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| Dr Yeoh: sees huge opportunities for Starhill Reit to acquire high-end assets in key hot spots |
Starhill Global Reit, which will focus on retail, will buy two malls in
Kuala Lumpur from YTL's Malaysia-listed trust Starhill Reit for $423.3
million.
The Singapore trust will also acquire the David Jones Building in Perth, Australia, for $148 million.
'This exercise will restructure the RM8 billion in retail and hotel
assets currently under our control into two distinct Reit portfolios -
the hospitality Reit in Malaysia and the retail-centric Reit in
Singapore, which will benefit both Reits in terms of pursuing growth
and development strategies in a single, focused class of assets,' said
YTL managing director Francis Yeoh.
With the proposed
acquisition of the three properties, Starhill Global Reit's total
portfolio size will grow to $2.5 billion. Its footprint will also be
extended to Malaysia and Australia, diluting the geographic
concentration risk. The trust's portfolio now comprises 10 properties
in Singapore, Japan and China valued at about $2 billion in total.
Starhill Global Reit also said in a separate announcement that it has
terminated the master leases and property management agreements for
seven properties in Japan to 'mitigate tenant concentration risks'.
Dr Yeoh said that YTL's long-term vision is for Starhill Global Reit to
be the main YTL-linked vehicle for the ownership of prime retail and
commercial properties.
On its part, Malaysia-listed Starhill
Reit will instead focus on the hospitality business after selling the
two malls. Hotel assets with the potential to be injected into the Reit
include The Ritz-Carlton in Kuala Lumpur and The Majestic Malacca.
'From the global standpoint, we see tremendous opportunities for
Starhill Reit to acquire high-end assets in key international hot
spots, including Bali, Saint Tropez, Phuket and other world-class
destinations,' said Dr Yeoh.
The two malls bought by Starhill
Global Reit from Starhill Reit - Starhill Gallery and Lot 10 Shopping
Centre - have a total net lettable area of 554,165 sq ft. They will be
bought using an asset-backed securitisation structure.
Starhill Global Reit also said that Katagreen Development, a
wholly-owned subsidiary of YTL Corp, will be the master lessee in both
properties with a tenure. The master lease will incorporate a step-up
rental feature every three years.
David Jones Building in Perth
will be acquired from Centro, a real estate company based in Australia.
David Jones, a department store, has a lease in the building until
October 2032. It now occupies about 95 per cent of the total gross
lettable area of the building and accounts for 75 per cent of the
annual gross rental.
The proposed Australian acquisition is
expected to be completed in January 2010 and will be funded by a
combination of debt and proceeds raised from Starhill Global Reit's
recent rights issue.
Starhill Global Reit was formerly known
as Macquarie Prime Reit, and was listed in 2005 with an initial
portfolio that included stakes in Singapore malls Ngee Ann City and
Wisma Atria.
The property trust's name was then changed after
YTL Corp in October 2008 took over the Macquarie Group's 26 per cent
stake in an all-cash deal worth $285 million.
YTL Corp has
been expanding aggressively in Singapore. In 2008, it landed
Singapore's second largest generating company, the 3,100-megawatt
PowerSeraya, for $3.8 billion.