THE Straits Trading Co, which is actively seeking new investment opportunities in real estate, has acquired a small stake in Suntec Real Estate Investment Trust (Suntec Reit).
The real estate, hospitality and mining group said its subsidiary Straits Real Estate bought 35.1 million Suntec Reit units in a series of transactions for $60.2 million or about $1.72 each. They represent 1.4 per cent of all outstanding Suntec Reit units.
Straits Trading said in a statement that the purchase was in line with its stated intention of deploying capital into suitable real estate-related opportunities.
"The board is of the view that the market acquisitions represent an investment in a liquid Singapore-focused Reit at an attractive entry price," said the firm, noting that the average purchase price worked out to a discount of 17.3 per cent to Suntec Reit's book value as at March 31.
Suntec Reit's underlying portfolio comprises office and retail properties in Suntec City, Park Mall, a one-third interest in One Raffles Quay and a one-third interest in Marina Bay Financial Centre Towers 1 and 2 and the Marina Bay Link Mall.
The investment is intended to be a "long-term investment and strengthens the company's real estate eco-system by giving it an interest in Suntec Reit which is managed by ARA Trust Management (Suntec), a wholly owned subsidiary of ARA Asset Management".
Straits Trading executive chairman Chew Gek Khim said the company has set aside funds to pursue "Blackstone-like" investments in real estate, shortly after the firm announced it was investing in a 20.1 per cent stake in ARA Asset Management for $294.4 million. The Blackstone Group is the world's biggest manager of alternative assets including real estate.
Straits Trading is now the single largest shareholder of the listed property trust manager.
As part of the deal, ARA Asset Management will manage Straits Trading's entire investment property portfolio, excluding its hospitality assets.
That portfolio includes the Straits Trading Building, nine good-class bungalows, 13 units in the 38-unit Gallop Green condominium, 14 units in the 26-unit The Holland Collection and some properties in Malaysia.
Suntec Reit units rose 3.5 cents to $1.75 last Friday, before the purchase was made public
Source: Straits Times, 5 May 2014