SingHaiyi Group announced today that it has acquired the entire stake of Tri-County Mall, a major shopping mall in Cincinnati, Ohio, United States, for US$45 million.
The acquisition, SingHaiyi’s first in the US real estate market, values the mall at a discount of 77% to its unaudited net book value (NBV) as at 30 June 2013.
The cost of the mall works out to US$43.5 per square foot of the effective retail area that SingHaiyi will own. The mall is located in Springdale, about 20 miles north of downtown Cincinnati.
SingHaiyi said it had confirmed the acquisition by signing an agreement with American Pacific International Capital, Inc. (APIC), a corporation owned by the controlling shareholders of SingHaiyi, confirming acquisition of the two-storey mall.
The mall has 1.26 million square feet of lettable retail space, of which 227,072 square feet is owned by Macy’s, a leading department store. Sitting on a total site size of 76.1 acres (3.3 million square feet), the mall has a total of 7,118 parking lots.
SingHaiyi had announced on 7 September 2013 that it would transfer US$29.25 million to APIC as deposit for the mall, subject to due diligence, before acquisition of a then-indicative stake of 65%.
APIC had paid the entire US$45 million for the mall after a successful bid at a court-ordered auction on 19 July 2013 in Hamilton County, Ohio. The mall was placed under receivership and foreclosure proceedings in 2012 mainly due to the huge debts it had incurred.
With a current occupancy rate of 84%, Tri-County Mall recorded earnings before interest, taxes, depreciation and amortization (EBITDA) of US$5.7 million for year 2012 and US$2.6 million for the six months ended 30 June 2013, respectively. These translate to gross yields of 12.7% and 11.5%, respectively. Upon the completion of the acquisition, SingHaiyi will be able consolidate the revenue and profit of the mall immediately.
SingHaiyi will engage APIC’s property management arm, APIC Property Management, LLC (APPM), as property manager with effect from January 2014. The current property manager, Urban Retail Properties, LLC, will continue to manage the mall in the meantime to ensure continuity of management and operations.
SingHaiyi will fund the acquisition from the $226 million raised from a recent rights issue and share placement that was undertaken as part of the group’s strategy to expand its real estate investment activities beyond Singapore to include the United States.
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