News Analysis: Another acquisition coming soon?

  • Suntec REIT launched another S$150m of perpetual securities at 4.25%, just a tad higher than the latest perpetual securities issued by LREIT.
  • Will there be another acquisition coming soon?
  • For future acquisitions, Suntec REIT remains positive on all its key markets and may consider to expand its UK portfolio after making its first foray last year. 
  • Maintain BUY; TP of S$1.85

Suntec REIT launched another S$150m of perps. Suntec REIT had just launched another S$150m of perpetual securities at 4.25%, expected to be issued on 15 June 2021. The first reset date is expected to be on 15 June 2026 (5 years). The pricing is just a tad higher than the latest perpetual securities that was launched by LREIT at 4.2%.

Will there be another acquisition?  The last perps, issued in Oct 2020, was to part finance the acquisition of The Nova Building, its first acquisition of UK office. Could this be a pre-emptive fund raising for another upcoming acquisition? Alternatively, it could be one of Suntec’s effort to lower its current gearing level at 44.4% as at Mar21.

Suntec REIT may consider to expand its UK portfolio after making its first foray into the market. If Suntec were to make another acquisition, aside from its existing key markets in Singapore and Australia, it may consider to expand its UK portfolio after making its first foray into the market in 2020. UK accelerated its vaccination program and is now one of the countries to have the highest vaccination rate. With 75% of the adult population having received a first vaccine dose and c.50% are fully vaccinated, UK targets to review lifting the final stage of lockdown by 21 June. This paves the way for the economy to return to normalcy faster-than-expected.