sold for a total sum of about S$250 milllion, BT understands.

The buyer is Master Contract Services, a Singapore-based group that is involved in the property and construction businesses. It is owned by Leow Ban Leong and Leong Suet Wah.

The properties are being sold by a fund managed by Alpha Investment Partners, which is part of Keppel Capital and sponsored by Keppel Group.

The transaction is believed to assign a price for the bigger asset - the first three floors of Heartland Mall with a total net lettable area of 86,000-plus square feet - which translates into a net yield of around 4.2 per cent. The space is almost fully let; tenants include Popular Bookstore, Cold Storage supermarket, Japan Home and POSB.

The space being sold is part of a four-storey HDB commercial building at 205 Hougang Street 21, beside Kovan MRT Station. Excluded from the transaction is the fourth level, which is owned by another party. The building is on a 90-year lease from the Housing & Development Board (HDB) starting April 1, 1993; this translates into a balance lease term of around 66 years.

The two strata retail units in Havelock II comprise around 6,600 sq ft of space that is leased to a supermarket and a 7,400 sq ft unit leased to a food court.

Alpha acquired the Heartland Mall space and the two Havelock II units as part of a bigger retail property portfolio which it bought from Guthrie GTS around a year ago.

Apart from the Havelock II units, the rest of that portfolio comprised some of the 10 former Emporium Holdings properties which Guthrie had acquired jointly with a Lendlease-managed fund back in 1999.

Nine of the 10 properties were on long-term leases from the HDB and mostly in town centres.

The partnership between Guthrie and the Lendlease fund sold a few of these properties, such as 12,900 sq ft of freehold space at Katong Shopping Centre and a property within a HDB estate in Jurong East, based on earlier media reports.

A few years ago, the Lendlease fund sold its stake in the remainder of the portfolio to Guthrie, which thus gained full ownership of the assets - which it has since offloaded, along with the two Havelock II units, to Alpha.

In recent months, Alpha has sold one of the properties, at Block 209, New Upper Changi Road, to Sheng Siong Supermarket, part of Sheng Siong Group, for S$53 million. Alpha also disposed of four other properties in HDB estates - at Block 712, Ang Mo Kio Avenue 6; Block 166, Bukit Merah Central; Block 451, Clementi Avenue 3; and Block 192, Lorong 4 Toa Payoh - for a total of S$151 million to Lian Beng Group. These transactions were announced by the buyers, which are listed, as part regulatory filings with Singapore Exchange.

Commenting on Master Contract Services' acquisition, Knight Frank's head of investment and capital markets, Ian Loh, said: "Most property groups are looking to boost their portfolio of investment properties generating recurring income - in view of the slowdown in the residential development business.

"We are seeing strong interest in commercial properties with a net yield of over 4 per cent."

Master Contract Services, in partnership with Keong Hong Construction and Asia Development, has developed the former Joo Chiat Police Station site along East Coast Road - which was sold at a state tender in 1994 - into Katong Square, filled with F&B outlets, and two hotels (Holiday Inn Express and Hotel Indigo).

Master Contract also owns the Premier Inn Singapore Beach Road. The group's portfolio of residential developments includes the Skies Miltonia condo in Yishun and The Amore executive condominium in Punggol.

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