KUALA LUMPUR: YTL Corporation Bhd is buying a 26% stake in Singapore-listed Macquarie Prime REIT (MP REIT) and a 50% stake in Prime REIT Management Holdings Pte Ltd (PRMH) from Macquarie Bank Ltd for a total of S$285 million (RM675 million) cash.
YTL Corp will acquire 247.1 million MP REIT units at S$0.82 each or a total of about S$202.6 million, representing a sharp discount of 49% to the REIT’s net asset value of S$1.62 but a 17% premium over its 30-day volume weighted average price. MP REIT has tumbled to S$0.54 from a high of S$1.27 in February amid the collapse of equity markets worldwide.
It will pay another S$62 million cash to acquire the 50% stake comprising 1.5 million PRMH shares and all its redeemable preference shares (RPS) comprising one class A RPS and one class B RPS.
Additionally, YTL Corp also agreed to pay S$20 million for services to be rendered by Macquarie Bank until the completion of the proposed acquisitions by the first quarter of next year.
PRMH is the holding company of Macquarie Pacific Star Prime REIT Management Ltd, which is the REIT manager of MP REIT, and Macquarie Pacific Star Property Management Ptd Ltd — the property manager of MP REIT’s properties in Singapore. The acquisition of the 50% stake in PRMH will enable YTL Corp to gain control of the REIT.
The acquisitions, which will be funded by proceeds from the US$300 million (RM1.06 billion) five-year guaranteed exchangeable bonds issued by YTL Corp subsidiary YTL Corp Finance (Labuan) Ltd on May 15, 2007, may mark the start of YTL Corp’s shopping spree for attractively priced properties during the current economic downturn.
YTL Corp is currently sitting on a cash pile of over RM11 billion.
Speaking to The Edge Financial Daily yesterday, YTL Corp managing director Tan Sri Francis Yeoh, said: “It is rather rare to get such attractive price for a REIT that owns S$2.2 billion worth of properties.”
He said MP REIT, which will be renamed Starhill Global REIT, would be a vehicle for YTL Corp to establish its presence in Singapore as well as internationally.
“We are always on the lookout for value acquisitions to add to our portfolio, and believe that the combined experience and connectivity of YTL Corp and MP REIT will provide the opportunity and platform to realise greater synergies and create further value for these landmark assets,” said Yeoh.
He added that YTL group’s experience in setting up and managing Starhill REIT would come in handy.
MP REIT is expected to offer an attractive yield of 9.4% based on Bloomberg market consensus on a distribution of 7.7 Singapore cents per unit next year. Its distribution policy is to distribute to unitholders at least 90% of its taxable income.
For the six months ended June 30, MP REIT recorded a net income available for distribution of S$34.2 million while revenue came in at S$60.6 million. Last year, it posted an annual net income available for distribution of S$59 million on revenue of S$103 million.
MP REIT’s asset portfolio now comprises 10 properties in three countries, valued at about S$2.2 billion. Its borrowings amounted to S$655.1 million as at June 30.
It invests primarily in real estate used for retail and office purposes. The listed entity has two landmark properties in Orchard Road, Singapore’s premier shopping and tourist precinct. Its portfolio includes a 74.23% strata title interest in Wisma Atria (Singapore) and a 27.23% strata title interest in Ngee Ann City.
MP REIT also owns seven properties in the prime areas of Roppongi, Shibuya-ku, Minato-ku and Meguro-ku in Tokyo, Japan and a premier retail property in Chengdu, central China.
Upon completion of the acquisition, Yeoh will be appointed as the REIT Manager’s executive chairman.
Other YTL Corp developments in Singapore include the Sandy Island and Lakefront developments, which are part of the Sentosa Cove project, and the Westwood Apartments, situated in Orchard Boulevard, which was acquired in November 2007.
By The Edge Daily
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