DFI puts Jelita Shopping Centre on the market with S$85 million guide price

The group is looking to enter into a long-term leaseback agreement with the prospective buyer

Jun 05, 2023



DFI Retail Group : D01 +0.36% (DFI) is seeking a buyer for the four-decade-old Jelita Shopping Centre at 293 Holland Road.

It has appointed JLL as the exclusive marketing agent to conduct an expression of interest (EOI) exercise for the two-storey, 999-year leasehold retail mall at the corner of Holland Road and Jalan Jelita.

The guide price is S$85 million, which works out to S$2,528 per square foot (psf) on the existing net lettable area (NLA) of 33,621 square feet (sq ft).

Jelita Shopping Centre is anchored by DFI’s Cold Storage supermarket brand. The outlet, which is open 24 hours a day, occupies the entire ground level of the mall, and spans about 20,000 sq ft.

Tenants on the second floor include Starbucks, Delifrance, Guardian and Times Bookstore.

DFI Retail Group, formerly known as Dairy Farm International until its name change last year, has a secondary listing on the Singapore Exchange. It is looking to divest and enter into a long-term leaseback arrangement with the prospective buyer of Jelita Shopping Centre.

Two options for long-term leaseback

DFI’s preference is to lease back the ground floor space of the mall for its supermarket operation, as per the existing arrangement.

A spokesperson for the group said: “We are seeking a real estate partner for Jelita Shopping Centre who can further enhance the customer experience of this bustling mall, as we sharpen our focus on our key expertise in operating high-quality supermarkets.”

The spokesperson added that plans are underway to upgrade and rebrand the current Cold Storage supermarket in the mall as a CS Fresh outlet, to improve the supermarket experience for the group’s customers.

The group is prepared to lease back the entire building under a master tenancy arrangement – and continue to operate the supermarket on the first level as well as manage the leases for the second level – if that is what the prospective buyer prefers.

Terry Wong, senior director of capital markets at JLL Singapore, said: “Jelita Shopping Centre presents a prospective buyer with an attractive opportunity to acquire a core retail offering with defensive income at a palatable quantum, and backed by a blue-chip anchor tenant.

“Astute investors can embark on asset enhancement and potentially tenant repositioning on the second floor to rejuvenate the existing asset.”
Substantial redevelopment potential

Jelita Shopping Centre, which opened in January 1981, sits on 46,616 sq ft of land. The site is zoned for commercial and residential use under the Urban Redevelopment Authority’s latest Master Plan.

The building’s existing gross floor area (GFA) of 46,427 sq ft is less than half the 102,555 sq ft maximum GFA allowed for the site, based on the 2.2 plot ratio for the site in the latest Master Plan. This points to significant redevelopment potential for the property.

“Prospective investors can enjoy a stabilised return while land banking given the property’s rare 999-year tenure, and look to further explore various redevelopment angles to tap the unutilised plot ratio at an opportune time,” said Wong.

Currently, there are no competing supermarkets of such scale within the vicinity. Moreover, Jelita Shopping Centre has 57 car parking spaces in its basement. The asset can be positioned as a key necessity retail and F&B offering. It already enjoys an established shopper catchment from surrounding private homes, including the prime landed residential enclave along Holland Road.

This catchment is set to receive a boost, with more than 4,000 new residential units slated for completion over the next five to six years, said Wong. These include HDB Build-To-Order projects, such as Ghim Moh Ascent, as well as in the Dover Forest area.

Wong also noted the potential to explore integrating Jelita Shopping Centre with the rail corridor, which is just behind it.

Recent Singapore mall transactions include the sale of a 50 per cent stake in Nex, announced in January 2023, at S$3,274 psf on NLA to Frasers Centrepoint Trust : J69U +0.46% and Frasers Property : TQ5 -0.58%. The balance site lease for Nex was about 84.5 years at the time.

In December last year, Link Reit picked up Jurong Point for S$2,762 psf and Swing By @ Thomson Plaza at S$1,568 psf. The balance site lease then was about 70 years for Jurong Point 1 and 82.5 years for Jurong Point 2. Swing By @ Thomson Plaza’s balance site lease was about 53 years.

The net property income (NPI) yields for the above transactions ranged from the high-4 per cent region (for Nex and Jurong Point) to mid-5 per cent (for Swing By @ Thomson Plaza).

Wong said that based on the guide price for Jelita Shopping Centre, the NPI yield would hinge on the leaseback terms and rental rates to be negotiated between DFI and the buyer.

“Prime suburban retail assets with highly visible road frontage are rarely available for sale and are typically tightly held as these assets have generated resilient cash flows during the pandemic,” Wong said.

The EOI exercise for Jelita Shopping Centre will close on Jul 18, 2023.

https://www.businesstimes.com.sg/pro...on-guide-price