LINK Real Estate Investment Trust (Reit), Asia’s biggest Reit, will buy a portfolio of assets from Singapore shopping mall owner NTUC Enterprise Co-operative for S$2.16 billion, NTUC unit Mercatus Co-operative confirmed on Wednesday (Dec 28).

The deal value is slightly lower than S$2.5 billion, the amount multiple sources had said was the size of acquisition, which was spoken about as what would be South-east Asia’s biggest real estate transaction of 2022.

In a bourse filing, Mercatus said sale-and-purchase agreements were entered into on Wednesday with various subsidiaries of Hong Kong-listed Link Reit to divest the group’s entire interest in Jurong Point and Swing By @ Thomson Plaza, which occupies Levels 1 and 3 of Thomson Plaza. The deal is expected to complete on Mar 31 next year.

Separately, Mercatus has entered into a long-term partnership with Link Reit for the asset and property management of AMK Hub in Ang Mo Kio, it said.

With AMK Hub, the Reit will become the sixth largest shopping centre operator by footprint once the deal is complete. The Reit will also be among the top 10 retail asset owners in Singapore, covering a catchment of almost 10 per cent of Singapore’s population, its manager Link Asset Management said in a separate statement.

Reuters first reported that Link Reit was the frontrunner in the sale late last month, even as CapitaLand Integrated Commercial Trust, part of Singapore-based CapitaLand Investment, and Frasers Property, which is part of Thai billionaire Charoen Sirivadhanabhakdi’s group, were also in the fray to buy the assets.

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NTUC Enterprise owns a diverse portfolio of assets across the areas of food, health, education, financial services and real estate.

Mercatus said its divestment is a result of a strategic review, and is in line with its strategy to refocus on certain type of core assets. As such, the issuer will continue to retain ownership of assets that are substantially used by NTUC, NTUC Enterprise and its portfolio of social enterprises, it said.

Jurong Point, with a net lettable area of 720,000 square feet, and Swing By @ Thomson Plaza, with a net lettable area of 110,000 square feet, are considered “non-core assets”, it noted.

Nevertheless, Link Asset Management said both properties are close to full occupancy and generated an annualised net property income of S$106 million as at October.

Seah Kian Peng, deputy chairman of Mercatus and group chief executive officer of NTUC Enterprise, said Mercatus’ strategic review is an example of how it continually reshapes its portfolio to deliver “greater social impact” and generate long-term sustainable returns.

“The divestment will allow us to unlock some value and redeploy capital to specific areas where we can make a difference in the lives of families in Singapore in a more direct and meaningful way, such as by scaling services in healthcare and education,” he added.

Seah also said Mercatus appreciates Link Asset Management’s willingness to retain talent and will work together with the Singapore Industrial and Services Employees’ Union to support Mercatus’ employees throughout this exercise.

Link Asset Management’s chairman Nicholas Allen said the acquisition presents the Reit with an opportunity to build its presence in Singapore, which it calls “a robust economy with domestic price stability that is conducive to sustained growth”.

This is aligned with its growth strategy to diversify and improve its portfolio mix across geographies and follows recent investments it has made in the region, he added.

Chief executive officer George Hongchoy said Jurong Point and Swing By @ Thomson Plaza are sizeable suburban retail assets with high occupancy rates and stable rents that are “traditionally tightly held and do not often come to market”.

The transaction lets Link Reit build a dedicated team in Singapore and provides a base for Link to expand further into other asset classes and strategies in Asia-Pacific, Hongchoy added. “We look forward to leveraging our deep experience to develop these assets further into vibrant and flourishing centres for Singaporeans.”

Link Asset Management said the acquisition will be fully funded through its cash resources and debt facilities. Upon completion, Link’s ratio of debt to total assets will change from 23.2 per cent to 27.1 per cent, based on its consolidated financial position as at Sep 30.

The manager, however, said it is open to bringing in capital partners for the assets, and is in active discussions with “reputable like-minded investors” to further this.

Units of Link Reit closed 0.6 per cent higher at HK$56.60 on Wednesday.