Trust Management (Suntec) Limited
Suntec Real Estate Investment Trust
SUNTEC REIT TO ACQUIRE A 51 PER CENT. INTEREST IN HARMONY
PARTNERS INVESTMENTS LIMITED WHICH HOLDS A 80 PER CENT.
INTEREST IN SUNTEC SINGAPORE INTERNATIONAL CONVENTION &
1.1 ARA Trust Management (Suntec) Limited, as manager of Suntec REIT (the “Manager”), is
pleased to announce that HSBC Institutional Trust Services (Singapore) Limited, as trustee of
Suntec REIT, has today through its wholly-owned subsidiary, Suntec Harmony Pte. Ltd.
(“Suntec Harmony”), entered into a share sale agreement (the “Share Sale Agreement”)
with an investor group (collectively, the “Vendors”) pursuant to which Suntec Harmony
agrees, subject to the satisfaction of certain conditions, to acquire 510 ordinary shares in the
capital of Harmony Partners Investments Limited (“HPIL”), constituting 51 per cent. of the
issued share capital of HPIL, and all the rights, title, benefits and interest in such percentage
of shareholders’ loans provided by the Vendors to HPIL constituting 51 per cent. of all
shareholders’ loans provided to HPIL, for an aggregate consideration of S$114,750,000 (the
1.2 The Vendors comprise (i) Bright Assets Enterprises Limited, (ii) Crescendo Investments
Group Limited, (iii) KCY Investments Limited and (iv) Clavon Capital Inc..
1.3 Currently Suntec REIT through Suntec Harmony has an effective interest of 20.0 per cent. in
the Suntec Singapore International Convention & Exhibition Centre (“Suntec Singapore”).
Upon completion of the Proposed Acquisition, Suntec REIT through Suntec Harmony will
have an aggregate effective interest of 60.8 per cent. in Suntec Singapore.
1.4 Completion of the Proposed Acquisition is subject to the satisfaction or waiver of the
conditions specified in the Share Sale Agreement and is expected to take place on or around
18 August 2011 or such other date as Suntec Harmony and the Vendors may agree.
2.1 The aggregate consideration for the Proposed Acquisition of S$114,750,000 was arrived at
after arm’s length negotiations on a willing buyer, willing seller basis, and taking into account
the valuation of Suntec Singapore.
2.2 The Manager and Trustee have commissioned an independent property valuer, Colliers
International (Singapore) Pte Ltd, to value Suntec Singapore. The open market value of
Suntec Singapore is S$400 million as at 1 August 2011. The valuation is based on income
capitalisation approach, discounted cash flow analysis and direct comparison method.
3. Method of Financing
The aggregate consideration will be payable in cash on completion of the Proposed
Acquisition, and this will be funded by bank borrowing. Following the Proposed Acquisition,
Suntec REIT’s gearing ratio is expected to increase marginally from 38.5% to 39.7% after the
completion of the Proposed Acquisition. Suntec REIT’s aggregate leverage (as defined in the
Property Funds Appendix) will be approximately 41.6%1 after the completion of the Proposed
4. Financial Effects of the Proposed Acquisition
The pro forma financial effects of the Proposed Acquisition presented below are strictly for
illustration purposes and do not reflect the actual financial position of Suntec REIT after
completion of the Proposed Acquisition. They have been prepared based on the latest
audited financial statements of Suntec REIT for the financial year ended 31 December 2010
(“FY2010”), taking into account the aggregate consideration of and the assumption that the
Proposed Acquisition is funded wholly by bank borrowing.
The proforma financial effects of the Proposed Acquisition on the total returns attributable to
unitholders and distribution per unit (“DPU”) of Suntec REIT are based on the assumptions
that Suntec REIT had completed the Proposed Acquisition on 1 January 2010 and through
Suntec Harmony held an aggregate effective interest of 60.8 per cent. in Suntec Singapore
through to 31 December 2010.
4.2 Pro Forma total returns attributable to unitholders
The FY2010 pro forma total returns attributable to unitholders attributable to the Proposed
Acquisition is approximately S$31.5 million2.
4.3 Pro Forma Net Asset Value (“NAV”)
The table below sets out the pro forma financial effects of the Proposed Acquisition on the
NAV per unit of Suntec REIT as at 31 December 2010, as if the Proposed Acquisition was
completed on 31 December 2010, assuming that the Proposed Acquisition is funded wholly
by bank borrowing.
Before acquisition After acquisition
NAV per unit (S$) 1.804 1.870
4.4 Pro Forma DPU
The table below sets out the pro forma financial effects of the Proposed Acquisition on Suntec
REIT’s DPU for FY2010, as if Suntec REIT had completed the Proposed Acquisition on 1
January 2010 and through Suntec Harmony held an aggregate effective interest of 60.8 per
cent. in Suntec Singapore through to 31 December 2010.
Before acquisition After acquisition
DPU (cents) 9.859 9.979
The Property Fund Appendix provides that the aggregate leverage ratio of Suntec REIT may exceed 35.0% (up to a maximum
of 60.0%) if a credit rating of the REIT is obtained and disclosed to the public. Suntec REIT is currently rated Baa2 by Moody’s.
Based on the consolidation of HPIL as at 31 December 2010, after adjusting for additional borrowing costs, the Manager’s
management fees and trust expenses.
5. Information on Suntec Singapore
5.1 Situated within Singapore’s Downtown Marina Centre precinct and only 20 minutes from
Changi International Airport, Suntec Singapore is an award-winning international venue
comprising approximately one million square feet of floor space spread over six levels catered
to meetings, conventions and exhibitions.
5.2 Suntec Singapore is part of the iconic integrated commercial development known as Suntec
City comprising Suntec Singapore, five Grade A office towers with over two million square
feet of net lettable area and one of Singapore’s largest shopping mall with over 800,000
square feet of retail space. In addition to its world-class facilities, Suntec Singapore offers
direct access to 5,200 hotel rooms, 1,000 retail shops and 300 restaurants within the Suntec
City vicinity. Suntec City is easily accessible by car and public transport networks.
6. Rationale for the Proposed Acquisition
6.1 The Manager believes that the Proposed Acquisition will benefit Unitholders in the long term
as the Proposed Acquisition fits the Manager’s principal investment strategy for Suntec REIT
to invest in quality income-producing assets. The Manager believes that the increase in
Suntec REIT’s interest in Suntec Singapore will be a strategic addition to Suntec REIT’s
existing portfolio, providing opportunities to integrate and enlarge Suntec REIT’s existing
interest in the entire Suntec City development and to unlock the underlying value of the
6.2 The Manager believes that Suntec Singapore is a quality asset which will enhance Suntec
REIT’s existing portfolio of properties in Suntec City. Suntec Singapore enjoys several key
competitive strengths including (i) strategic location in the downtown core of Singapore, (ii) its
excellent connectivity and accessibility with its direct link to one of Singapore’s major MRT
interchange stations, City Hall MRT, as well as two MRT stations in the Circle MRT line – the
Esplanade and Promenade Stations, offering seamless and sheltered commuting for Suntec
Singapore’s visitors and tenants and (iii) large floor space spreading over six levels of
meeting space, offering conference and exhibition planners abundant choice from a range of
venues to accommodate different events.
7. Interests of Directors
Based on the information available to the Manager as at the date of this announcement, none
of the directors of the Manager or substantial Unitholders have any interest, direct or indirect,
in the Proposed Acquisition.
8. Inspection of Documents
A copy of the Share Sale Agreement and the valuation report of Suntec Singapore is
available for inspection during normal business hours at the registered office of the Manager
at 6 Temasek Boulevard, #16-02 Suntec Tower Four, Singapore 038986 for a period of three
months from the date of this announcement.3
By Order of the Board
ARA Trust Management (Suntec) Limited
(Company registration no. 200410976R)
(as manager of Suntec Real Estate Investment Trust)
Yeo See Kiat
12 August 2011
Prior appointment with the Manager will be appreciated.
ABOUT SUNTEC REIT
Listed on 9 December 2004, Suntec REIT holds properties in Suntec City, Singapore’s largest integrated
commercial development (including one of Singapore’s largest shopping mall), Park Mall, Chijmes, a one-third
interest in One Raffles Quay, a one-third interest in Marina Bay Financial Centre Towers 1 and 2, the Marina Bay
Link Mall and a 20.0% interest in Suntec Singapore International Convention & Exhibition Centre. Its aim is to
invest in income-producing real estate which is primarily used for retail and/or office purposes. Suntec REIT is
managed by an external manager, ARA Trust Management (Suntec) Limited.
ABOUT ARA TRUST MANAGEMENT (SUNTEC) LIMITED
ARA Trust Management (Suntec) Limited, part of the ARA Asset Management Limited group (“ARA”), is the
manager of Suntec REIT. ARA, a real estate fund management company, is an affiliate of the Cheung Kong
Group, and is listed on the Main Board of Singapore Exchange Securities Trading Limited (the “SGX-ST”).
ARA’s business segments comprise REIT management, private real estate fund management, and specialist
equity fund management and corporate finance advisory services. For more details, please visit www.ara-
The value of units in Suntec REIT (“Units”) and the income derived from them, if any, may fall or rise. Units are
not obligations of, deposits in, or guaranteed by, ARA Trust Management (Suntec) Limited (as the manager of
Suntec REIT) or any of its affiliates. An investment in Units is subject to investment risks, including the possible
loss of the principal amount invested.
Investors should note that they will have no right to request the Manager to redeem or purchase their Units for so
long as the Units are listed on the SGX-ST. It is intended that holders of Units may only deal in their Units
through trading on the SGX-ST. The listing of the Units on the SGX-ST does not guarantee a liquid market for the
The past performance of Suntec REIT is not necessarily indicative of the future performance of Suntec REIT.