Suntec REIT

[NTL]

Here is the announcement for the acquisition. Supposed to be 100% pre-committed with Leighton Group leasing 76% of the area, for around 10years. Should be good news?

http://infopub.sgx.com/FileOpen/Acquisit...eID=264711

http://infopub.sgx.com/FileOpen/PressRel...eID=264750

[memphisb]

The transaction will improve earnings and boost distribution income to unitholders as
there will be coupon payments of 6.32% per annum payable to Suntec REIT during the construction.
15 November 2013

In addition, unitholders will enjoy income certainty and stability through the long lease terms with
annual rental escalations.”

The Transaction will be fully funded by a S$500 million 5-year unsecured loan facility provided by
Commonwealth Bank of Australia, DBS Bank and Standard Chartered Bank. Standard Chartered
Bank acted as the financial advisor to the Transaction.

I guess its an okay move although debt ratio will increase.

[NTL]

The debt ratio seems to be above 41% after the acquisition. Likely there will be a rights issue or private placement to follow?

[shanrui_91]

The transaction will improve earnings and boost distribution income to unitholders as
there will be coupon payments of 6.32% per annum payable to Suntec REIT during the construction.
15 November 2013

In addition, unitholders will enjoy income certainty and stability through the long lease terms with
annual rental escalations.”

The Transaction will be fully funded by a S$500 million 5-year unsecured loan facility provided by
Commonwealth Bank of Australia, DBS Bank and Standard Chartered Bank. Standard Chartered
Bank acted as the financial advisor to the Transaction.

I guess its an okay move although debt ratio will increase.

if you take into account that suntec has to pay income tax for foreign properties and the annual 0.3% of asset mgmt fee to be paid to ara, i am not sure if this is a truly yield accretive transaction. Dividend yield for suntec is slightly compressed at the moment as investors await aei contribution.

So how to convince shareholders? By using 100% debt, any acquisition can be shown to be accretive

[desmondxyz]

The transaction will improve earnings and boost distribution income to unitholders as
there will be coupon payments of 6.32% per annum payable to Suntec REIT during the construction.
15 November 2013

In addition, unitholders will enjoy income certainty and stability through the long lease terms with
annual rental escalations.”

The Transaction will be fully funded by a S$500 million 5-year unsecured loan facility provided by
Commonwealth Bank of Australia, DBS Bank and Standard Chartered Bank. Standard Chartered
Bank acted as the financial advisor to the Transaction.

I guess its an okay move although debt ratio will increase.

if you take into account that suntec has to pay income tax for foreign properties and the annual 0.3% of asset mgmt fee to be paid to ara, i am not sure if this is a truly yield accretive transaction. Dividend yield for suntec is slightly compressed at the moment as investors await aei contribution.

So how to convince shareholders? By using 100% debt, any acquisition can be shown to be accretive

I believe the management already considered all these and taken into account before they made the acquisition... No worry

[AlphaQuant]

The debt ratio seems to be above 41% after the acquisition. Likely there will be a rights issue or private placement to follow?

Think an equity fund raising is a when and not an if. The problem is the steep discount of price to NAV - my guess is that ARA will prob wait for the AEI works to finish, DPU to restore, hopefully get the price higher, offload more of their stake and then call for a rights/PO.

[NTL]

The debt ratio seems to be above 41% after the acquisition. Likely there will be a rights issue or private placement to follow?

Think an equity fund raising is a when and not an if. The problem is the steep discount of price to NAV - my guess is that ARA will prob wait for the AEI works to finish, DPU to restore, hopefully get the price higher, offload more of their stake and then call for a rights/PO.

It was mentioned before that Suntec is using a lower cap rate for valuation compare to the other REITs. What will be the valuation, and NAV, if they have use the same cap rate as others?

If Suntec is trading at it's value of $2+, then the yield will be somewhere around 4%. That will make the REIT very unattractive.

[felixleong]

http://www.todayonline.com/business/sunt...81-million

[felixleong]

SINGAPORE - Suntec REIT has agreed to purchase an office development in Sydney for A$413.2 million (S$481.3 million) in its maiden overseas acquisition that is expected to boost its distributable income, the trust manager said on Friday.

The property, 177-199 Pacific Highway, is a 31-storey Grade A state-of-the-art commercial tower with net lettable area of about 423,915 sq ft. Targeted for completion in 2016, the freehold property is located in one of the most prominent sites in North Sydney Central Business District at the junction of Pacific Highway and Berry Street.

The property is 100 per cent pre-committed, with the Leighton Group, one of Australia’s largest building and property development group taking a head lease of 76 per cent of the net lettable area. It will house the corporate headquarters of Leighton, which will also provide a rental guarantee for four years for any vacant space on completion.

Mr Yeo See Kiat, the Chief Executive of the trust manager, said, “When completed, 177 Pacific Highway will be the most iconic building in North Sydney. It is a strategic fit with Suntec REIT’s portfolio of high quality commercial assets in Singapore and is in line with our growth strategy to expand our footprint in Asia-Pacific and enhance Suntec REIT’s income and geographical diversification.”

“The transaction will improve earnings and boost distribution income to unitholders as there will be coupon payments of 6.32 per cent per annum payable to Suntec REIT during the construction. In addition, unitholders will enjoy income certainty and stability through the long lease terms with annual rental escalations,” he added.

[felixleong]

rights or placement coming, get your pants ready ^^