Suntec Reit to divest three Australian assets, focus more on Singapore
Under the divestment strategy, the supervisor says the Reit is going to focus a lot more on Singapore, granted the nation’s macroeconomic and political stability and the associated strength of the Singapore dollar, specifically amidst economic unpredictability and high rising cost of living.
This is part of a profile reconstitution to reduce overseas presence, starting off with Australia, sharpen its emphasis on the growing Singapore account and boost its capital framework.
According to a Sept 21 bourse filing, the divestment strategy follows a strategic assessment accomplished by the Reit after a change in its sponsor.
” This would certainly also reduce the profits drag arising from the high-interest rate setting in Australia and enhance the Reit’s interest plans ratio.”
Chong Kee Hong, CEO of Suntec Reit’s manager, stated the effective divestment of the properties will reduce the Reit’s aggregate leverage proportion to below 40%, providing higher adaptability for future purchases, unit buy-backs and/or capital distributions.
Located within North Sydney’s CBD, 177 Pacific Highway is a 31-storey Grade A commercial property development. The recently finished 21 Harris Street is a nine-storey, Grade An office building in Pyrmont, west of Sydney’s CBD. Both are fully operated by the Reit.
The supervisor added that Singapore’s business real estate market “stays favourable”, supported by limited new supply and tight vacancy rates. It will remain to explore opportunities to enhance Suntec REIT’s visibility in the city-state.
Suntec Reit will be launching formal sales campaigns for three freehold business real properties in Australia, consisting of 177 Pacific Highway and 21 Harris Street in Sydney, and 477 Collins Street in Melbourne.
The divestments of the Australian investments are supported by “improving conditions in Australia’s funding markets and continued investors’ interests in top notch, well-leased assets with secure income flows”, the bourse filing noted.
On The Other Hand, Suntec Reit carries a 50% stake in 477 Collins Street, a 39-storey, premium-grade office development called Olderfleet, in Melbourne’s CBD.
