SINGAPORE (Dec 18): The Straits Trading Company is taking up a 37.7% stake in a joint venture with ARA Asset Management and ICBC International Investment Management to acquire a retail mall in Shanghai, China for RMB 2.42 billion ($469.5 million), the group announced in a regulatory filing on Tuesday.
The arrangement was entered into by SRE Venture 16 (SREV16), a wholly-owned subsidiary of Straits Real Estate.
Straits Trading owns a 89.5% stake in Straits Real Estate, a co-investment vehicle that seeks out real estate related investments and opportunities globally.
The group also owns a 20.95% stake in ARA Asset Management, a premier global integrated real assets fund manager.
SREV16’s capital contribution to the total purchase consideration will be approximately RMB 441.9 million, which will be funded by internal resources.
Located in the Sanlin District of Pudong, Shanghai, the property has a gross floor area (GFA) of around 83,074 sqm.
Opened in the fourth quarter of 2018, the mall is currently 91.3% occupied.
Based on an independent valuation by CBRE, the value of the property is RMB 2.66 billion as at Aug 31, 2019.
Straits Trading says the proposed acquisition of the mall offers an opportunity to upgrade the asset’s tenant profile and capitalise on positive rental reversions.
The group adds that the proposed acquisition is in line with its strategy of redeploying capital from its existing property portfolio of high quality but low yielding investment properties into potentially higher return real estate opportunities via Straits Real Estate.
Straits Trading announced last week that Straits Real Estate is divesting four residential properties in Central Osaka, Japan for 8.25 billion yen ($103.2 million).
On Dec 4, the group also announced that Straits Real Estate’s wholly-owned subsidiary had entered into a contract to acquire a mixed-use office and industrial property in Victoria, Australia for A$24.0 million ($22.3 million).
As at 11.23am, shares in Straits Trading are trading flat at $2.09.