Suntec Reit to divest three Australian assets, focus more on Singapore
The supervisor added that Singapore’s commercial property market “remains favourable”, supported by limited new supply and tight vacancy rates. It will remain to explore possibilities to reinforce Suntec REIT’s presence in the city-state.
” This would certainly also lower the earnings drag occurring from the high-interest rate atmosphere in Australia and boost the Reit’s interest coverage ratio.”
According to a Sept 21 bourse data, the divestment strategy complies with a calculated evaluation undertaken by the Reit after an adjustment in its sponsor.
Suntec Reit are going to be releasing official sales efforts for 3 estate commercial real properties in Australia, consisting of 177 Pacific Freeway and 21 Harris Street in Sydney, and 477 Collins Street in Melbourne.
Located within North Sydney’s CBD, 177 Pacific Highway is a 31-storey Grade A commercial development. The just recently finished 21 Harris Street is a nine-storey, Grade An office building in Pyrmont, west of Sydney’s CBD. Both are totally owned by the Reit.
Chong Kee Hong, CEO of Suntec Reit’s manager, stated the successful divestment of the properties will decrease the Reit’s aggregate leverage ratio to below 40%, giving higher versatility for future procurements, unit buy-backs and/or capital distributions.
On The Other Hand, Suntec Reit carries a 50% claim in 477 Collins Road, a 39-storey, premium-grade office space project called Olderfleet, in Melbourne’s CBD.
This is part of a profile reconstitution to decrease international presence, starting with Australia, develop its focus on the growing Singapore portfolio and improve its funding framework.
Under the divestment plan, the supervisor states the Reit is going to focus a lot more on Singapore, given the nation’s macroeconomic and political stability and the associated power of the Singapore dollar, specifically amidst economic unpredictability and high inflation.
The divestments of the Australian assets are supported by “boosting conditions in Australia’s capital markets and proceeded capitalists’ rate of interests in high-grade, well-leased properties with stable income streams”, the bourse filing noted.
