29 October 2008

YTL ventures into S’pore REIT.

The Star reported today that Malaysian conglomerates YTL Corporation Berhad had bought over Macquarie Bank's total interest in the Macquarie Prime REIT for about S$285million.

The Macquarie Prime REIT has two main properties in its portfolio - namely Wisma Atria as well as Ngee Ann City - both prime shopping centres situated along Orchard Road. Wisma Atria opened in 1986 and is a 22-storey building comprising a podium of 5 levels of shops, 3 levels of car parks and 13 levels of offices in the tower block.

Ngee Ann City meanwhile has two office towers, Tower A and B which are both 26 storeys high. Among its many shops are the Takashimaya department store and Kinokuniya, the largest bookstore in Southeast Asia. Till 2007, it housed the library@orchard, part of the National Library Board on the 5th floor. Ngee Ann City is also home to the largest Best Denki in Singapore, known as Big Best. In 2005, the shopping mall opened an art and creativity section on the 4th floor called iFORUM, the first of its kind in Singapore.

So, that sums it all up about the two properties.

Read more on the news report below.

YTL Corp Bhd is making inroads in Singapore’s real estate sector with its proposed acquisition of about 26% in Macquarie Prime REIT (MP REIT) and 50% of Prime REIT Management Holdings Pte Ltd from Macquarie Bank Ltd for S$285mil.

Prime REIT is the holding company of Macquarie Pacific Star Prime REIT Management Ltd, the REIT manager of MP REIT, and Macquarie Pacific Star Property Management Pte Ltd, the property manager of MP REIT’s Singapore properties.

Merrill Lynch (S) Pte Ltd is financial advisor to YTL Corp on the proposed acquisitions.

YTL Corp said in a statement yesterday the group would acquire 247,101,000 units in MP REIT at S$0.82 each, which was a 49% discount to MP REIT’s net asset value per unit, a 17% premium over its 30-day volume-weighted average price and a premium of 52% over its last traded price.

The proposed acquisitions will be financed by internally generated funds.

The acquisitions, which would provide a yield of about 9.4%, would allow YTL Corp to control the REIT. MP REIT had a market capitalisation of S$516mil as of Oct 24 and owns over S$2.2bil worth of prime retail and office properties in Singapore, Japan and China.

Its asset portfolio include 74.23% of total strata lots in Wisma Atria and 27.23% of total strata lots in Ngee Ann City.

YTL Corp said upon completion of the transaction, it intended to rename MP REIT, the manager and the property manager companies to Starhill Global REIT, YTL Pacific Star REIT Management Ltd and YTL Pacific Star Property Management Pte Ltd, respectively.

As Starhill Global REIT will be a key vehicle of YTL Corp, the group planned to appoint managing director Tan Sri Francis Yeoh as the REIT manager’s executive chairman.

“Our vision and investment track record will enable us to add value to MP REIT through our sponsorship as we focus on re-branding and growing the REIT through yield accretive acquisitions of prime regional assets,” Yeoh said.

Since its listing on the Singapore Exchange in September 2005, MP REIT has added eight retail properties to its portfolio through the acquisitions of prime assets in Japan and China.

An analyst with a local brokerage said YTL Corp, with its war chest of more than RM10bil, was in a good position to pick up some quality assets at depressed prices following the global financial meltdown.

“With the price at a 49% discount to the net asset value, the proposed acquisition of MP REIT will provide stable earnings and good upside potential. By having a REIT in Singapore, YTL will be well placed to tap the city-state’s expanding real estate sector and promote its Starhill brand in the international market,” she added.


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