Property group JBE said to buy Mercatus assets in HDB estates in low-S$80 million deal

SINGAPORE-BASED property group JBE is understood to have inked a deal to buy one of the three bundles of commercial properties in Housing and Development Board (HDB) estates that NTUC Enterprise unit Mercatus put on the market a few months ago.

The pricing is in the low-S$80 million range, The Business Times understands.

Word in the market is that Evia Real Estate is in exclusive due diligence with a view to acquiring the other two bundles from Mercatus. It is said to be looking at a price slightly north of S$175 million.

In both cases, the respective price is said to reflect a net yield of about 4.5 per cent.

Balance tenures for the 18 properties in the three bundles vary, but average around 57 years.

Both transactions will be subject to HDB’s approval.

In September, BT reported that Mercatus had put the portfolio of 18 properties up for sale, split into three bundles. They add up to about 170,000 square feet (sq ft) of space in HDB shops, shophouses and low-rise commercial blocks.

The portfolio has full occupancy, with about 80 per cent of the space leased to NTUC FairPrice, which is set to retain its long-term tenancies in the properties. CBRE conducted an expression of interest exercise for the portfolio.

Mercatus and FairPrice Group are part of the NTUC Enterprise group of social enterprises.

Attractive location

From a buyer’s perspective, the attraction of the 18 properties is their location in mature HDB estates, with a captive catchment of heartlanders shopping for daily necessities. The assets provide stable income with built-in rental increases.

The bundle that JBE is buying from Mercatus comprises nine assets. They include the FairPrice supermarket spaces of about 13,500 sq ft at Block 166 Bukit Merah Central and 10,270 sq ft at Block 114 Aljunied Avenue 2. Another property is a 7,700-plus sq ft ground-floor shop unit in Holland Drive. Also in the bundle is a 797 sq ft ground-floor shop unit in Hougang Avenue 3 occupied by a Cheers outlet, the convenience retail format of NTUC FairPrice.

Three of the nine properties are two-storey HDB shophouses; an Additional Buyer’s Stamp Duty of 65 per cent will apply for the respective residential components. The three are in Tampines Street 11, Jurong West Street 41 and Clementi Avenue 2.

JBE was set up in 2004 by Patrick Lam Kong Yin, who hails from Hong Kong but is a Singapore permanent resident.

Among the projects JBE has developed are The Luxe in Handy Road, and three executive condominium (EC) projects – Signature at Yishun, SkyPark Residences and The Amore. JBE is also developing The Commodore, a private condominium in Canberra Drive in the Sembawang area.

Bigger assets

Evia Real Estate, founded in 2010 by Vincent Ong and Leslie Lim, is doing due diligence for a total of nine properties that Mercatus has packaged into two bundles.

One of the more centrally located assets among them is a space of about 30,000 sq ft at 71 Kallang Bahru, a two-storey commercial block a stone’s throw from Geylang Bahru MRT station. Besides a FairPrice supermarket which occupies the bulk of this space, there are some shops on the ground floor as well.

Another sizeable asset of about 45,000 sq ft is in a three-storey commercial block at 510 Bishan Street 13, around 100 m from the Bishan bus interchange and MRT station. FairPrice occupies about 21,000 sq ft of this space; Mercatus also has other tenants for this asset.

Both of these properties have potential for enhancement in value, for instance, by reconfiguring and repositioning some spaces to cater to tenants that can pay higher rents.

There is also a 13,000 sq ft corner ground-floor shop at Block 135 Jurong Gateway Road near Jurong East MRT station.

One of the nine properties, at Block 57 New Upper Changi Road, is a two-storey HDB shophouse.

Evia Real Estate has two business segments – fund management and property development.

Evia-managed funds have taken stakes in joint ventures that have developed a number of residential projects in Singapore, including Gem Residences, a private condo in Toa Payoh, and the Lake Life, Heron Bay and Watercolours EC projects.

An Evia-managed fund owns two hotels in Japan.

In Singapore, another Evia fund owns jointly with Metro Holdings, Asia Green, a predominantly office asset at 7 and 9 Tampines Grande.