Singapore-listed office and retail real estate investment trust, Suntec REIT (SGX:T82U), announced on 29 June that it has as entered into a conditional property sale agreement to divest Park Mall for SGD411.8 million
The price is based based on the property’s valuation as at 31 December 2014, said the REIT in an official statement on the divestment.
Suntec REIT acquired Park Mall, an integrated office and home furnishing mall on Orchard Road, in 2005 for SGD245.1 million. The property is more than 40 years old with remaining land lease tenure of 53 years.
Suntec REIT has described the divestment as being in line with its proactive approach in reviewing and evaluating asset plans of its portfolio. “The divestment will also allow Suntec REIT to free up capital, providing greater financial flexibility”, said Yeo See Kiat, CEO of the REIT’s manager.
“In conjunction with the divestment, Park Mall Investment Limited, a joint venture company of which Suntec REIT has a 30% interest, has been set up to redevelop Park Mall into a commercial development comprising two office blocks with an ancillary retail component”, the REIT revealed further.
“The redevelopment will unlock the underlying value of the property by further enhancing the gross floor area of the site. In addition, Suntec REIT will have the ability to own part of the redeveloped property by acquiring one office block upon completion”, Yeo said.
“We may use part of the sale proceeds to mitigate the dip in DPU arising from the divestment”, he added.
Units of Suntec REIT are currently listed on the Singapore Exchange at SGD1.71.