Mercatus Co-operative hires JP Morgan for strategic review, seen to have bundled 4 Singapore retail assets for potential sale

FIRST, it was NTUC Income Insurance that began a sale process for its Income At Raffles office building in Collyer Quay. Then, another co-operative in the NTUC stable, Mercatus, is now said to have bundled 4 of its retail properties in Singapore for sale.

JP Morgan is marketing the bundled package and the price expectation is “in excess of S$4 billion”, The Business Times understands.

The 4 retail assets are: Jurong Point, AMK Hub in Ang Mo Kio, Mercatus’ half-stake in Nex (integrated with the Serangoon bus interchange and MRT station) and some 110,000 sq ft of strata space in Thomson Plaza (roughly half of the mall) — totalling about 1.5 million sq ft of net lettable area (NLA).

In Thomson Plaza, the space that Mercatus owns is branded as “Swing By @ Thomson Plaza”, comprising F&B, retail, entertainment and lifestyle options.

When contacted by BT, a spokesperson for Mercatus Co-operative said: “We have hired JP Morgan as our financial advisor to perform a strategic review of some of the real estate investments and holdings within our portfolio, including AMK Hub, Jurong Point, Nex and Swing By @ Thomson Plaza.

“We would like to clarify that Mercatus’ strategic review has no connection to Income At Raffles,” she added.

Mercatus Co-operative is substantially owned by NTUC Enterprise.

The spokesperson said that Mercatus “regularly explores strategic options to sustain long-term value for our stakeholders” and that it is currently conducting a strategic review of some properties within its portfolio, which may or may not lead to a transaction.

“For now, it is business as usual, and we remain committed to safeguarding the interests of all stakeholders.”

Last year, Mercatus acquired minority stakes in 2 Sydney properties, giving the co-operative effective interests of about 30 per cent for 1 Bligh (an office building) and 7.6 per cent for Brookfield Place (a commercial property).

BT understands J.P. Morgan is trying to interest potential bidders for the co-operative’s 4 Singapore retail assets to also buy Mercatus’ Australian real estate holdings.

While the Singapore retail property market continues to reel from competition from online retail, labour shortage and rental expense, a veteran investment property consultant expects no lack of suitors for Mercatus’ 4 Singapore retail assets on offer. “These are very resilient properties, with mostly necessity retail offerings in the suburbs with substantial shopper catchment.

“The likes of overseas pension funds, private equity investors and Reits, along with some local groups, will find the portfolio interesting. Some could club together and buy the portfolio first, then split it among themselves,” he said.

The largest of the 4 retail assets, Jurong Point, is integrated with Boon Lay MRT station and bus interchange next door. Mercatus owns 720,000 sq ft of strata area in the mall, with an appraised value of about S$2.11 billion as at Dec 31, 2021. Jurong Point generated S$128.7 million in total revenue last year, said Mercatus’ 2021 annual report.

The mall was built in 2 stages, with the original Jurong Point completed in 1995 and the extension, in 2008. The property was developed on 2 sites; one has about 70 years left on its lease, and the other, 83 years.

AMK Hub, with 320,000 sq ft NLA, was valued at S$846 million at the end of 2021. Its revenue last year was S$57 million. Standing on a site with some 81 years left on its lease, the property is directly connected to an integrated transport hub comprising Ang Mo Kio MRT station and bus interchange.

Nex, which is on a site with 85 years on its lease, produced S$124.7 million revenue last year and was valued at S$1.96 billion at the end of 2021. Mercatus owns half of Nex.

The revenue from Swing By @ Thomson Plaza last year was S$13.3 million, and the property was valued at S$203.1 million at end-2021. Thomson Plaza, on a site with around 53 years left on its lease, is a stone’s throw from Upper Thomson MRT station, which opened last year.

Mercatus also owns a portfolio of strata-titled assets comprising a mixture of units across 33 locations in Singapore. These assets have a total of about 360,000 sq ft and were valued at S$437 million as at end-2021; they generated S$30.8 million in revenue last year.

The co-op also owns the One Marina Boulevard office tower in the central business district, with 430,000 sq ft NLA. It was valued at S$650 million at the end of 2021.