Thursday, March 11, 2010

Sun Plaza goes on the market for over $300m

Investment buzz in shopping centre scene; Alpha takes stake in Katong Mall

THE shopping centre investment scene seems to be abuzz. At least one property is being put on the market officially.

Sun Plaza, located between Sembawang MRT station and bus interchange, will be marketed through an expression of interest exercise.

The asking price for the 11-year-old mall, owned by Heeton Holdings and Koh Brothers, is understood to be in excess of $300 million or $2,000 per square foot (psf) of net lettable area.

The mall has seven levels, two of which are basement floors, and offers scope for asset enhancement work and repositioning to boost yields.

Meanwhile, over in the Katong area, a fund managed by Alpha Investment Partners is said to have taken a majority stake, believed to be around 70 per cent, in the consortium that bought Katong Mall late last year for $247.6 million.

The consortium, originated by former CapitaMalls Trust chief executive Pua Seck Guan, also includes China-based retailer Beijing Hualian Group and BreadTalk Group.

Katong Mall, located at the corner of East Coast and Joo Chiat roads, will be revamped and its net lettable area boosted by about 20 per cent.

Alpha, Keppel Land’s fund management unit, has also been active in other segments of the property market. Another of its funds controls 90 per cent of a company that owns the newly spruced-up office block at Cecil Street known as The Spazio (formerly Dapenso Building).

In Shanghai, Alpha is expected to bag an upscale service apartment block from Morgan Stanley Real Estate in a transaction estimated at about 900 million yuan (S$184 million).

Over in Singapore’s Sembawang area, CB Richard Ellis is handling the expression of interest exercise for Sun Plaza.

The property has been built to its maximum plot ratio; hence, it is being pitched for its asset enhancement potential.

For instance, a community library on the third level could be moved to a higher level with the library space decanted to create higher-value retail / restaurant space, for example, in basement 1.

As well, a cineplex on the fourth and fifth levels that was formerly operated by Eng Wah has been left vacant, presenting an opportunity for a new investor to reconfigure the space into smaller lots for lease to higher-paying tenants.

Sun Plaza’s retail area is spread across six levels, including basement 1. Basement 2 is occupied by 260 carpark lots.

Currently, the average gross monthly rental for the mall is said to be about $8 per square foot but market watchers reckon that through asset enhancement works and improving tenant mix, it might be possible to raise this figure to $12-14 psf.

Sun Plaza is on a site with a remaining lease term of about 85 years. Tenants include NTUC FairPrice, Yamaha Music School, Taka Jewellery and Kopitiam.

Above Sun Plaza are 76 apartments which were sold by the developers years ago.

Source: Business Times, 11 Mar 2010

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