YTL buys Singapore REIT

Portfolio worth S$2.2b includes prime properties on Orchard Road, and in Japan and China

INFRASTRUCTURE conglomerate YTL Corp Bhd yesterday thrust itself into the heart of Singapore's Orchard Road prime property belt when it took control of the Macquarie Prime REIT (MP REIT) and its management company Prime REIT Management Holdings Pte Ltd (PRMH) for S$285 million (RM678 million).

MP REIT also has other prime properties in Japan and China. Altogether, it has a property portfolio worth some S$2.2 billion (RM5.24 billion).

MP REIT holds 74.2 per cent of total strata lots in Wisma Atria on Orchard Road and about 27.2 per cent of the total strata lots in Ngee Ann City.

Together, the holding offers the longest stretch of street level frontage along the bustling upmarket Orchard Road.

YTL Corp's latest investment is an addition to its other projects in Singapore, including the Sandy Island and Lakefront developments on Sentosa Island, and the Westwood Apartments on Orchard Boulevard.

YTL Corp managing director Tan Sri Francis Yeoh was in Singapore yesterday to finalise the agreement with the REIT vendors.

The sale to YTL Corp involved 247.1 million units of MP REIT at S$0.82 (RM1.95) a unit.

Speaking to Business Times, Yeoh said the 49 per cent discount to the REIT's net asset value per unit was possible amid the current global market turbulence.

The price is, however, a 17 per cent premium over its 30-day volume weighted average price and a premium of 52 per cent over the units' last traded price.

The acquisition of 50 per cent of PRMH, together with the units, allows YTL Corp to control the REIT.

The units also provide an attractive 2009 yield of about 9.4 per cent based on a Bloomberg forecast.

MP REIT had a market capitalisation of about S$516 million (RM1.23 billion) as of October 24 2008.

Merrill Lynch (Singapore) Pte Ltd acted as exclusive financial adviser to YTL Corp on the proposed acquisitions.

There are firm plans to rename the REIT as Starhill Global REIT and the property manager as YTL Pacific Star REIT Management Ltd and YTL Pacific Star Property. Yeoh will then be appointed the REIT manager executive chairman.

"The proposed acquisitions provide the YTL group with an opportunity to globalise our Starhill brand," Yeoh said.

YTL Corp's Starhill brand now encompasses several prime properties in Kuala Lumpur's Bukit Bintang area.

MP REIT was listed on the main board of the Singapore Exchange Securities Trading Ltd on September 20 2005 at an initial public offering (IPO) price of S$0.98 (RM2.33) with the year's projected dividend yield of 5.12 per cent.

The IPO was oversubscribed by 35 times.

By New Straits Times (by Mustapha Kamil)