Circular to Unitholders - Suntec REIT

Overview
This overview section is qualified in its entirety by, and should be read in conjunction with, the full
text of this Circular. Meanings of capitalized terms may be found in the Glossary of this Circular.
The Acquisition of a One-third Interest in
One Raffles Quay is a prime landmark commercial development located in Singapore’s
Central Business District (“CBD”) and enjoys excellent connectivity and accessibility. One
Raffles Quay Pte Ltd (“ORQPL”) is the developer and current owner of One Raffles Quay.
The issued share capital of ORQPL is held in equal proportions (i.e. one-third each) by
wholly-owned subsidiaries of Cheung Kong (Holdings) Limited, Hongkong Land International
Holdings Limited and Keppel Land Properties Pte Ltd 1 .
Suntec REIT is proposing to acquire a one-third
interest in One Raffles Quay indirectly through the
purchase of the entire issued share capital of
Comina Investment Limited, a wholly-owned indirect
subsidiary of Cheung Kong (Holdings) Limited.
As One Raffles Quay is a recently completed
development, a substantial number of major
tenancies were leased at rents which are
significantly below current market rental rates. As
such, the trustee of Suntec REIT (the “Trustee”)
has entered into a deed of income support (the
“Deed of Income Support”) with the Vendor that
would enable Suntec REIT to strengthen its
distributable income for the benefit of the
Unitholders. Under the Deed of Income Support,
the Vendor has undertaken to pay to the Trustee in quarterly instalments over 54 months,
up to an aggregate amount of S$103.48 million (inclusive of GST).
The agreed consideration payable to the Vendor in connection with the Acquisition (the
“Agreed Consideration”) is S$941.5 million. The current estimated costs of the
Acquisition is approximately S$954.6 million (the “Total Acquisition Cost”) 2 , which
includes an acquisition fee of S$9.4 million payable to ARA Trust Management (Suntec)
Limited (the “Manager”) in the form of Units. In addition to the Total Acquisition Cost, the
costs in relation to the Debt Financing and the Issue of Convertible Bonds are
approximately S$19.8 million.
The Manager proposes to satisfy the Total Acquisition Cost and the costs in relation to the
financing, (i) partly through the issue of Consideration Units to the Vendor, (ii) partly
through the issue of Units to the Manager in satisfaction of the acquisition fee and partly
with the proceeds of either (iii)(a) the drawdown of the Debt Financing or (b) the drawdown
of the Debt Financing and the Issue of Convertible Bonds, in such proportion as the
Manager in its discretion, deems appropriate.
For the avoidance of doubt, notwithstanding that the resolution relating to the Issue of
Convertible Bonds is passed, the Manager is not obliged to, and has at all times the
discretion whether or not to proceed with the Issue of Convertible Bonds in order to
proceed with the Acquisition.
1 On 30 July 2007, K-REIT Asia announced that it will acquire a one-third interest in One Raffles Quay through the acquisition of one-third of the
issued share capital of ORQPL from Boulevard
2 The Total Acquisition Cost comprises the Share Purchase Price, the Purchaser Loan, the acquisition fee payable to the Suntec REIT Manager in
units, as well as the estimated professional and other fees and expenses in connection with the Acquisition