Suntec REIT

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Business Times - 03 Sep 2011

Chijmes being put up for sale

Owner Suntec Reit appoints Colliers International to market iconic property through expression of interest


THE iconic Chijmes along Victoria Street is being put up for sale. BT understands that owner Suntec Real Estate Investment Trust (Suntec Reit) has appointed Colliers International to market the property through an expression-of-interest exercise.

However, Suntec Reit is expected to sell the asset only if it gets a good price.

The property was last valued for $134 million at the end of last year. It has 79,794 square feet of net lettable area, and generated revenue of $2.6 million and net property income of $1.8 million for the second quarter ended June 30, 2011.

The development includes several conservation buildings and two gazetted national monuments - Chijmes Hall (the former CHIJ Chapel) and Caldwell House.

'This has presented restrictions for the Reit's manager, which may also have found it taxing to devote so much resources and time to what is a relatively small asset in its portfolio,' said an industry observer.

Suntec Reit acquired Chijmes for $128 million in late 2005 and since then, the Reit has made several major acquisitions - such as one-third stakes in One Raffles Quay and the first phase of Marina Bay Financial Centre.

'Right now, Chijmes may be a bit dated and a new owner may be more willing to pump in resources to spruce it up a little, rejuvenate it. The new owner could change the tenant mix and increase rentals,' said the industry observer.

Chijmes is on a site with a remaining lease of about 79 years. It has 97 car park lots and is located opposite Raffles City and the City Hall MRT Station.

Tenants include Lei Garden Restaurant and Harry's Bar.

Suntec Reit bought Chijmes from a partnership involving Low Keng Huat, Jetaime Investments and Lei Garden.

The consortium paid $26.8 million for the 1.4 ha site at a state tender in 1990 and pumped in a further $100 million to restore the asset. Chijmes won the Merit Award in the Unesco Asia-Pacific Heritage Awards for Cultural Heritage Conservation in 2002.

For Q2 2011, Suntec Reit posted distribution per unit of 2.532 cents, marginally up from 2.528 cents in the same year-ago period. Income available for distribution rose 22.3 per cent to $56.2 million.

Gross revenue dipped 1.8 per cent year on year to $61.3 million in Q2 2011 due to weaker office and retail revenues.

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Business Times - 09 Sep 2011

It makes sense for Suntec Reit to divest Chijmes


BT WEEKEND recently reported that Suntec Real Estate Investment Trust has appointed a property agent to handle an expression of interest exercise for the sale of Chijmes, an iconic conservation development at Victoria Street that houses within it two national monuments.

Whether Suntec actually sells the asset will depend on whether it can make a nice profit from it. The asset was valued at $134 million at the end of last year, higher than the $128 million Suntec paid for it in late 2005.

Back then, Suntec spoke about potential for asset enhancement, synergy with the Reit's Suntec City Mall and Park Mall, and scope for 'organic growth' within the portfolio.

But five to six years on, Suntec could have found it challenging to do all these. After all, there are a lot of restrictions unique to a conservation property. Chijmes Hall (the former CHIJ chapel) and Caldwell House are gazetted national monuments. Suntec would have found it requires a lot of effort on this property, and the returns may not be commensurate.

Back in 2005, Suntec was hungry for assets. It had just bought Park Mall opposite Dhoby Ghaut MRT Station from Wing Tai for $230 million, while another deal to buy 11 properties from City Developments for $788 million was in the midst of coming apart.

Today, Suntec has a much bigger office portfolio, having acquired one-third stakes in One Raffles Quay and Marina Bay Financial Centre (the latter at $1.496 billion late last year). Last month, the trust raised its effective stake in Suntec Singapore International Convention & Exhibition Centre to 60.8 per cent.

Chijmes, a somewhat dated retail and entertainment development, seems less and less important in Suntec Reit's portfolio. Suntec may not find it worth its while to devote more resources to spruce up the asset, which certainly needs some rejuvenation. But there could be other parties that may find Chijmes appealing.

Despite the current weaker property investment climate among institutional investors such as property funds against the backdrop of global economic uncertainty, there is no dearth of private wealth and sovereign wealth funds (SWF) looking for a place to park their monies, especially in a relatively safer place such as Singapore. Raffles Hotel, diagonally opposite Chijmes, belongs to one such SWF, Qatari Diar.

Who knows, Chijmes could find a new lease of life if part of the space is transformed into a luxury boutique hotel in a charming historic building, taking after the Raffles Hotel on one side and the future luxury hotel coming up on levels two to four of Capitol Building and Stamford House, on the other side. And both are also conserved properties.

More facilities may need to be incorporated and, of course, the permission of the authorities, including the Urban Redevelopment Authority (URA), would have to be secured first.

Some well-heeled educational institutions may also find value in buying Chijmes with the intention of using it as a campus - again assuming URA approves such use for the site. This would return the grounds to their original use and would go well with the presence of Singapore Management University and National Library nearby.

And who knows, a church may end up holding weekend services at the old chapel on the former convent grounds with multimedia link-up to the classrooms.

The prospects for extracting greater value from a historic property such as Chijmes may appeal to many investors. But perhaps Suntec Reit may have set its sights on new acquisitions in the segments of the property market where it has been more successful. The cash and other resources released through the sale of Chijmes could also come in handy against a weakening global economic climate.

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Business Times - 26 Oct 2011

Suntec Reit's Q3 DPU edges up

Beats forecast by 17.9%; income for distribution up 21.9% at $56.4m


SUNTEC Real Estate Investment Trust (Suntec Reit) yesterday posted distribution per unit (DPU) of 2.533 cents for the third quarter ended Sept 30, up 1.2 per cent year on year.

The DPU represented an annualised distribution yield of 8.4 per cent based on the Oct 24 unit price of $1.195.

Income available for distribution was $56.4 million, a 21.9 per cent year-on-year increase from $46.2 million.

According to the manager, ARA Trust Management (Suntec) Limited, 3Q2011 DPU outperformed its forecast by 17.9 per cent. On a year-to-date basis for the nine months ended September, DPU totalled 7.453 cents, exceeding the forecast by 12.4 per cent.

Yeo See Kiat, chief executive officer of the manager, said: 'I am happy to report that we have once again delivered another quarter of high distribution income. This was achieved on the back of higher income contribution from MBFC properties (comprising Marina Bay Financial Centre Towers 1 and 2, and Marina Bay Link Mall) as well as prudent capital management approach that led to greater interest savings.'

Gross revenue for the quarter stood at $67.9 million, a 7.4 per cent increase over the previous year, mainly due to the consolidation of $7.5 million in revenue from Suntec Singapore.

In August, the trust raised its effective stake in Suntec Singapore from 20.0 per cent to 60.8 per cent.

Net property income for the quarter came in at $47.8 million, a decrease of $2.8 million or 5.6 per cent year-on-year.

For the office portfolio, the committed occupancy of Suntec City Office Towers as at end-September was 98.0 per cent whilst Park Mall office maintained full occupancy.

For the retail portfolio, the committed occupancy of Suntec City Mall was 96.5 per cent, whilst Park Mall and Chijmes achieved 100.0 per cent committed occupancy.

For jointly-controlled entities, One Raffles Quay maintained full committed occupancy, whilst MBFC properties stood at 98.5 per cent.

The overall committed occupancy for the office and retail portfolio stood at 98.6 per cent and 97.3 per cent respectively.

Suntec Reit units closed trading yesterday one cent up at $1.205.

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Business Times - 28 Oct 2011

Suntec Reit sells Chijmes for $177m to Pua-linked entity

OSIM's Sim holds stake in the entity; Pua, Sim also linked to a nearby project


SUNTEC Real Estate Investment Trust (Suntec Reit) is selling Chijmes for $177 million to an entity whose shareholders include Pua Seck Guan's Perennial Real Estate group and OSIM boss Ron Sim.

Mr Pua and Mr Sim are also joint majority shareholders (40 per cent stake) in the nearby Capitol project, which will have retail/theatre, hotel and residential components.

According to a Perennial spokesperson, this acquisition provides good synergistic opportunities between the Chijmes and Capitol sites.

'We like this site because it's a good opportunity to own an iconic heritage landmark commercial site, and it's very rare to get an opportunity to invest in such a large commercial site right in the downtown core of Singapore CBD (central business district), with a low plot ratio of 0.8,' said the Perennial spokesperson.

HSBC Institutional Trust Services (Singapore), as trustee of Suntec Reit, entered into a property sale agreement with PRE 8 Investments Pte Ltd for the 154,062 sq ft plot located along Victoria Street.

With a gross floor area of 127,793 sq ft, the $177 million price tag translates into about $1,385 psf ppr (per sq ft per plot ratio). The area was valued at $143.7 million by DTZ Debenham Tie Leung (SEA) as at Oct 15, placing the divestment at 23.2 per cent above the valuation.

Suntec Reit is expected to recognise an estimated gain of about $39.5 million following the divestment.

The sale of Chijmes follows an expressions of interest exercise conducted by Colliers International.

According to Suntec Reit's results for the third quarter ended Sept 30, the property posted revenue of $2.7 million and net property income of $1.8 million during the quarter.

Going forward, PRE 8 Investments intends to spend some $40 million to rejuvenate the asset.

'In terms of efficiency of the asset, it will be enhanced; the tenancy mix will be reviewed and optimised; and in terms of ambience, a lot can be done to improve and blend it with the precinct. Over time, we hope to enhance the rental revenue from this asset.'

Chijmes has 79,794 sq ft of net lettable area and includes several conservation buildings and two gazetted national monuments - Chijmes Hall (the former CHIJ Chapel) and Caldwell House.

Chijmes is on a site with a remaining lease of about 79 years. It has 97 car park lots and is located opposite Raffles City and the City Hall MRT Station. Tenants include Lei Garden Restaurant and Harry's Bar.

The completion of the divestment is expected to be sometime in January 2012.
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The Straits Times
Nov 1, 2011
Suntec City to get $410m makeover

Revamp will expand retail net lettable area by 14 per cent

EXPECT to see some radical changes at Suntec City next year as it undergoes a $410 million makeover to freshen its look.

Completed close to 17 years ago, Suntec City is a mixture of retail spaces, offices and venues for meetings, conventions and exhibitions.

One key change will involve the building of new access points; new bridges will improve the property's access to South Beach and the Marina Bay area.

More shops are on the way too. Suntec City's retail net lettable area will expand by 14 per cent from 855,000 sq ft to 980,000 sq ft. The added space will come partially from the conversion of the first two levels of the convention centre to retail use.

The sleek new layout will include duplex shops and revamped atrium areas. A Sky Garden on the retail mall's third level will offer a mix of new dining and entertainment options, including alfresco restaurants and watering holes.

These changes will extend to the convention centre. The enhanced layout will mean easier access from the retail mall to the convention centre. Meetings and exhibitions will be held on levels two through to seven, with a grand entrance on level three.

The venue will also undergo improvements to make it a more flexible and functional area with advanced technological facilities like a double-storey interactive digital wall.

The three-year upgrade will be carried out in four phases, with the first phase involving the sprucing up of the convention centre, part of the mall's first floor as well as the food and beverage area around the Fountain of Wealth.

Suntec Reit is the owner of Suntec City Mall, and has stakes in office properties within five of Suntec City's office towers. The Reit also holds a 60.8 per cent interest in the Suntec Singapore International Convention and Exhibition Centre.

Suntec City receives more than 24 million visitors annually.

Funding for the enhancement works will be primarily supported by the Reit's recent $177 million sale of the Chijmes property and bank borrowings.

'While it is a very successful and busy (development), it is also time for us to bring ourselves to the next level, in line with the growth of the Marina Bay scene,' said Mr Yeo See Kiat, chief executive of Suntec Reit's manager, ARA Trust Management (Suntec).

Retail rents at Suntec City Mall average $10.10 psf per month, but ARA Trust Management (Suntec) said the upgrade could improve the rents by up to 25 per cent, to $12.59 psf per month.

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Business Times - 02 Nov 2011

Mixed reactions to $410m Suntec City makeover

Some say it is necessary, others think resultant gearing is too high


analYSTS' reviews were mixed following the announcement of Suntec City's $410-million makeover, with some giving caution over the resultant high headline gearing.

Suntec Real Estate Investment Trust (Suntec Reit) had announced on Monday a combined $410-million asset enhancement initiative (AEI): $230 million for Suntec City Mall and $180 million for Suntec Convention Centre, in which Suntec Reit has a 60.8 per cent stake.

Nomura Equity Research noted that the AEI is necessary to keep Suntec City competitive, with the projected return on investment of 10.1 per cent a reasonable return, even taking into account that actual increase in passing rent may be lower than the targeted 25 per cent.

However, it warned that the market's immediate reaction to this announcement may be cautious.

'While it appears that the manager has adequately addressed cash flow over the next two years (proceeds from the divestment of Chijmes can meet the capital expenditure requirements for the first two phases as well as make up any shortfall as a result of the project), headline gearing remains high relative to other Reits, suggesting recapitalisation overhang is likely to remain for awhile,' Nomura said.

Nomura issued a 'buy' call on the stock, with a target price of $1.64.

Suntec Reit had earlier said it intends to fund the $230 million AEI over four phases. Phases one and two of the AEI will cost approximately $55 million and $75 million respectively, whereas phase three and four will cost approximately $50 million each.

Standard Chartered noted that the Reit's gearing could rise to approximately 42 per cent upon completion of the project, but added that it is likely to be mitigated by the gradual nature of the expenditure.

It added: 'We continue to think that Suntec Reit could sell assets to raise equity to reduce its gearing. Strata office spaces in Suntec Office Towers could be sold, or Park Mall could be divested. If (it) manages to sell Park Mall at 20 per cent above current book value of $338 million, gearing could fall to approximately 38.5 per cent.

'However, this could still seem high as the Reit's gearing could rise to some 47 per cent if office capital values fall 25 per cent as we forecast.'

Royal Bank of Scotland on the other hand was largely positive on the Reit's plans, noting that the AEI could lead to a $0.10 accretion to its valuation. They reiterated their buy rating, with a target price of $1.70.

'Suntec City Mall has been underperforming over the past year and we believe the refurbishment would help to rejuvenate the mall,' it said. 'In addition, the creation of more prime net lettable area from the conversion of SSICEC would also help to contribute to higher income for the trust.'

Suntec Reit units closed trading yesterday down 6.5 cents at $1.175.

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Singapore News
Suntec REIT reports Q1 DPU of 2.45 cents

24 April 2012 2122 hrs

SINGAPORE: Suntec Real Estate Investment Trust (Suntec REIT) has reported a first quarter distribution per unit (DPU) of 2.45 Singapore cents.

This is 2.7 per cent higher than its DPU of 2.39 cents declared a year ago.

The trust said its annualised distribution yield stood at 7.8 per cent, compared to 7.6 per cent in the same period last year.

Suntec REIT's gross revenue rose 20.1 per cent to S$73.3 million year-on-year.

In its filing to the Singapore Exchange, the REIT manager said this is mainly due to the consolidation of revenue from Suntec Singapore.

Meanwhile, net property income rose five per cent to S$49 million from the previous year.

Although the office market remained subdued in the first quarter of 2012, the trust said its overall committed occupancy for the office portfolio enjoyed a strong occupancy of 99.4 per cent as at 31 March 2012.

Committed occupancy for the retail portfolio stood at 97.3 per cent as at 31 March 2012.

The trust is starting asset enhancement works at Suntec City, which is expected to complete by the second quarter of 2013.

Several established brands have signed up for retail space in the newly refurbished Suntec City Mall, including Swedish clothing giant H&M which will take up 20,000 square feet.

Another major international fashion retailer has also committed approximately 22,000 sq ft with the mall.

In the coming year, the trust said it will focus on the smooth execution of its refurbishment works for Suntec City Mall as well as maintain a high occupancy level for the rest of the mall.

Mr Yeo See Kiat, chief executive officer of ARA Trust Management (Suntec), said: "For our office portfolio, with the strong occupancy level and renewal achieved to date, barring any unforeseen circumstances, we are confident that our office portfolio would outperform that of the preceding year."

- CNA/wk
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Hi, new to forum here. I was reading the 2010 and 2011 AR and I don't quite understand the debt maturity profile of Suntec REIT. If you feel generous, could you take a look at 2010 AR page 27 where there's a bar graph on the debt profile and.. is the period FY 2013 - FY 2015 worrying?
(01-05-2012, 04:56 PM)Traumfanger Wrote: Hi, new to forum here. I was reading the 2010 and 2011 AR and I don't quite understand the debt maturity profile of Suntec REIT. If you feel generous, could you take a look at 2010 AR page 27 where there's a bar graph on the debt profile and.. is the period FY 2013 - FY 2015 worrying?

REITs do not repay their debt (unless they choose to liquidate their portfolio). Instead, they roll-over loans via refinancing. If they are unable to do so, then they will be forced to raise equity to repay debt ie Saizen REIT, MI-REIT, Capitaland REITs etc. So in that period, Suntec will most likely be refinancing their loans with new loans.
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
I see. I am in NS currently and I have a small saving of S$2k which is not growing at all.. I am looking at this company for it's dividend, so far (haven't finish reading it's report) the reputation and operation are sound, just that a few of it's management personnel are still quite new in terms of their experience.. Will this be a safe investment? I have seen a few sites/ bloggers themselves vested in this company.

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