Straits Trading unit invests in A$36m debt for Melbourne home project

A UNIT of mainboard-listed property group The Straits Trading Company has subscribed to A$36 million (S$33.6 million) in secured notes to fund an Australian developer's upcoming project, the Straits Trading board said in a bourse announcement on Friday.

SRE Venture 17's subscription - which will be paid for with a mix of internal resources and bank borrowings - is meant to fund a 600-unit high-rise private-home project in Melbourne's central business district that will be developed by end-2022 by an ICD Property-led consortium.

The Straits Trading board said the deal was part of a strategy to redeploy capital from its high-quality but low-yield investment property portfolio "into potentially higher-return real estate opportunities".

It is not expected to materially affect Straits Trading's earnings and net tangible asset per share for the year to Dec 31, the board added, and will not affect its issued share capital.

The notes are being offered by a mezzanine lender set up by MaxCap Group, a commercial real estate investment manager that deals in funds and mandates in Australia and New Zealand.

Separately, the board said that liquidators have been appointed for the voluntary winding-up of two dormant subsidiaries, a development which is not expected to materially affect group net tangible assets or earnings per share for the financial year.

Ho Lon Gee and Lee Wei Hsiung, from corporate services firm Tricor, were named the liquidators for the winding-up of SRE Capital and SRE Venture 4.

Straits Trading shares closed flat at S$2.10 on Friday before the announcement.