Detailed Report

Metro Holdings Limited (“Metro”), listed on the SGX-ST since 1973, together with its joint venture partner Sim Lian Group, has announced the divestment of its Western Australia retail asset – Dalyellup Shopping Centre.

Dalyellup Shopping Centre, located at 54 Tiffany Centre, Dalyellup, WA, is a freehold neighbourhood shopping centre with a net lettable area (NLA) of approximately 6,468 square metres. This property was the only retail asset in Western Australia within Metro’s 30%-owned joint venture portfolio with Sim Lian.

The property was divested to an independent third party for a gross sale consideration of A\$35.8 million (approximately S\$30.5 million). After accounting for selling costs, outstanding incentives, capital gains tax, and loan repayment, the net sale proceeds total about A\$16.0 million (S\$13.6 million), with Metro’s 30% share being A\$4.8 million (S\$4.1 million).

Strategic Implications: The divestment aligns with Metro’s ongoing portfolio reconstitution and capital recycling strategy. Notably, it comes closely after the acquisition of 1 Castlereagh Street, Sydney, a prime office building, in October 2024. This represents a strategic shift to increase portfolio exposure to Australia’s eastern seaboard (New South Wales, Victoria, Queensland), which are typically regarded as higher-growth and more liquid markets compared to Western Australia.

The net sale proceeds are earmarked for general corporate purposes, specifically repayment of bank borrowings and potential return of capital to shareholders. This could be price-sensitive for investors, as a capital return may directly impact shareholder value.

Financial Impact: Management expects that the divestment will not have a significant impact on the Group’s consolidated net tangible assets per share or earnings per share for FY2026. However, the ability to sell the property at a slight premium to book value, especially in a challenging market environment, demonstrates the underlying strength and valuation discipline of Metro Holdings’ asset management.

Metro’s Australia Portfolio – Updated Snapshot

As of 31 March 2025, prior to the divestment, Metro’s Australian joint venture portfolio comprised 5 office buildings and 13 retail centres, with a total appraised value of A\$1,396 million (S\$1,178 million), NLA of 176,279 sqm, occupancy of 92.9%, and a weighted average lease expiry of 5 years.

Following the divestment:

• Portfolio value: A\$1,361 million
• Number of properties: 17 quality freehold assets (5 office buildings, 12 retail centres)
• Total NLA: 169,811 sqm

Metro Holdings – Corporate Background

Metro Holdings has transformed from a textile retailer (est. 1957) to a diversified property and retail group with operations across Singapore, China, Indonesia, the UK, and Australia. The company’s property investment segment is focused on prime retail and office assets in major cities, while its retail division continues to operate flagship Metro department stores in Singapore.

Investor Considerations and Potential Share Price Impact

• Capital Return Potential: Metro has indicated that part of the net sale proceeds may be distributed to shareholders, which is a positive catalyst for share price appreciation.
• Portfolio Quality and Focus: Rationalising exposure from Western Australia to the eastern seaboard may yield superior long-term returns and reduce risk, which could improve investor sentiment.
• Premium Sale Price: Achieving a premium to book value in a subdued market signals management’s effective asset management and could support share valuations.
• Financial Stability: Use of proceeds to repay bank borrowings strengthens the balance sheet, further supporting shareholder value.
• Ongoing Portfolio Rationalisation: Investors should monitor for further divestments or acquisitions that could reshape the company’s asset base and earnings profile.

Conclusion

The divestment of Dalyellup Shopping Centre marks a significant strategic move for Metro Holdings, underpinning its commitment to portfolio optimisation, capital recycling, and enhancing shareholder returns. The transaction, premium pricing, and potential capital return are all factors that could influence Metro’s share price in the near term.

Shareholders are advised to monitor further portfolio movements and any announcements regarding capital return, as these may be material to the Group’s future performance and share valuation.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult professional advisers before making any investment decisions related to Metro Holdings Limited.

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