Circular to Unitholders - Suntec REIT

• Income Diversification
The Acquisition is expected to benefit Unitholders by improving income diversification and
reducing the reliance of Suntec REIT’s income stream on any single property. With the enlarged
portfolio post the Acquisition, the reliance on the income contribution from Suntec City Mall and
Suntec City Office Towers will be reduced. The Manager expects that the contribution to Suntec
REIT’s Net Property Income 8 by Suntec City Mall and Suntec City Office Towers within Suntec
REIT’s property portfolio for the Forecast Year will decrease from approximately 87.4%, prior to
Completion, to approximately 69.6%.
• Improved Quality and Diversity of Tenant Base
The Acquisition is expected to further enhance the tenancy profile of Suntec REIT’s office tenant
base with the addition of major anchor office tenants such as ABN AMRO Asia Pacific Pte Ltd,
Barclays PLC, Credit Suisse (Singapore) Limited, Deutsche Bank Aktiengesellschaft, Ernst &
Young Services Pte Ltd and other major financial institutions, to Suntec REIT’s group of core blue
chip tenants.
• Greater Trading Liquidity and Flexibility
The Conversion Units, when issued, are expected to increase the free float of Units on the
SGX-ST. This could lead to an increase of Suntec REIT’s weighting in certain benchmark equity
indices. Unitholders will be able to benefit from the expected improvement in trading liquidity.
• Rare Opportunity to Own an Iconic Building
One Raffles Quay is a landmark building designed by the internationally renowned architectural
firm Kohn Pedersen Fox Associates of New York. The Acquisition presents a rare opportunity for
Suntec REIT to partner with reputable property companies, Hongkong Land International’s parent
entity, Hongkong Land Limited (“Hongkong Land”) and K-REIT Asia 9 , in owning a prestigious
iconic prime grade ‘A’ office development with long term growth potential.
These benefits are elaborated in “Rationale for the Acquisition” at paragraph 2.2 of the Letter to
Unitholders below.
METHOD OF FINANCING
The Manager proposes to satisfy the Total Acquisition Cost of S$954.6 million and the costs in relation
to the financing of approximately S$19.8 million:
(i)
(ii)
partly through the issue of Consideration Units of an aggregate value of S$94.15 million to the
Vendor,
partly through the issue of Units to the Manager in satisfaction of the acquisition fee of S$9.4
million (being 1.0% of the Agreed Consideration), payable to the Manager pursuant to Clause 15.2
of the Trust Deed (exclusive of GST);
and partly with the proceeds of either (iii)(a) the drawdown of Debt Financing for the balance of
approximately S$870.9 million, which Suntec REIT is expected to obtain for the purposes of the
Acquisition, 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, to collectively raise the balance of
S$870.9 million.
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9
Includes dividend income, interest income and rental income support net of all taxes.
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.
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