Listed diversified group Thakral Corp has been ramping up its acquisition of investment properties. On May 21, it announced the proposed acquisition of a strata office unit at The Riverwalk, a 27-storey commercial and residential project with a 99-year lease from December 1980.
The purchase price is $30 million and it involves buying the entire shareholding of Thakral Realty (S) Pte Ltd, which owns the 18,998 sq ft strata office unit on the third level of The Riverwalk. The total comprises $9 million for the entire shareholding of TRSPL and its current outstanding loan of $21 million. As it is a related-party transaction, it will be subject to approval by shareholders.
The Riverwalkl is a commercial and residential development with a 99-year lease from 1980 (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Upon the completion of the proposed acquisition, Thakral Corp will sign a three-year leaseback agreement at a monthly rent of $5.50 psf. The gross monthly rent works out to $101,739. The group says the acquisition will be financed using the proceeds from the recent sale of its warehouse properties in Hong Kong.
“We believe real estate in Southeast Asia — especially Singapore — is in a sweet spot,” says Inderbethal Singh Thakral, CEO of Thakral Corp. “Given the uptrend in the local property market and Singapore’s improving economic outlook, demand for well-located commercial office space is expected to grow.”
He sees Thakral Corp entering the Singapore market “at an opportune time”, as the value of such office buildings is expected to appreciate in the coming years. “The rental revenue from our investment in the office unit at The Riverwalk will provide us with a stable source of recurring income,” he adds.
Thakral Corp paid $30 million to purchase the 18,998 sq ft office space on the third level of The Riverwalk (Credit: Samuel Isaac Chua/EdgeProp Singapore)
The company has been looking at Singapore and the Southeast Asian markets since last September. “We should have moved a little bit faster,” concedes Thakral. “But with limited capital, we will deploy it very carefully.”
He feels that it is difficult to find good deals in Singapore, as prices have soared. “If you look at this whole block, [The Riverwalk] is probably the cheapest around,” he says. That explains the acquisition of the strata office unit last month.
Thakral Corp ventured into the office market in Osaka, Japan, in 2014 with the acquisition of two buildings and since then, it has built a portfolio of two office buildings, two hotels and a retail property. In January this year, the firm announced the acquisition of the nine-storey Legal Itachibori Building, marking Thakral Corp’s sixth investment property in Osaka. The building has a gross built-up area of 60,472 sq ft, with net lettable area of 41,646 sq ft and an occupancy rate of 82%. The investment was made through Thakral Corp’s 50%-owned subsidiary Thakral Japan Properties.
In January this year, the firm announced the acquisition of the nine-storey Legal Itachibori Building, marking Thakral Corp’s sixth investment property in Osaka. (Credit: Thakral Corp)
The investments are expected to generate positive returns for shareholders as Japan’s real estate market stays upbeat. “The growth in tourism here has led to greater demand for hotels,” says Thakral. “The Osaka office market is showing stronger rental growth, backed by solid demand and limited supply, attracting both domestic and overseas investors.”
The reason for investing in quality office buildings is that it is the “preferred asset class for global investors”, says Thakral. There is also very limited office stock in Osaka, where vacancy today is below 5%, he adds. “We are therefore confident of the strategic value of our Japanese real estate portfolio.”
The Yotsubashi East Building (pictured) and Yotsubashi Nakano Building are two office buildings in Thakral Corp’s Osaka portfolio (Credit: Thakral Corp)
Thakral also sees the office, hotel and retail sectors in Osaka benefiting from the tourism boom in Japan, as Tokyo will be hosting the 2020 Olympic and Paralympic Games.
Thakral Corp has had a presence in Osaka since 1936, he says. His grandfather was a textile merchant who plied his trade between Japan and Thailand. The Osaka office closed in 1939 during World War II and reopened in 1951. “My cousin was born there, and he used to speak fluent Japanese,” he says. “Now my nephew is based there, and he speaks like a local.” Thakral was based in Japan for four years, handling the family’s textile business, before moving to Hong Kong, where he ventured into consumer electronics. Since then, the company has morphed into a diversified conglomerate with investments in the property, beauty and lifestyle segments.
Since August 2015, Thakral Corp’s property investments in Australia have expanded to include retirement resorts. Last month, the company and its subsidiaries acquired a new property at Maroochydore, Queenstown, making it the fifth resort-style retirement housing project branded GemLife.
The latest project, GemLife Maroochydore, will increase Gemlife’s portfolio of retirement homes to more than 1,200 units (Credit: Thakral Corp)
GemLife Maroochydore will have 247 homes sitting on an 18.9ha (over two million sq ft) site when completed. Development approval was received in April, and construction is expected to take place in 3Q2018. Thakral Corp and its Australian joint-venture partner have committed to invest A$12 million ($12.26 million) in the development of the GemLife Maroochydore project. This latest project will boost Gemlife’s portfolio to more than 1,200 retirement homes.
In Australia, Thakral Corp’s other investment properties include Fortitude Valley, a mixed-use development in Brisbane that was completed in 3Q2017; a premium residential project called Grange Residences that is also in Brisbane and that was sold out within eight weeks of its launch; and Newstead Series, a luxury residential project in Brisbane that is 90% sold and scheduled for completion soon.
Newstead Series, a luxury residential project in Brisbane that is 90% sold and scheduled for completion soon (Credit: Thakral Corp)
Even though Thakral Corp has been listed in Singapore since 1995 and its head office is here, the whole management team is overseas. The family still maintains a home on a sprawling site of close to 50,000 sq ft on Meyer Road in prime District 15, and it is where Thakral lives when he visits Singapore at least once every quarter.
Thakral has spent four years in Japan, another 21 years in Hong Kong and the last 13 years in China, where he is now based in Shanghai. “I never really grew up in Singapore except for the first two years after I was born and during my National Service,” he says.
Perhaps he will visit the country more often now that “the Singapore property market is looking good”.