Lian Beng-Apricot Sembawang (LBAS) is buying Sembawang Shopping Centre from CapitaLand Mall Trust (CMT) for S$248 million, a price tag that is almost the double the suburban mall’s latest valuation.

LBAS is a 50-50 joint venture company of home-grown construction firm Lian Beng Group (Lian Beng), and Apricot Capital, the private investment firm of the Super Group’s Teo family.

The sale is among the largest in value in recent years for a standalone retail mall with an original 999-year leasehold.

LBAS’ bid was the highest in the field, almost twice the S$126 million valuation for the property as at last Dec 31. The valuation was commissioned by CMT and carried out using the capitalisation method and the discounted-cashflow method.

Lian Beng’s valuation, on the other hand, was done on a market-comparable basis; it said that its bid price factored in prevailing market conditions and the current market prices of properties in the vicinity.

The purchase price works out to S$1,203 per sq ft (psf) for the mall, based on its gross floor area (GFA) of 206,087 sq ft. Going by its total net lettable area (NLA) of 143,631 sq ft, the psf price is S$1,727.

Lian Beng’s executive chairman Ong Pang Aik told The Business Times on Thursday: “Considering that Sembawang Shopping Centre is a 999-year leasehold property, we think that the purchase price in per square foot (psf) is reasonable.”

With the mall more than 99 per cent occupied, the buyer’s purchase was made for property-investment purpose or for recurring rental collection, he said.

Based on the current income from the mall, the purchase price of S$248 million would work out to a net income yield (gross revenue less operating expenses) of 4.2 per cent.

In July last year, Lian Beng and Apricot Capital had acquired mixed-used commercial and residential building Wilkie Edge near Little India for S$280 million from CapitaLand Commercial Trust. That price worked out to S$1,299 psf based on GFA, and S$1,812 psf based on the building’s NLA.

Among other terms of sale, Sembawang Shopping Centre is being sold subject to existing tenancies and licences. Major tenants at the mall include Giant, Yamaha Music School, Food Junction and Daiso Japan.

The building has four floors of retail units and three carpark levels with 165 parking spaces.

Lian Beng described the proposed acquisition as a “strategic investment”, in line with one of the group’s core business activities in property investments.

Looking ahead, the retail market in Singapore may have stabilised, with long-term recovery within sight. Unlike other markets, where it is easy to convert non-retail land usage into retail centres, there is a limited supply of retail assets in Singapore, due in part to the Master Plan. Additionally, the impact of e-commerce on the local retail market is limited as consumers still visit shopping centres for “retail therapy or experiential shopping.

Adapted from: The Straits Times, 20 April 2018