Suntec Reit to increase Singapore focus, sell three Australia properties
Sign up now: Get ST's newsletters delivered to your inbox
The plans come after a review that could help improve Suntec Reit’s capital structure.
PHOTO: BT FILE
Shikhar Gupta
- Suntec Reit will focus on growing its Singapore assets and reduce overseas exposure by selling three properties in Australia.
- The sales aim to lower leverage below 40%, allowing future acquisitions, unit buy-backs, or capital distribution, while offsetting earnings drag from high Australian interest rates.
- The move follows a strategic review by new sponsor Tang Organization to strengthen portfolio performance and enhance capital efficiency for higher future distributions.
AI generated
SINGAPORE – Suntec Real Estate Investment Trust (Suntec Reit) will focus on growing its Singapore assets and reducing its overseas exposure, starting with Australia, following a strategic review of its portfolio.
“The macroeconomic and political stability, together with the relative strength of the Singapore dollar... continue to support a compelling case for growing Suntec Reit’s investment in Singapore,” said the manager on Sept 21 in a bourse filing.
At the same time, the Reit manager intends to sell three properties in Australia: 177 Pacific Highway and 21 Harris Street in Sydney, and 477 Collins Street in Melbourne.
These divestments are “supported by improving conditions in Australia’s capital markets” and continued investor interest, said the manager.
With the sales, Suntec Reit’s aggregate leverage is expected to fall to below 40 per cent, said Chong Kee Hiong, chief executive officer of the Reit’s management team. This will provide room for “future acquisition opportunities, unit buy-back and/or capital distribution”.
The sales are also expected to offset an earnings drag from the “high-interest rate environment in Australia”. Australia’s benchmark interest rate currently stands at 4.35 per cent.
Suntec Reit has $12.2 billion in total assets under management, with three properties in Singapore, four in Australia and two in Britain. About 74 per cent of its income is contributed by its Singapore portfolio, followed by 15 per cent from Australia and 11 per cent from Britain.
The announcement comes after Suntec Reit’s new sponsor, Tang Organization, launched a review of the Reit’s portfolio in March. The review was aimed at strengthening portfolio performance and enhancing capital efficiency.
Tang Organization, which took over ESR Asset Management, had said that the initiatives could support higher distributions in the coming years, while balancing Suntec Reit’s capital management needs and long-term sustainability.
Units of Suntec Reit rose 0.7 per cent to close 1 Singapore cent higher at $1.38 on Sept 18. THE BUSINESS TIMES