Suntec Reit eyes injection of 9 Penang Road from sponsor into portfolio

[SINGAPORE] Tang Organization, the new sponsor of Suntec Real Estate Investment Trust (Reit), may soon inject its 9 Penang Road building that houses UBS’ Singapore operations into the Reit’s portfolio.

“At this moment, 9 Penang Road, an eight-storey commercial development strategically situated in the prime commercial and retail hub of Orchard Road and Dhoby Ghaut could be a potential pipeline for Suntec Reit,” said the Reit manager in a bourse filing on Friday (Apr 10).

Suntec Trust Management was responding to a unitholder’s query, ahead of its annual general meeting on Thursday, on Tang Organization’s pipeline of properties for the Reit.

Tang Organization – controlled by Gordon Tang and his wife Celine – is the parent company of Acrophyte Asset Management, which took over Suntec’s manager, previously known as ESR Trust Management (Suntec), in March.

The group had said that it will undertake a review to strengthen the Reit’s portfolio performance and enhance capital efficiency. It had noted that it will also explore “disciplined approaches” to asset-optimisation and recycling.

Such value-unlocking strategies, some analysts have noted, could include an acquisition of 9 Penang Road from Gordan Tang’s SingHaiyi Group.

In 2021, Suntec Reit sold its 30 per cent interest in 9 Penang Road to Haiyi Holdings for about S$89.9 million. Haiyi Holdings, which had earlier redeveloped the site together with Suntec Reit and SingHaiyi Group, already held a 35 per cent stake in the joint venture before buying out the Reit’s interest.

Completed in 2019, the Grade-A commercial building comprises two office towers and an ancillary retail space.

The Tangs also have interests in One Raffles Quay (ORQ), Marina Bay Financial Centre (MBFC) Towers 1 and 2, and the Marina Bay Link Mall.

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Focus on NAV

In December, Hongkong Land announced plans to inject its holdings in ORQ and MBFC Towers 1 and 2 into a new private fund. Prior to the fund’s formation, it had offered joint-venture partners pre-emptive rights to purchase its stakes in ORQ as well as MBFC Towers 1, 2 and 3.

Keppel Reit exercised its option to acquire Hongkong Land’s one-third stake in MBFC Tower 3 for S$1.45 billion. However, the pre-emptive offers for ORQ and MBFC Towers 1 and 2 lapsed.

Responding to a unitholder’s query on why it did not pursue these assets, the Suntec Reit manager said that they are “very good quality assets” in the core Central Business District, and are priced competitively.

“For the acquisition to be accretive, Suntec Reit would have to fund it fully by debt, which would bring the aggregate leverage ratio to above 45 per cent for a one-sixth stake in ORQ or MBFC,” it noted.

The manager added that the Reit was trading at about a 30 per cent discount to its net asset value (NAV) at the time.

“Issuing equity will be dilutive to NAV and distribution per unit for unitholders. Hence, the manager is of the view that it was not in unitholders’ interest to accept the offer.”

Another unitholder raised concerns about the “significant gap” between the Reit’s unit price and its NAV.

The manager noted that the discount to NAV had narrowed to 29 per cent as at Dec 31, 2025, from 43 per cent a year earlier.

Divestment opportunities

Apart from operational improvements, the Reit will continue to pursue divestment opportunities for mature assets and the sale of strata units in Suntec City Office.

“Divestment of these assets at close to or higher than book value may narrow the discount further,” said the manager.

Suntec Reit had earlier divested some strata office floors at Suntec City.

In 2021, it sold three floors in Towers 1 and 2 to SilkRoad Property Partners for S$197 million – an 8.9 per cent premium over the independent valuation of S$180.9 million – resulting in a net gain of S$13.9 million.

The properties changed hands in 2024 when HSBC Asset Management took over SilkRoad, and HSBC is reported to have just put them up for sale for S$135 million.

Units of Suntec Reit closed up 1.3 per cent or S$0.02 at S$1.52 on Wednesday.