Suntec REIT Aims To Sell S$100 million Worth Of Strata Office Units
SINGAPORE – The manager of Suntec REIT targets to dispose SS$100 million worth of strata units in Suntec office towers for the whole of 2023, reported The Business Times on Monday afternoon (23 October, SGT).
Chong Kee Hiong, the CEO of Suntec REIT’s manager, revealed on Monday that so far they have achieved nearly 40 percent of the sales target. In Q3 2023, the Singapore-listed real estate investment trust (REIT) divested three office units in the said development at prices above S$3,000 psf, exceeding the strata units’ book value of S$2,500 psf.
He noted that they intend to sell strata office units in Suntec office towers if a party is keen to acquire them. They also don’t want to negatively affect Singapore’s office market by selling at S$3,000 psf or below.
“We are not going to sell our assets cheap,” Chong explained. “The market will come back, so it’s a matter of how much we hold on until the market comes back.”
Moreover, he shared that Suntec REIT has no plans to dispose its strata-titled office units in Suntec Towers 4 and 5.
“We have enough smaller units in Towers 1, 2, and 3,” he disclosed, adding that these three office buildings contain about S$1 billion worth of strata units that the trust can sell.
“By selling strata, it’s basically buying us time until the market recovers, where we can go back to selling our mature assets.”
Also, any divestment proceeds will be utilised to repay Suntec REIT’s debts. Chong said he is optimistic that the trust wouldn’t surpass the 45 percent aggregate leverage ratio (ALR) threshold or infringe on its interest coverage ratio covenants.
However, Suntec REIT’s ALR edged up from 42.6 percent in Q2 2023 to 42.7 percent at the end of the third quarter. Despite this, Chong said raising capital via a rights issue to tackle Suntec REIT’s higher gearing ratio is a “last priority”.
“In this climate, getting unitholders to fork out more money just to make the balance sheet stronger, I don’t think is the right thing to do,” he noted. “We are still focused on divestments, and the market is still there for divestment.”