Suntec REIT - OCBC Investment 2015-11-05: Acquisition and leaseback of strata floors in Suntec Tower Two

Suntec REIT - OCBC Investment 2015-11-05: Acquisition and leaseback of strata floors in Suntec Tower Two SUNTEC REIT SUNTEC REAL ESTATE INV TRUST T82U.SI 

Suntec REIT: Acquisition and leaseback of strata floors in Suntec Tower Two 

  • Suntec REIT announced that it had entered into a sale and purchase agreement with Maybank Kim Eng Properties Pte Ltd to purchase and leaseback three floors of strata office space at Suntec Tower Two. 
  • The purchase consideration amounts to S$101.6m (total acquisition outlay estimated to be S$105.7m), and is expected to generate a NPI yield of ~3.9%, which is higher than the NPI yield of 3.2% achieved in 2014 for Suntec REIT’s portfolio.
  • The estimated transaction price of ~S$2,605 psf NLA appears fair, in our view. 
  • A day prior to this announcement, Suntec REIT also said that it had launched and priced S$105m 2.83% notes due 2018 under its US$1.5b Euro Medium Term Note Programme. We believe the proceeds of this issuance would be used to finance the above mentioned acquisition. 
  • Maintain HOLD and S$1.50 fair value estimate on the REIT.


 
Wong Teck Ching Andy OCBC Securities | http://www.ocbcresearch.com/ 2015-11-05
OCBC Securities SGX Stock Analyst Report HOLD Maintain HOLD 1.50 Same 1.50


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