Suntec Reit to divest three Australian assets, focus more on Singapore
Located within North Sydney’s CBD, 177 Pacific Highway is a 31-storey Grade A commercial development. The just recently accomplished 21 Harris Street is a nine-storey, Grade An office complex in Pyrmont, west of Sydney’s CBD. Both are completely operated by the Reit.
Chong Kee Hong, CEO of Suntec Reit’s manager, claimed the successful divestment of the possessions will decrease the Reit’s aggregate leverage ratio to below 40%, giving higher versatility for future purchases, unit buy-backs and/or resources distributions.
” This would also lower the earnings drag arising from the high-interest rate setting in Australia and enhance the Reit’s interest plans ratio.”
The divestments of the Australian investments are sustained by “improving conditions in Australia’s funding markets and proceeded capitalists’ rate of interests in premium, well-leased assets with secure income streams”, the bourse filing noted.
Under the divestment strategy, the supervisor states the Reit is going to concentrate more on Singapore, provided the country’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 portfolio reconstitution to reduce foreign presence, starting off with Australia, hone its focus on the expanding Singapore portfolio and enhance its funding framework.
Meanwhile, Suntec Reit carries a 50% risk in 477 Collins Road, a 39-storey, premium-grade office space project referred to as Olderfleet, in Melbourne’s CBD.
The manager added that Singapore’s business real estate market “continues to be favourable”, sustained by restricted new supply and limited vacancy rates. It will continue to explore possibilities to reinforce Suntec REIT’s visibility in the city-state.
Suntec Reit will be launching formal sales initiatives for 3 property commercial properties in Australia, consisting of 177 Pacific Highway and 21 Harris Street in Sydney, and 477 Collins Street in Melbourne.
According to a Sept 21 bourse declaration, the divestment strategy follows a strategic assessment undertaken by the Reit after a change in its sponsor.
