SINGAPORE (Nov 8): Metro Holdings is eyeing an entry into Australia’s commercial real estate market with an investment of A$95.8 million ($89.7 million) for the proposed acquisition of a 20% stake in a portfolio of 14 properties.
The portfolio, which is worth approximately A$900 million, comprises four office buildings and 10 retail centres.
The properties span across four key states in Australia: New South Wales, Victoria, Queensland and Western Australia.
Metro will subscribe to 20% of the issued units in three trusts – SLH Property Trust (SLH Trust), Sim Lian Property Trust (SLPT) and Sim Lian Property Trust II (SLPT II) – that hold the 14 freehold properties through their respective subsidiaries.
The trusts are affiliates of Sim Lian Holdings, a property group that was formerly listed on the Singapore Exchange.
Under a joint venture agreement, Metro will set up an asset management company with Sim Lian, which will be 20% and 80% by Metro’s and Sim Lian’s affiliates, respectively.
The joint venture asset management company will be appointed as the asset and investment manager of the trusts to manage the portfolio.
The portfolio has a total net lettable area of 130,925 sqm, with a committed average occupancy rate of 96.7% and overall weighted average lease expiry (WALE) of approximately 8 years.
Metro says the investment is in line with its strategy to expand its geographical footprint beyond its current presence in China, Indonesia, United Kingdom and Singapore.
It adds that the proposed acquisition will drive the diversification of the group’s investment portfolio across the region, as well as immediately generate a stable and recurring income stream.
The group says it will fund the transaction via a combination of internal cash sources and external borrowings.
“This investment marks our entry into the Australia office and retail segment through a strategic partnership with Sim Lian, which possess deep expertise in the Australia market,” says Yip Hoong Mun, Metro’s group CEO.
“With this acquisition, Metro will be able to establish an immediate presence in Australia with quality assets spanning across four key states in Australia and generating immediate recurring income,” he adds.
“With the combined expertise of Sim Lian and Metro Holdings, we are confident that our dedicated asset management team will further grow and enhance the current portfolio,” says Kuik Ah Han, chairman of Sim Lian.
Shares in Metro closed half a cent higher at 94.5 cents, before the announcement.
