Dairy Farm Singapore has put up for sale its “7-Eleven Portfolio”, which comprises 13 HDB shophouses and a 999-year leasehold retail shop at Peninsula Plaza. The asking price is a grand total of $48.79 million, for a total combined strata area of 21,289 sq ft. According to the marketing agent JLL, the assets can be sold either individually or collectively.
The properties are located in prime areas such as City Hall (Peninsula Plaza) and in mature residential estates like Ang Mo Kio, Bedok and Clementi (see table).
They come with prominent frontage, and most of them are in close proximity to road junctions, coffee shops, post offices and supermarkets. The 999-year leasehold strata retail unit at Peninsula Plaza occupies a prime ground floor location with a prominent main road frontage.
The portfolio will be offered for sale under three separate clusters.
Cluster 1 features assets that are offered for sale with a long-term sale and leaseback arrangement with 7-Eleven in place, providing investors with the opportunity to acquire high-yielding properties with a strong and established blue-chip tenant in place. The units will be leased to Cold Storage Singapore, a subsidiary of Dairy Farm International Holdings.
Cluster 2 features assets that are offered for sale with vacant possession, providing units located in good locations for owner-occupiers. Investors can also have the flexibility of leasing the units to their own preferred tenants.
Cluster 3 features an individual asset located at Bedok Reservoir Road. The unit is offered for sale with existing tenancy, providing the incoming investor with a stable income stream.
The 7-Eleven portfolio will be offered for sale via an open tender process that will close on June 5 at 3pm.
This is the first time that a series of prime 7-Eleven convenience stores situated in long-standing and proven mature residential hubs is being put onto the market for sale, says Clemence Lee, associate director of capital markets at JLL.
Such properties are highly sought-after by investors due to their defensive and counter-cyclical nature, Lee adds. He expects strong interest from investors such as boutique real estate funds, local companies, family offices and high-net-worth individuals (HNWIs) who are looking to own a turnkey property with strong tenant covenant and a long term tenancy in place.
Dairy Farm Singapore derives its returns from retail and not property, says the company in a statement. As such, over 95% of its stores are leased. Dairy Farm Singapore owns about 400 7-Eleven stores in Singapore. “The acquisition of the assets was due to legacy reasons and not a strategic one,” according to the company. “In order to improve its capita efficiency, Dairy Farm has decided to divest the portfolio.”
Furthermore, in light of their noncore strategic nature and lack of scalability for further development, it is considered more beneficial to unlock the value of these assets. The proceeds will be used to reinvest and grow the business, says Dairy Farm Singapore.
Dairy Farm Singapore is a subsidiary of Dairy Farm International, a leading pan-Asian retailer. Besides 7-Eleven, the group also operates wellknown retail brands such as Cold Storage supermarket, IKEA furniture store, Giant hypermart and Guardian pharmacy. In 2017, the group and its associates and joint ventures operated more than 7,100 outlets, employed 200,000 people and had total annual sales exceeding US$21 billion ($27.9 billion).
Incidentally, Dairy Farm International is incorporated in Bermuda and listed on the London Stock Exchange, with secondary listings in Bermuda and Singapore. The group’s businesses are managed from Hong Kong by Dairy Farm Management Services through its regional offices. Dairy Farm is a member of the Jardine Matheson Group.