Sunday, January 22, 2012

SuntecReit: Divestment of Chijmes completed

The divestment of Chijmes has been completed.

Chijmes was divested at $177M, which is 23.2% above valuation. In 4Q FY2011, Chijmes brought in 2.7M of revenue. This makes up about 4.5% of the total revenue of 60M. The proceeds of this disposal will also finance the upcoming asset enhancement of Suntec City.

The enhancement project will be conducted in 4 phases from mid 2012 to 2015. After the enhancement is completed, there will be an significant increase in the rent (estimated from a $10.10 psf pm to $12.59 psf pm). This is an increase if 25%
See announcement here: Remaking of Suntec City

During this period of time, we will observe a drop in income distribution for suntec reit due to
1) no more revenue for Chijmes
2) disrupted revenue during the asset enhancement.

As each of the phases complete, we will see a gradual increase in DPU. After the asset enhancement is fully completed, the DPU observed will be much better than what we observed today. I will be holding on to my SuntecREIT and observe again once the 4 phases kicks in.

Related posts:
SuntecReit: Excellent Q4 results

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