Proposed Acquisition of One-Third Interest in One ... - Suntec REIT

Proposed Acquisition of 

One-Third Interest in 

One Raffles Quay 

Extraordinary 

General 

Meeting 

8 October 2007, 2:30pm

Disclaimer 

THIS PRESENTATION IS AVAILABLE ONLY TO PERSONS WHO ARE NON-U.S. PERSONS AND PERSONS WITH ADDRESSES OUTSIDE THE U.S., CANADA AND JAPAN 

The information contained in this presentation is for information purposes only and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to 

purchase or subscribe for units in Suntec Real Estate Investment Trust (“Suntec REIT”, and units in Suntec REIT, “Units”) in Singapore or any other jurisdiction nor should it or any 

part of it form the basis of, or be relied upon in any connection with, any contract or commitment whatsoever. 

The past performance of the Units and ARA Trust Management (Suntec) Limited (the “Manager”) is not indicative of the future performance of Suntec REIT and the Manager. 

Predictions, projections or forecasts of the economy or economic trends of the markets are not necessarily indicative of the future or likely performance of Suntec REIT. 

The value of the Units and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager. An investment in Units is 

subject to investment risks, including the possible loss of the principal amount invested. Investors have no right to request that the Manager redeem or purchase their Units while 

the Units are listed. It is intended that Unitholders may only deal in their Units through trading on Singapore Exchange Securities Trading Limited (the “SGX-ST”). Listing of the 

Units on the SGX-ST does not guarantee a liquid market for the Units. 

A circular dated 18 September 2007 (the “Unitholders’ Circular”) setting out the details of, inter alia, the proposed acquisition of a one-third interest in One Raffles Quay, together 

with the notice of an extraordinary general meeting of the holders of Units (“Unitholders”), has been despatched to Unitholders. This presentation is qualified in its entirety by, and 

should be read in conjunction with, the full text of the Unitholders’ Circular. Terms not defined in this presentation adopt the meanings in the Unitholders’ Circular. 

This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those 

expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these risks, uncertainties and assumptions 

include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in 

expected levels of property rental income, changes in operating expenses (including employee wages, benefits and training costs), property expenses and governmental and public 

policy changes. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager's current view of future events. All forecasts 

are based on the principal terms of the Convertible Bonds (as defined the Unitholders’ Circular) as set out in Appendix B of the Unitholders’ Circular and the Manager's 

assumptions as explained in Appendix C of the Unitholders’ Circular. Such yields will vary accordingly for investors who purchase Units in the secondary market at a market price 

higher or lower than the issue price range specified in the Unitholders’ Circular. The major assumptions are with respect to certain expected levels of property rental income and 

property expenses over the relevant periods, which are considered by the Manager to be appropriate and reasonable as at the date of the Circular. The forecast financial 

performance of Suntec REIT is not guaranteed and there is no certainty that it can be achieved. Investors should read the whole of the Unitholders’ Circular for details of the 

forecasts and consider the assumptions used and make their own assessment of the future performance of Suntec REIT. 

This presentation has been prepared by the Manager. The information in this presentation has not been independently verified. No representation, warranty, express or implied, is 

made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions in this presentation. 

None of the Manager or any of its agents or advisers, or any of their respective affiliates, advisers or representatives, shall have any liability (in negligence or otherwise) for any loss 

howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. 

1 

Trust Management (Suntec) Limited 

http://www.suntecreit.com

Summary of Approvals Sought 

Resolution 

1 

The Proposed Acquisition of a One-Third Interest in One Raffles Quay 

• Ordinary Resolution 

2 

3 

The Proposed Issue of up to S$450 million aggregate principal amount of S$ denominated 

Convertible Bonds 

• Extraordinary Resolution 

• Subject to and contingent upon passing of Resolution 1 

The Proposed Issue of Consideration Units in payment to Cavell Limited 



4 

The Proposed General Mandate for the Issue of New Units and/or Convertible Securities 


5 

The Proposed Supplement to the Trust Deed in Connection with the Valuation of Real Estate 


2 




 

Resolution 1 – The Proposed Acquisition of a One-Third Interest in 

One Raffles Quay (Ordinary Resolution) 

 

Resolution 2 – The Proposed Issue of up to S$450 million Aggregate 

Principal Amount of S$ denominated Convertible Bonds 

 

Resolution 3 - The Proposed Issue of Consideration Units in payment to 

Cavell Limited 

 

Resolution 4 - The Proposed General Mandate for the Issue of New Units 

and/or Convertible Securities 

 

Resolution 5 – The Proposed Supplement to the Trust Deed in 

Connection with the Valuation of Real Estate 

3 



Key Highlights of Proposed Acquisition 

Suntec REIT to acquire a one-third interest in One Raffles Quay from 

Cavell Limited – wholly owned subsidiary of Cheung Kong Holdings 

Joint ownership by Suntec REIT (one-third), K-REIT Asia (one-third) (1) and 

Hongkong Land International Holdings Limited (one-third) 

Purchase price of S$941.5 m for the one-third interest 

Yield accretive at 4.2% net property income yield (2) 

Increase in asset base from S$3.9 b (3) to S$4.8 b 

Enlargement of office portfolio from 1.4 m sq ft to 1.8 m sq ft (4) 

4 

Notes: 

(1) As per K-REIT Asia’s announcement dated 30 July 2007 

(2) Including rental top-up income support of up to S$103.48 m (inclusive of GST) over a 54 month period 

(3) As of 30 June 2007 

(4) Includes the office space attributable to the acquisition of a one-third interest in One Raffles Quay 



One Raffles Quay 

A prime landmark commercial development strategically located in the heart of 

Singapore’s CBD 

Source: URA, ARATMS 

5 



Property Details of One Raffles Quay 

NORTH TOWER 

SHELTERED PLAZA 

SOUTH TOWER 

Property 

Description 

Valuation (1) 

(as at 2 Jul 07) 

Tenure 

Gross Lettable Area 

Number of Tenants 

50-storey Office Tower (“North Tower”) 

29-storey Office Tower (“South Tower”) 

Retail outlets and cafes 

Sheltered plaza as a drop-off point 

A hub car park with 713 car park lots 

S$941.5 million (CB Richard Ellis) 

S$941.5 million (Knight Frank) 

Leasehold 99 years with effect from 13 June 

2001 

1,339,407 sq ft 

31 

RETAIL OUTLETS AND CAFES 

Major Tenants 

Committed 

Occupancy 

(as at 30 June 07) 

ABN AMRO Asia 

Credit Suisse 

Ernst & Young 

100% 

Barclays 

Deutsche Bank 

UBS 

6 

Note: 

(1) Reflects one-third interest in One Raffles Quay 



Joint Ownership Structure 

33.3% (1) 33.3% 

33.3% (2) 

ORQPL 

The 3 Shareholders of ORQPL will enter into a Restated Shareholders’ Agreement in 

relation to the joint holding of ORQPL 

7 

Notes: 

(1) To be held through 100% owned subsidiary Comina Investment Limited 

(2) As per K-REIT Asia’s announcement dated 30 July 2007 



Acquisition Rationale 

Rare Opportunity to Own an 

Iconic Office Development 

Income Diversification 

Yield Accretive 

Quality Tenant Base 

Fits Manager’s Acquisition 

Strategy in Growth Corridors 

Greater Exposure to Prime 

Grade A Office Market 

8 



Rare Opportunity to Own an Iconic Office 

Development 

 

 

 

 

Strategically located in 

the heart of Singapore’s 

Central Business District 

Excellent connectivity and 

accessibility to major 

MRT interchange station 

– Raffles Place MRT 

State of the art Grade A 

Iconic building 

Designed by renowned 

Kohn Pedersen Fox 

Associates of New York 

9 



Acquisition is Yield Accretive 

4.2% 

3.6% 

Net Property Yield of 

existing properties 

Projected Net Property 

Yield of ORQ 

(1) (2) 

Notes: 

(1) Based on annualised Net Property Income yield for Suntec REIT’s existing properties for the nine months ended 30 June 2007 

(2) Projected Net Property Income yield includes dividend income, interest income and rental income support net of all taxes for the forecast year 

ending 30 September 2008 

10 



Fits Manager’s Acquisition Strategy in 

Growth Corridors 

 

 

 

Foothold in the development of 

Marina Bay Growth Corridor 

Fits Manager’s strategic focus on 

Marina Bay Growth Corridor 

Adjacent to Marina Business and 

Financial Centre (“MBFC”) and 

Integrated Resort 

11 

Source: URA, ARATMS 



Income Diversification 

NPI Contribution by Suntec City Mall and Office Towers is expected to decrease from 87.4% 

to below 70% post acquisition 

Pre-Acquisition (By NPI) 

Post Acquisition (By NPI) 

CHIJMES 

4.5% 

Park Mall 

8.1% 

CHIJMES 

3.6% 

Park Mall 

6.5% 

(2) 

ORQ 

20.3% 

Suntec 

City 

87.4% 

Suntec 

City 

69.6% 

FY2008 (1) NPI: S$155.3 m 

FY2008 (1) NPI: S$194.9 m 

12 

Notes: 

(1) Net Property Income forecast year ending 30 September 2008 

(2) Includes dividend income, interest income and rental income support net of all taxes 



Quality Tenant Base 

ABN AMRO Bank 

Barclays 

Credit Suisse 

Deutsche Bank AG 

Ernst & Young 

UBS AG 

…and other major financial institutions 

13 



Greater Exposure to Prime Grade A Office 

Market 

Pre-Acquisition (By NLA ‘000) (1) 

Post Acquisition (By NLA ’000) (2) 

1,827 

1,383 

1,383 

Office 

1.4 million sq. ft. of Office Space 

Office 

1.8 million sq. ft. of Office Space 

Notes: 

(1) Based on NLA for Suntec REIT’s existing properties as at 30 June 2007 

(2) Based on NLA for Suntec REIT’s existing properties as at 30 June 2007 and one-third interest of NLA of One Raffles Quay 

14 



Long Term Growth Potential Of Prime 

Grade A Office Market 

(Prime Grade A Office Gross Rental S$psf pm) 

19.0 

17.0 

15.0 

13.0 

11.0 

9.0 

7.0 

5.0 

3.0 

9.0 

1989 

11.1 

1990 

10.0 

1991 

6.3 

1992 

5.6 

1993 

8.0 

1994 

9.6 

1995 

10.4 

1996 

9.0 

1997 

7.1 

1998 

6.2 

1999 

7.9 

2000 

6.6 

2001 

5.5 

2002 

4.6 4.8 

2003 

2004 

5.9 

2005 

9.6 

2006 

13.0 

2007E 

15.0 

2008E 

Source: JLL, CLSA Research, ARATMS 

Historical data – Jones Lang LaSalle (JLL) 

Projected Prime Grade A rents - CLSA Research 

 

 

The dynamics of the Singapore property market is positive with strong demand and 

limited supply for the next few years 

One Raffles Quay is well positioned to benefit from the positive rental reversions in a 

strengthening office market 

15 




 

 

 

 

 

Resolution 1 – The Proposed Acquisition of a One-Third Interest in One 

Raffles Quay 



(Extraordinary Resolution) 







16 



Financing Plan for Acquisition 

 

 

 

Issue of Consideration Units (S$94.15m) to the Vendor (1) ; and 

(a) Drawdown of Debt Financing; or 

(b) Drawdown of Debt Financing and Issue of up to S$450m of Convertible Bonds 

Leverage Ratio (2) Leverage Ratio (2) 

23.3% 

36.6% 

Target 

leverage ratio: 

up to 45% 

Pre-Acquisition 

(3) (4) 

Post-Acquisition 

Notes: 

(1) Cavell Limited - wholly-owned subsidiary of Cheung Kong (Holdings) Limited 

(2) Leverage Ratio refers to the ratio of Suntec REIT’s borrowings (excluding deferred payments) to the value of its Deposited Property 

(3) Based on Suntec REIT’s latest unaudited financial statements as at 30 June 2007 

(4) Post-issue of Convertible Bonds and draw down of Debt Financing and assuming no conversion of Convertible Bonds 

(5) According to the MAS revised property fund guidelines, “Borrowing Limit” will be replaced with “Aggregate Leverage Limit” which comprises actual borrowings 

and deferred payments. Suntec REIT’s Aggregate Leverage Limit is 28.6% pre-acquisition (as at 30 June 2007) and 40.9% post-acquisition. 

17 



Convertible Bond Financing 

Proposed Terms (1) 

Size 

Issue price 

Maturity 

Conversion price 

Coupon 

Yield-to-Put/Maturity 

Up to S$450,000,000 

100% of aggregate principal amount 

Up to 7 years from the date of the issue of the Convertible Bonds 

25% – 50% over closing unit price on the last business day prior to the launch of 

the Offering 

2.0% – 4.0% per annum, payable semi-annually 

2.0% – 4.0% per annum, calculated on a semi-annual basis 

Rationale: 

The Convertible Bonds will allow Suntec REIT to: 

 

 

 

 

 

 

Tap into a new capital markets funding investor base 

Optimize its capital structure (given current leverage ratio) 

Achieve cost savings over debt financing 

Issue equity at a premium to current unit price (on conversion) 

Manager has flexibility to settle conversion with cash 

Conversion Units, when issued, are expected to increase free float and trading liquidity 

Note: 

(1) By approving the issue of Convertible Bonds, the Unitholders are deemed to have approved the terms of the Convertible Bonds, together with the terms 

which are incidental or ancillary to such terms, and the issue of Conversion Units upon conversion of the Convertible Bonds 

18 



Overall Yield Accretion to Unitholders 

- Conversion Scenario 

Scenario A: Proforma DPU Impact 

Assuming Conversion Units and Consideration Units issued at the beginning of Forecast Year (1) 

No Deferred Units (2) – DPU Impact 

Deferred Units – DPU Impact 

8.32 

8.49 

8.57 

+2.0% +3.0% +4.1% 

8.66 

7.45 

7.72 7.78 

+3.6% +4.4% +5.5% 

7.86 

Existing 

Properties 

Low End Conv. 

Premium 

S$2.33 

Mid Point Conv. 

Premium 

S$2.51 

High End Conv. 

Premium 

S$2.79 


Properties 

Low End Conv. 

Premium 

S$2.33 

Mid Point Conv. 

Premium 

S$2.51 

High End Conv. 

Premium 

S$2.79 

19 

Enlarged Portfolio 

Notes: 

(1) Forecast Year ending 30 September 2008 

(2) Includes first instalment of deferred units 

(3) Conversion price computed with conversion premium over an illustrative price of S$1.86 per Unit 





- No Conversion Scenario 

Scenario B: Proforma DPU Impact 

Assuming only Consideration Units have been issued at the beginning of Forecast Year (1) 

No Deferred Units (2) – DPU Impact 

Deferred Units – DPU Impact 

8.98 

8.69 

8.32 

8.39 

+0.8% +4.4% +7.9% 

7.45 

7.81 

7.54 

+1.2% +4.8% +8.3% 

8.07 


Properties 

High End 

Coupon Rate 

4.0% 

Mid Point 

Coupon Rate 

3.0% 

Low End 

Coupon Rate 

2.0% 


Properties 

High End 

Coupon Rate 

4.0% 

Mid Point 

Coupon Rate 

3.0% 

Low End 

Coupon Rate 

2.0% 

20 


Notes: 


(2) Includes first instalment of Deferred Units 





 


Raffles Quay 

 



 

Resolution 3 - The Proposed Issue of Consideration Units in 

payment to Cavell Limited (Ordinary Resolution) 

 



 



21 



Proposed Issue of Consideration Units to 

the Vendor 

Overview 

Vendor 

Issue Size 

Issue Price 

Illustrative number of Units 

Status of Consideration Units 

Cavell Limited, a wholly-owned subsidiary of Cheung Kong 

(Holdings) Limited (“Cheung Kong”) 

S$94.15 million 

VWAP for the 10 Market Days prior to Completion 

50,615,887 (1) representing 3.5% of Total Existing Units (2) 

• Entitled to participate in dividends only from Issue Date 

• Trade as temporary stock counter up to Books Closure Date 

Rationale: 

 

Aligns Cheung Kong’s interest with Unitholders 

 

Demonstrates Cheung Kong’s commitment and support of Suntec REIT 

22 

Notes: 

(1) Assuming issued at illustrative price of S$1.86 

(2) Number of issued units as at 30 June 2007 is 1,425,867,465 




 


Raffles Quay 

 



 



 

Resolution 4 - The Proposed General Mandate for the Issue of New 

Units and/or Convertible Securities (Ordinary Resolution) 

 



23 



General Mandate for New Issue 

 

General Mandate (under Rule 887 of the Listing Manual) for the new issue of Units; 

and/or Convertible securities in FY2008 without specific approval of unitholders in a 

general meeting provided that 

• New units and convertible securities do not exceed 50.0% of units in issue at the end of 

FY2007, if issued on a pro-rata basis; or 

• New units and convertible securities do not exceed 20.0% of units in issue at the end of 

FY2007, if NOT issued on a pro-rata basis 

Rationale: 

 

The General Mandate will allow Suntec REIT to raise funds via new issue more 

expeditiously and to be more responsive in acquisition of new properties in a 

competitive environment where timeliness is crucial 

24 




 

 

 

 

 


Raffles Quay 








Connection with the Valuation of Real Estate (Extraordinary 

Resolution) 

25 



Proposed Supplement to the Trust Deed 

Supplement in connection with Valuation of Real Estate 

 

 

Proposed amendment to clarify valuation method for Real Estate should be the same whether 

held directly or through SPV 

Alignment of valuation method will have corresponding effect on the management fee 

Clause 6.1.2 of Trust Deed (proposed additions indicated by underlined text) 

“(in the case of an Investment falling within any paragraph of the definition of “Authorised Investment” 

which is in the nature of a Real Estate in the form of land whether held directly by the Trustee or 

indirectly through Special Purpose Vehicles and subject to Clauses 6.2 to 6.4) (a) on the Trust’s 

acquisition of an Authorised Investment, its Acquisition Cost thereof on its Acquisition Date and (b) on 

a subsequent valuation by an Approved Valuer of such Authorised Investment obtained pursuant to 

any of the provisions of this Deed since the date of the Investment as determined by such valuation 

(or an appropriate proportion thereof where relevant, in a situation where the Real Estate is not 

(whether directly or indirectly) wholly-owned by the Trust);” 

26 



Independent Financial Adviser Opinion 

 

IFA (Ernst & Young Corporate Finance Pte Ltd) Opinion: 

• The Acquisition (together with entry into the Share Purchase Agreement); and 

• The Issue of the Consideration Units 

are on normal commercial terms and will not be prejudicial to the interests of Suntec 

REIT and the minority Unitholders 

IFA Advice (1) : 

• “advise the Independent Directors to recommend that the Unitholders vote in 

favour of the Acquisition and the issue of the Consideration Units at the EGM” 

Note: 

(1) Please refer to a copy of the letter from the IFA to the Independent Directors in the Shareholders’ Circular for the IFA’s key assumptions and 

considerations 

27 



Key Dates 

Key Milestones 

EGM 

Issue of Convertible Bonds 

(Under Resolution 2) 

Issue of Consideration Units 

Target Date for Completion 

Date 

8 October 2007, 2.30 pm 

To be determined by Manager (no later than the 

date of Completion) 

To be determined (but is expected to be no later 

than 31 October 2007) 

31 October 2007 (or such other date as may be 

agreed between the Trustee and Vendor) 

28 




 

 

 

 

 

The Proposed Acquisition of a One-Third Interest in One Raffles Quay 


The Proposed Issue of up to S$450 million Aggregate Principal Amount of S$ denominated 

Convertible Bonds 



The Proposed Issue of Consideration Units in payment to Cavell Limited 



The Proposed General Mandate for the Issue of New Units and/or Convertible Securities 


The Proposed Supplement to the Trust Deed in Connection with the Valuation of Real Estate 


29 



Appendix 

30 




- No Convertible Bonds 

Scenario C: Proforma DPU Impact 

 

Assuming only Consideration Units have been issued at the beginning of Forecast Year (1) , and no convertible 

bonds 

Illustrative Coupon 

Rate for the Debt 

Financing 

Forecast Year 2008 DPU (cents) 

No Deferred Units Issued (2) 

Assuming Deferred Units Had Been Issued 

Existing Properties Enlarged Portfolio Existing Properties Enlarged Portfolio 

3.5% 

8.54 

+2.6% 

7.67 

+3.0% 

3.6% 

8.48 

+1.9% 

7.62 

+2.3% 

3.7% 

3.8% 

8.32 

8.43 

+1.3% 

8.37 

0.6% 

7.45 

7.57 

+1.6% 

7.52 

+0.9% 

3.9% 

8.31 

-0.1% 

7.47 

0.3% 

4.0% 

8.26 

-0.7% 

7.42 

-0.4% 

31 

Notes: 


(2) Includes first instalment of Deferred Units 




The table below sets out selected information about the Enlarged Portfolio. 

Existing Properties 

ORQ Interest 


Net Lettable Area (sq ft) 

2,420,543 

445,192 (1) 

2,865,735 

Number of Tenants 

619 

31 

650 

Parking Lots 

3,516 (2) 

713 

4,229 

Valuation (S$ m) 

3,871 

941.5 (1)(3) 

4,812.5 

Committed Occupancy (%) 

98.5 

100.0 

98.7 

Forecast Year (Financial Year Ending 30 September 2008 (S$ m) 

Net Property Income 

155.3 

39.6 (4) 

194.9 

(1) Reflects one-third interest in One Raffles Quay. 

(2) This figure includes 3,073 parking lots at Suntec City Mall and Suntec City Office Towers, which are owned by MCST. The purchase price, valuation and 

income statistics do not relate in any manner to these parking lots. 

(3) This takes into account the Deed of Income Support where Vendor has undertaken to pay to the Trustee in quarterly instalments over 54 months, an 

aggregate amount of S$103.48 million (inclusive of GST). 

(4) Includes dividend income, interest income and rental income support net of all taxes. 

32 



Thank You 

33 



Contact 

ARA Trust Management (Suntec) Limited 

www.suntecreit.com 

www.ara-asia.com 

Address: 

#09-01 Suntec Tower 2 

9 Temasek Boulevard 

Singapore 038989 

Tel: +65 6835 9232 

Fax: +65 6835 9672 

Yeo See Kiat 

Chief Executive Officer 

seekiatyeo@ara.com.hk 

Marilyn Tan 

Investor Relations Manager 

marilyntan@ara.com.hk 

Vicky Lim 

Assistant Manager 

Investor Relations & Financial Analyst 

vickylim@ara.com.hk 

34

Proposed Acquisition of One-Third Interest in One ... - Suntec REIT

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