Although the acquisition was at a premium to market price, it was at a discount to Suntec REIT’s end-December net asset value (NAV) of $2.03. One of Group CEO Michael Smith’s strategies is to divest HKL’s non-core assets, such as MCL Land at NAV, and execute a share buyback at a discount to NAV. Here, part of the monies from SCPREF was used to acquire units in Suntec REIT at a discount to NAV, albeit above the prevailing market trading price.
On March 19, Hongkong Land Holdings (HKL) announced that it acquired a 10.8% interest in Suntec REIT from ESR Group for $541 million. The assets of interest to HKL are Suntec REIT’s one-third interest in both Marina Bay Financial Centre (MBFC Towers 1 & 2) and One Raffles Quay (ORQ), the same assets in which the Singapore Central Private Real Estate Fund (SCPREF), 50% owned and managed by Hongkong Land, holds a one-third interest.
“The acquisition enables Hongkong Land to deploy recently recycled capital into prime, income-producing commercial assets predominantly located in Singapore. This aligns with the company’s positive outlook and conviction in Singapore’s prime commercial property market. Additionally, the yield derived from the company’s stake in Suntec REIT will contribute to the diversification of Hongkong Land’s earnings profile,” says an HKL announcement.
