BTO: Suntec Reit secures $825m refinancing

Business Times - 29 Apr 2009

Suntec Reit secures $825m refinancing

Interest margin at below 3.75%; Q1 distributable income up 23% at $46.4m

By UMA SHANKARI

 

SUNTEC Reit has secured an $825 million loan facility. And with this fresh loan, the office and retail trust has no further refinancing needs until 2011.

 

The new facility will be used to refinance Suntec Reit's existing debt under its medium-term notes programme and $700 million of commercial mortgage backed securities maturing this year.

 

It comprises a $725 million three-year loan and a $100 million seven-year fixed-rate loan from a panel of seven banks. The blended all-in interest margin works out to less than 3.75 per cent, Suntec Reit said yesterday.

 

The loan facility will be secured by Suntec City Mall and parts of the trust's portfolio in Suntec City Office Towers. The loans were granted by the three local banks - DBS Bank, OCBC Bank and United Overseas Bank - and four foreign banks.

 

The new facility means that Suntec Reit has refinanced $1.7 billion of borrowings in the past two years, said Yeo See Kiat, chief executive of the trust's manager. Suntec Reit refinanced $870 million of loans in 2008.

 

'Amid the tight liquidity in this global economic and financial crisis, this club loan of $825 million clearly demonstrates Suntec Reit's strong credit standing,' said Mr Yeo, adding that the trust is now in a good position to meet the challenges ahead.

 

Yesterday, Suntec Reit also reported that distributable income for Q1 2009 rose 23 per cent to $46.4 million, from $37.6 million a year ago, on higher office and retail rents from its properties.

 

On the back of this, distribution per unit (DPU) rose 15.9 per cent to 2.918 cents from 2.5185 cents in 2008.

 

Net property income for the quarter rose 15 per cent to $49.2 million, from $42.6 million a year ago.

 

Gross office revenue for the three months ended March 31 rose 32 per cent to $30.2 million. At end-March, committed overall occupancy for the office portfolio stood at 97.4 per cent, with renewal and replacement leases at Suntec City secured at an average of close to $10 per square foot per month (psf pm) for the quarter.

 

Likewise, committed retail passing rents remained strong. The committed retail passing rent at Suntec City Mall stood at $11.05 psf pm, while rents at Park Mall and Chijmes were $7.63 psf pm and $10.76 psf pm. The committed overall occupancy for the retail portfolio was 98.8 per cent.

 

Suntec Reit owns Suntec City Mall and office units in Suntec Towers One, Two and Three and the whole of Suntec Towers Four and Five. Its property portfolio also comprises Park Mall, Chijmes and a one-third interest in One Raffles Quay.

 

The trust's units lost three cents, or 4.3 per cent, to close at 66 cents yesterday.