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SPH Reit seeks diversification Down Under with A$206m mall buy

SPH Reit on Tuesday announced the proposed acquisition of Figtree Grove Shopping Centre in Australia for A$206 million (S$206 million) from an unrelated third party, Swordfish Australian Mid TC.

SPH Reit's 85-per-cent contribution to the property price is A$175.1 million, or A$188.2 million after including fees.

On acquisition, the property is expected to generate a net property income yield of about 5.7 per cent after taking into account the transaction costs.

The buyer trust is a wholly-owned sub-trust of SPH Reit Moelis Australia Trust, which in turn is jointly held by SPH Reit and several entities managed by the asset management division of listed financial services group Moelis Australia in the proportion of 85:15. 

Figtree Grove is a sub-regional shopping centre located on Princes Highway, Figtree, Wollongong, in New South Wales. The property sits on a freehold land area of 50,900 sq m and has a total gross lettable area of 21,984 sq m. 

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Anchored by 24-hour Kmart, Coles and Woolworths supermarkets, it focuses on non-discretionary shopping with about 58 per cent of space leased to supermarkets and a discount departmental store.

The property has an occupancy rate of 98.5 per cent. The seller will provide gross rental guarantees, capped at A$800,000, on vacant tenancies for 12 months from the date of completion of the deal.

SPH Reit said the proposed acquisition is in line with its strategy to diversify its income and geographical exposure. Figtree Grove will provide the Reit with about 5.2 per cent exposure by asset value to Australia.

"The proposed acquisition is SPH Reit's first foray overseas and will enhance SPH Reit's geographical diversification," it said.

The purchase is to be financed through a combination of debt and internal sources. SPH Reit's gearing ratio will be about 30.1 per cent after the acquisition is completed.

Separately, the manager of SPH Reit updated that for the secured term loan facility of S$975 million, incremental facility notices were established for a three-year loan of S$50 million and a four-year loan of S$50 million. The incremental loans will be converted to Australian-denominated loans via cross-currency swaps. The proceeds from the loans will be applied to partially finance the proposed acquisition in Figtree Grove.

The deal is conditional on the necessary approvals being granted by the relevant authorities. SPH Reit is sponsored by Singapore Press Holdings, which owns The Business Times. Its units closed flat at S$1.01 on Tuesday.

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