SPH REIT management has finally announced their first maiden acquisition post its IPO in mid-2013. The Management had previously mentioned that they had been aggressively and actively looking at acquisition of different properties but were having challenges finding yield accretion ones.
It sure took a long time before the Management team of SPH REIT finally found a property that their team assessed to be a yield accretive investment. I was thus very surprised to find out that they had made an announcement on 30 April 2018 (Monday) after market trading hours and slightly after 8pm with regard to SPH acquisition of The Rail Mall.
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| Extracted from SPH REIT SGX Announcement |
The Rail Mall is a retail strip, with a 360-metre prominent road frontage to
Upper Bukit Timah Road, comprising 43 single-storey shop units and 95
private carpark lots. One of the key access points to the Rail Corridor is
located within a short walking distance from The Rail Mall.
The Rail Mall has a total net lettable area of approximately 50,000 square
feet. It is well served by the Hillview MRT station about 250 metres away and a
network of public bus services. Accessibility is further enhanced by its
proximity to the Bukit Timah Expressway (BKE) and Pan Island
Expressway (PIE).
The expected completion date of this acquisition will be on 28 June 2018.
The only thing which i do not like is that The Rail Mall lease ends on 17 March 2046. This is a very old leasehold property. Only another 29 years of the 99 yrs leasehold remain for the lease tenure. I also trust that the management team has budgeted in sufficient maintenance expenses for the aged property.
Despite being only a minor acquisition exercise at only S$63.24Mil, this does help build up the M&A exposure for the SPH REIT management team. I am glad that this new property will add value to shareholders and is definitely the right step forward for SPH REIT. May the Seletar Mall and other acquisitions also come along for SPH REIT to continue growing.
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