Suntec Reit sells Park Mall; strikes redevelopment JV

Singapore

SUNTEC Real Estate Investment Trust is selling Park Mall to Park Mall Pte Ltd for S$411.8 million, said ARA Trust Management (Suntec), the manager of Suntec Reit, on Monday.

The Reit acquired Park Mall, which is an integrated office, lifestyle and home furnishing mall situated within the Orchard Road shopping belt, in 2005 for S$245.1 million. The property is more than 40 years old, with a remaining land lease tenure of 53 years.

Yeo See Kiat, chief executive officer of the manager, said that part of the sale proceeds may be used to "mitigate the dip in DPU (distribution per unit) arising from the divestment". In conjunction with the divestment, Park Mall Investment Limited - a joint venture (JV) company in which Suntec Reit has a 30 per cent interest and which owns 100 per cent of Park Mall Pte Ltd - has been set up to redevelop Park Mall into a commercial development comprising two office blocks with an ancillary retail component.

Said Mr Yeo: "The redevelopment will unlock the underlying value of the property by further enhancing the gross floor area of the site. In addition, Suntec Reit will have the ability to own part of the redeveloped property by acquiring one office block upon completion." Suntec Reit shares ended trading down 2 Singapore cents at S$1.71 on Monday.