Suntec REIT: Announced the divestment and redevelopment of Park Mall at $411.8m. In conjunction, Suntec REIT will take a 30% stake in Park Mall Investment Limited, the joint venture company set up to redevelop Park Mall into a commercial development, with the rest of 70% held by SingHaiyi Group and Haiyi Holdings.
The net proceeds post divestment fee, estimated at $408m will be used to fund Suntec REIT’s 30% investment in the JV company, redeployed including for the repayment of debt, or maybe used to mitigate the dip in DPU arising from the divestment. Management estimates divestment would affect DPU by 6% on a proforma basis.
Deutsche estimates FY15E and FY16E DPU would be lowered by about 1.6% and 5% assuming all proceeds is used to repay debt. Gearing for the trust would be lowered to 32.6% from current 35.7%.
The house maintains its SELL rating with TP: $1.65.
Additionally, Credit Suisse also maintains its UNDERPERFORM rating with TP: $1.54.
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