Suntec Reit to divest three Australian assets, focus more on Singapore
According to a Sept 21 bourse filing, the divestment plan complies with a strategic evaluation carried out by the Reit after a change in its sponsor.
The divestments of the Australian assets are supported by “boosting conditions in Australia’s capital markets and proceeded investors’ passions in premium, well-leased properties with secure revenue streams”, the bourse filing noted.
Found inside of North Sydney’s CBD, 177 Pacific Highway is a 31-storey Grade A commercial development. The recently finished 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.
This is part of a portfolio reconstitution to decrease overseas visibility, beginning with Australia, hone its focus on the expanding Singapore profile and boost its capital framework.
” This would also lower the profits drag occurring from the high-interest rate environment in Australia and improve the Reit’s interest coverage ratio.”
Suntec Reit are going to be releasing official sales efforts for 3 freehold commercial real properties in Australia, making up 177 Pacific Freeway and 21 Harris Street in Sydney, and 477 Collins Street in Melbourne.
Meanwhile, Suntec Reit holds a 50% risk in 477 Collins Street, a 39-storey, premium-grade office development called Olderfleet, in Melbourne’s CBD.
Chong Kee Hong, CEO of Suntec Reit’s manager, said the successful divestment of the assets will reduce the Reit’s aggregate leverage ratio to below 40%, providing greater flexibility for future purchases, unit buy-backs and/or funding distributions.
Under the divestment plan, the supervisor states the Reit will concentrate a lot more on Singapore, given the nation’s macroeconomic and political stability and the relative power of the Singapore dollar, specifically amid economic uncertainty and high inflation.
The supervisor included that Singapore’s commercial property market “continues to be favourable”, sustained by restricted new supply and tight vacancy prices. It will certainly continue to explore chances to strengthen Suntec REIT’s exposure in the city-state.
