Since then, Blackstone has repositioned the mall and it is now anchored by top national retailers Coles, Woolworths, ALDI, Kmart, Big W and Event Cinemas, alongside 23 mini-majors and 152 specialty stores.
According to media reports, Blackstone had been in talks to sell Top Ryde for about two months and negotiated with MA Financial to raise the funds for the transaction. The Australian Financial Review reported that Blackstone had an asking price of A$700 million when it initially put Top Ryde for sale in 2018.
According to Keppel REIT’s announcement, the gross purchase price payable based on the 75% effective interest is A$393.8 million (approximately $334.8 million or A$6,813 per sq m), excluding GST. The purchase price “represents a fully leased initial property yield of 6.7% after taking into account the independent valuation of the property,” Keppel REIT’s announcement says. An MA Financial fund will hold the remaining 25% and an MA Financial subsidiary will be the property manager.
Based on reports out of Australia, Top Ryde’s transaction price was at a 45% discount to its estimated replacement price.
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“We are neutral on Keppel REIT’s acquisition of a shopping centre in Sydney. While the acquisition price is fair, in our view, the addition of a new retail asset class in the Australian market dilutes Keppel REIT’s overall investor appeal as a prime office landlord,” writes Vijay Natarajan, vice president, real estate and REITs, RHB Bank, in an update. His rationale is that Keppel REIT is trading closer to his fair value and he sees limited upside.
Top Ryde is a freehold mall built in 2010 and refurbished in 2016. Occupancy stands at 96%, and as part of the acquisition, the vendor has provided a rent guarantee of AUD11.4 million that can be utilised at the discretion of the purchaser to fund potential rent shortfall, leasing commission, and/or incentives.
Weighted average lease expiry (WALE) by gross rent is 4.2 years with an evenly spread-out lease profile. The mall mainly caters to non-discretionary tenants, who account for 77% of income, with top tenants being supermarkets such as Coles, Woolworths, and The Growers.
Post acquisition (completion expected by 1Q2026), Australia will account for around 20% of Keppel REIT’s portfolio value with Singapore at 76%. Its new retail sector will account for 4%. Keppel REIT plans to raise its retail exposure to up to 20% in the medium term, Nararajan says.
According to Keppel REIT’s announcement, the pro-forma DPU accretion based on FY2024 financials is 0.89% to 5.65 cents. The pro forma aggregate leverage dips marginally to 41.6% from 41.7%. Keppel REIT raised $113 million from a placement of 114.95 million units, pricing placement units at 98.3 cents on Oct 8.
