Suntec REIT: Annouced the sales of Chijmes for $177m or $1385/psf ppr to an entity whose shareholders include Pua Seck Guan's Perennial Real Estate and OSIM boss Ron Sim. The sale represents a 23.2% premium or $33.3m over the valuation of $143.7m as at 15 Oct11, and a 3.9% annualized yield on Chijmes’ net property income of $5.2m for 9M11.
Perennial believes the acquisition provides good synergistic opportunities between the Chijmes and Capitol sites which it jointly owns 40% with Ron Sim. Site with a gfa of 127,793 sqft, was recently valued by at sgd143.7m by DTZ.
For proforma financial effects, using FY10 financial statements, Suntec REIT is expected to recognize an estimated gain on the divestment of approximately $39.5m, and the divestment would increase grp NAV by $0.018/unit to $1.801/unit. CIMB note that while the divestment of Chijmes could ease concerns associated with AEI funding at Suntec City Mall, balance sheet remains leveraged at near 40% even if all proceeds were channelled towards debt repayment and house remain wary of impact from a slowing office market and maintains U/pm with $1.18 TP.
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