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Bond Market News

Suntec to Offload Strata Units & Buy London Office Building

Singapore’s Suntec Real Estate Investment Trust (REIT) is set to divest its portfolio of strata units at Suntec City Office for S$197mn ($146.3mn) and acquire a 100% interest in a ”The Minster Building” in the City of London for £353mn ($487.6mn). The divestment of the Suntec City Office strata units comes at a premium of 8.9% over the independent valuation fetching a gain of S$13.9mn ($10.3mn). After the deal, Suntec REIT’s assets under management (“AUM”) will increase by S$200mn to S$11.7bn ($8.7bn). Singapore at 70.7% constitutes the bulk of its AUM. Australia and the UK constitute 16.8% and 12.5% of AUM respectively. Mr. Chong, Chief Executive Officer of the Manager, said, “ The proceeds from divestments and the recent perpetual securities issuance have improved our financial flexibility… The Minster Building is higher yielding than the divested assets and we achieved DPU and NAV accretions of 3.6% and 0.7% respectively for the unitholders.”  The London property has an income yield of 4.5% and long weighted average lease expiry of 12.3 years according to Mr. Chong.

Suntec’s bonds were stable. It’s 2.6% 2025s and 4.25% perps were trading at 100.2 and 100.74 respectively.
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