SINGAPORE (XFN-ASIA) dated 30 Jun 2005 - Suntec REIT said it is buying a total of 12 properties from City Developments and Wing Tai for about 1.03 bln sgd, making it the largest real estate investment trust by asset size and net lettable area in the city state.
Suntec REIT will buy 11 properties from City Developments, namely Fuji Xerox Towers, Plaza By The Park, City House, Central Mall (Office Tower), The Arcade Units, Katong Shopping Centre Units, North Bridge Commercial Complex Units, Fortune Centre Units, Golden Mile Complex Units, People's Park Centre Carpark Unit and Queensway Shopping Centre Carpark Unit. These properties were priced at a total of 788 mln sgd.
Suntec REIT said it will also buy Park Mall, which is majority owned by Wing Tai, for 230 mln sgd.
The total acquisition cost of about 1.03 bln sgd comprises the aggregate purchase price of the properties of 1.02 bln sgd, an acquisition fee of 10.2 mln and other fees and expenses of about 3 mln.
"The acquisition is aimed at diversifying Suntec REIT's earnings, which is currently solely derived from the Suntec City office and commercial complex," Suntec REIT said in a statement. "Upon completion of the acquisitions, Suntec REIT will have a total of 13 properties," it added. Suntec REIT said the 13 properties will have a total net lettable area of 3.5 mln square feet and an asset size of 3.3 bln sgd. "This will make Suntec REIT the largest Singapore real estate investment trust by asset size as well as net lettable area," it said.
Suntec REIT said the acquisitions will improve its distribution per unit (DPU) for its unitholders. It said that the acquisitions are expected to improve the income diversification of Suntec REIT, "reducing its reliance on any one single property," adding that the number of its tenants is expected to increase by 78.9 pct to 730 from 408 following the acquisitions.
Suntec REIT also said the acquisitions will be partly funded from the expected net proceeds of a proposed offer and the issue of new units to investors, as well as additional borrowings.
In a separate statement, City Developments said that the sale of its 11 properties will give it "an immediate cash receipt of 710 mln sgd." "Based on the net book value of these properties as of December 31 2004, this deal will provide CDL with a pretax profit of about 342.31 mln sgd, before taking into account the transaction costs," City Developments said.
Report fm OCBC dated 4-Jul here
They recommend Upgrade BUY, Fair Value $1.38 (fm $1.27)
Comments : Suntec REIT dropped to an intra day low of $1.20 after Mr Li sold his stake to below 5% a couple of weeks back. These last few weeks, we also saw Temasek selling almost their entire stake in CCT REIT and Fortune REIT launching new shares. Temasek also announced their intention to launch the IPO for MapleTree REIT.
Mkt reaction so far has not been very positive and the price has been stable at aro' $1.22-$1.24 as little detail has been provided on these purchases. Suntec will likely issue new shares and this will likely cause pressure on the share price. I am still positive with Suntec REIT and just bought at $1.23 on 4-Jul to add to my earlier purchases of $1 (IPO) and $1.25 (17-Jun). Note that I intend to hold these for the longer term but may sell some if the opportunity arises (ie. price rises too fast) or due to other adverse conditions (eg. interest rate goes up).
Disclaimer : Use the above at your own risk! We'll not be responsible for any losses incurred but you can give us credit if you make money :D
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2 comments:
Recently, I have use CPF fund to buy Suntec Reit at $1.23. This is the first stock that I bought after I sold all my Singtel and CSM stock. I decide to take profit for both Singtel and CSM as my Singtel share has covered the lost of CSM. Decide to realign my long term investment. I don't think I will have technology stock in my long term investment unless some technology counter can really show a great potential growth.
Business Times - 12 Jul 2005
Hock Lock Siew
CMT set to catch up with Suntec with Bugis deal
By KALPANA RASHIWALA
SUNTEC Reit announced recently that it was acquiring Park Mall from Wing Tai, along with 11 properties from City Developments. The deals, if they go through, will increase the real estate investment trust's assets from about $2.2 billion to nearly $3.2 billion.
With the enlarged portfolio, Suntec Reit will zip past rival CapitaMall Trust (CMT), which currently has a stable of seven malls totalling about $2.4 billion.
What's more, the proposed acquisition of Park Mall will allow Suntec Reit to set up shop, so to speak, closer to CMT's Plaza Singapura shopping centre in the Orchard Road area.
But things could change again soon. That's because of two transactions earlier this year involving CMT's parent, CapitaLand, in the Bugis Junction complex. Following those two deals, CapitaLand and its fellow Temasek stablemate Keppel Land took full control of Bugis City Holdings.
Unlocking value
Effectively, CapitaLand now controls 59.6 per cent of Bugis Junction's retail component and 62.1 per cent of the office tower in the complex.
Both CapitaLand and Keppel Land are keen to unlock the value of their investment in the complex, which they've been involved with for more than a decade. Pidemco Land (which in 2000 merged with DBS Land to form CapitaLand) and KepLand were among the founding shareholders of Bugis Junction. Opened in 1995, the complex comprises the 403-room Intercontinental Hotel besides the mall and the office tower.
Market watchers expect CapitaLand and KepLand to do some horse-trading on Bugis Junction. Given that CapitaLand has a shopping-centre Reit, CMT, and that KepLand has been talking about its intention to float an office Reit for some time, analysts expect the horse-trading to result in CapitaLand clinching the mall at Bugis Junction, and KepLand taking the 15-storey office tower.
If that happens, and assuming the mall component is worth, say, close to $600 million, such an acquisition will again boost CMT's asset size to the $3 billion mark. That will take it close to Suntec Reit's asset size after the proposed acquisitions from CityDev and Wing Tai.
Interestingly, a purchase of Bugis Junction mall would bring CMT closer to Suntec Reit's turf at Suntec City.
Competition would heat up between the managers of the two Reits to lure tenants and shoppers. Their ability to do so will directly impact their respective net property income and hence that all important performance indicator for a Reit: distribution per unit. That in turn will affect the two Reits' respective unit prices on the stock market.
Bugis Junction mall, which has a net lettable area of about 420,000 sq ft, has defied doomsday predictions. Before its opening in 1995, market watchers had been sceptical about its success, given the location in the old Bugis Street area, which had been a magnet for tourists drawn to its attraction of dolled-up transvestites.
But thanks to a maverick mall manager in the form of Japan's Parco group, a unique development incorporating new buildings with re-created shophouses roofed over in glass and fully air-conditioned, plus an MRT station, the critics were proven wrong.
Sell the hotel
And ten years on, Bugis Junction mall continues to be one of Singapore's most popular. CapitaLand, with its expertise in mall management, should be able to add to Bugis Junction's success.
But what of the hotel component of the complex? CapitaLand and KepLand, through Bugis City Holdings, control 90 per cent of the Intercontinental Singapore, with the rest being held by the hotel group itself.
One option for CapitaLand and Keppel Land is simply to put the hotel component up for sale. This could prove to be an attractive choice, considering the recent strong response to the tender for Crown Hotel on Orchard Road - a response that points to growing investor interest in Singapore's real estate and hospitality sectors.
Comments : Could be the reason why Suntec drops to $1.19 now. I bot more, becoming sunset, keep dropping :D
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