26/12/2018 – Singapore sovereign wealth fund GIC has reportedly cash in on a Taiwanese shopping mall that it acquired a decade ago. According to media reports, the transaction is set to double the asset’s price tag when compared to the price GIC paid in 2008.
Hong Kong-based private equity real estate firm ARCH Capital Management made the acquisition via its subsidiary ARCH Capital Property Advisors on behalf of an unnamed institutional investor, who partnered with Taiwanese investment trust Millerful REIT No.1.
Unable to reveal the name of ARCH’s client, the Hong Kong company described it as a pension fund from outside of Asia looking to build a core portfolio in major gateway cities in the region.
The retail center acquired is Taimall, the largest shopping center in the Taoyuan area that has a total gross floor area of around 1000,000 square meters occupying more than 300 retail tenants, on top of holding a theater, an entertainment center, and a small sports complex.
Announcing the deal, ARCH Capital Property’s managing director James Chou said that his company saw in the deal “a rare opportunity to acquire an established premium retail asset offering stable income and sustained revenue growth potential over the longer term.”
ARCH Capital said that the company acted as the investment adviser for the institutional investor on the deal and will now be in charge of the management and performance of the mall.
Although operations in Taimall has been stable over the years, the Chief Executive Officer and Chief Investment Officer at ARCH Capital Management Richard Yue explained that the fully let retail asset still holds further potential.
According to Yue, ARCH approached GIC with an off-market offer for Taimall. He explained that ARCH has been tracking the asset’s development for years as well as keeping track of fundamentals such as demographics.
“I think Taiwan is quite interesting right now due to the cap rates. They are probably slightly below Australia and Japan, but higher than Hong Kong and Singapore,” Yue said. “The financing is lower than the cap rate, so Taiwan is a fairly stable place to invest, and it is relatively cheaper than all the other mentioned places.”
Founded in 2006, ARCH Capital focuses on opportunistic to core/ core-plus real estate investment opportunities in Greater China and Southeast Asia across the residential, mixed-use, and commercial asset classes.
ARCH has raised US$1.4 billion across funds, joint ventures, and separate accounts to date. The firm also has more than US$12 billion gross development value under management across the Asia-Pacific region with an emphasis on Greater China and Southeast Asia.
Meanwhile, GIC manages Singapore’s foreign reserves and sees itself as a global long-term investor with well over US$100 billion in assets in over 40 countries worldwide. The sovereign wealth fund has been making purchases in the realty space in the region and even globally.
Earlier this month, GIV announced that it will acquire two blocks in the Hwaseong Dungeon Logistics Complex in South Korea through a real estate fund for US$570 million. The blocks were owned by K-Eco Logis Co., Ltd, a subsidiary of Halla Corp and the developer of the assets.