Singapore’s SPH REIT expands into Australia with A$175m mall deal

Singapore-based SPH REIT has acquired a majority stake in a shopping centre in the Australian city of Wollongong for A$175m (US$123m), marking its first overseas acquisition as part of its Asia-Pacific expansion plan.

SPH bought the Figtree Grove centre in an 85:15 split joint venture with ASX-listed financial services firm Moelis Australia, according to a company announcement.

The 21,984 sq.m. mall is anchored by discount department retailer Kmart and supermarkets Coles and Woolworths, and also features 72 specialty stores.

The purchase has a net property income yield of about 6% or 5.7% after transaction costs.

“With a [weighted average lease expiry] of 5.4 years by income and built-in rental expectations, the acquisition will provide stable and growing income to our unitholders,” said Susan Leng, CEO of SPH REIT Management.

The centre has a 1.5% vacancy rate and generates total retail sales of $10,551 per sq.m., above other malls in the same category. 

The property is 3.7km southwest of Wollongong’s CBD and is well-situated to serve key growth areas in the city’s central and south-western suburbs.

SPH expects the deal to increase its gearing ratio to about 30.1% once the transaction is completed.

SPH REIT’s portfolio comprises the Paragon retail centre, The Clementi Mall and the Rail Mall in Singapore.

The REIT is owned by listed Singapore Press Holdings.

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