Trust Management (Suntec) Limited

Transcription

1 Trust Management (Suntec) Limited Manager of Media release For immediate release 30 June 2005 SUNTEC REIT ACQUIRES OVER S$1 BILLION OF PROPERTIES Forges strategic alliances with leading property developers Key highlights: Proposes to acquire 12 properties for S$1,018.0 million (the Acquisitions ) Portfolio to grow from 1 property to 13 properties Tenant base to grow from 408 to 730 Net lettable area to increase from 2.2 million sq ft to 3.5 million sq ft Deposited property to increase from S$2.2 billion to S$3.2 billion Strategic alliances with City Developments Limited and Wing Tai Holdings Limited Singapore, 30 June 2005 ARA Trust Management (Suntec) Limited (the Manager ), the manager of Suntec Real Estate Investment Trust ( Suntec REIT ) is pleased to announce that it has entered into separate conditional sale and purchase agreements with City Developments Limited ( CDL ) and related corporations of CDL for the proposed acquisitions of 11 properties, comprising Fuji Xerox Towers, Plaza By The Park, City House, Central Mall (Office Tower), The Arcade Units, North Bridge Commercial Complex Units, Fortune Centre Units, Golden Mile Complex Units, Katong Shopping Centre Units, People s Park Centre Carpark Unit and Queensway Shopping Centre Carpark Unit (the CDL Properties ). Separately, the Manager has entered into a conditional sale and purchase agreement with Wingain Investments Pte Ltd ( Wingain, a subsidiary of Wing Tai Holdings Limited, Wing Tai ) for the proposed acquisition of Park Mall (together with the CDL Properties, the Properties ). The aggregate purchase price consideration for the CDL Properties is S$788.0 million (the Purchase Consideration ), which will be satisfied by the issue of deferred units in Suntec REIT ( Units ) amounting to approximately S$78.0 million in value and the balance in cash. The purchase price of

2 Park Mall is S$230.0 million, which will be satisfied in cash. These Properties will generate an average trading property yield of 4.4 per cent. Commenting on the Acquisitions, Mr John Lim, the chief executive office ( CEO ) of the ARA Group said, "This marks the beginning of our strategic alliances with CDL and Wing Tai, both of whom are leading property developers. These acquisitions strengthen our portfolio considerably, providing income and asset diversification, transforming Suntec REIT into a multiple-asset portfolio with a wider tenant base and increased revenue streams." "With our common interests in Suntec REIT, we will work closely together for the benefit of our unitholders," he added. Mr Yeo See Kiat, the acting CEO of the Manager also added, "My team and I look forward to forging a mutually rewarding relationship with our strategic partners. I am also delighted that with the appointment of our two partners as property managers, the tenants are assured of continuity in the management of the properties." Increased diversification When completed, the proposed acquisitions will increase the asset value of Suntec REIT s total investment properties from approximately S$2.2 billion as at 31 March 2005 to approximately S$3.3 billion. With the proposed acquisitions, the REIT s property portfolio will expand from one property to thirteen properties. The enlarged asset base will improve the diversification of the REIT s income in terms of number of assets, geographic location and tenant base. Strategic alliances with CDL and Wing Tai On completion of the Acquisitions, Suntec REIT will enter into property management agreements with CDL and Wing Tai for the property management of the CDL Properties and Park Mall respectively, marking the start of formal working relationships between the Manager and the two leading property developers. The Manager has also entered into a strategic advisory agreement with CDL. The Manager believes that the Acquisitions align the interests of CDL and Wing Tai to those of Suntec REIT. Potential upside The Properties are in prime locations with easy access to major roads and MRT stations. With the proposed Acquisitions, Suntec REIT is well positioned to take advantage of an improving office market that is at its early recovery stage of a market cycle. Prime office rents have bottomed in Q and have been rising steadily since then. According to Jones Lang LaSalle, the effective gross rents for Grade A offices in the small space category went up recently by 6.5% and 5.2% in the

3 Orchard Road area and Raffles Place vicinity respectively. Large spaces showed larger rises of 6.8% and 4.5% respectively. Rental recovery was also observed to be filtering down into the Grade B segment in the CBD with small space category rents rising by about 3.8%. Between 2005 & 2007, Jones Lang LaSalle expects rental values for Prime Grade A space and Prime Grade B space to grow by 9.2% p.a. and 6.6% p.a. respectively. Greater trading liquidity and flexibility The enlarged asset base resulting from the proposed Acquisitions will allow greater trading liquidity of Units and would also create more flexibility for future acquisitions. Funding via new debt and equity The Manager aims to optimise the capital structure and cost of capital of Suntec REIT by using an appropriate combination of new debt and equity to fund the proposed Acquisitions. Conditions for the Acquisitions The completion of the Acquisitions is subject to a number of conditions, including approvals from Suntec REIT s unitholders at an extraordinary general meeting for the Acquisitions and for an equity fund raising to partially finance the Acquisitions, details of which will be announced at an appropriate time. The Acquisitions are expected to be completed by October Value of the Properties The CDL Properties were valued by Knight Frank Pte Ltd, while Park Mall was valued by CB Richard Ellis (Pte) Ltd, both in accordance with the instructions issued by the Trustee. All valuations were prepared using the income and discounted cash flow methods as well as the direct comparison and replacement cost methods of valuation. The purchase price, the valuation and the date of valuation of each of the Properties are set out in the table below: Purchase Price Valuation Date of Valuation Property (S$ million) (S$ million) Park Mall June 2005 Fuji Xerox Towers May 2005 Plaza By The Park May 2005 City House May 2005 Central Mall (Office May 2005 Tower) The Arcade Units May 2005

4 Purchase Price Valuation Date of Valuation Property (S$ million) (S$ million) North Bridge Commercial May 2005 Complex Units Fortune Centre Units May 2005 Katong Shopping Centre May 2005 Units Golden Mile Complex May 2005 Units People s Park Centre May 2005 Carpark Unit Queensway Shopping May 2005 Centre Carpark Unit Total 1, ,018.0 ENDS For enquiries, please contact Yeo See Kiat Acting Chief Executive Officer seekiatyeo@ara.com.hk Ho Siang Twang, CFA Strategic Planning & Fund Management Manager siangtwangho@ara.com.hk ABOUT SUNTEC REIT Listed on 9 December 2004, Suntec REIT holds properties in Suntec City, Singapore s largest integrated commercial development (including Singapore s largest shopping mall). Its aim is to invest in income-producing real estate which is primarily used for retail and/or office purposes. Suntec REIT is managed by an external manager, ARA Trust Management (Suntec) Limited. In relation to the initial public offering in November/December 2004, the joint financial advisors were Citigroup Global Markets Singapore Pte. Ltd. ( Citigroup ) and DBS Bank Ltd ( DBS Bank ). The joint lead underwriters and bookrunners were Citigroup, DBS Bank and Deutsche Bank AG, Singapore Branch, and BNP Paribas Peregrine (Singapore) Ltd was the co-manager in the transaction.

5 ABOUT ARA TRUST MANAGEMENT (SUNTEC) LIMITED ARA Trust Management (Suntec) Limited, part of the ARA Asset Management Limited group ( ARA ), is the manager of Suntec REIT. ARA is a member of the Cheung Kong Group. ARA is currently involved in managing the publicly listed Fortune Real Estate Investment Trust and private equity real estate funds such as Al Islami Far Eastern Real Estate Fund Limited. It is staffed by experienced professionals who have extensive experience in the real estate industry in Singapore and the region. IMPORTANT NOTICE This media release may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies and venues for the sale or distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses (including employee wages, benefits and training costs), governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager s current view on future events. The value of Units and the income derived from them, if any, may fall or rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors should note that they have no right to request the Manager to redeem their Units while the Units are listed. It is intended that Unitholders may only deal in their Units through trading on Singapore Exchange Securities Trading Limited ( SGX-ST ). Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The past performance of Suntec REIT is not necessarily indicative of the future performance of Suntec REIT.