YTL Corp Bhd ... Nov 2008

It is acquiring stakes in two real estate investment trusts (REITs) management companies in Singapore from Macquarie Bank Ltd for S$285mil. It would acquire about 26% of Singapore-listed Macquarie Prime REIT (MP REIT) and 50% of Prime REIT Management Holdings Pte Ltd (PRMH).

Under the corporate exercise, YTL Corp would acquire 247.1 million units of MP REIT at 82 cents, which is at a discount of 49% to MP REIT’s net asset value per unit.

The acquisition of 50% of PRMH together with the units allows YTL Corp to control the REIT.

MP REIt has stakes in two of the most prominet properties along Orchard Road, namely Ngee Ann City and Wisma Atria. The REIT also wholly owns seven propeerties in Tokyo, Japan, and the Spring Zongbei Dept store in China. As at end Sept 2008, the REIT’s total properties were valued at S$2.2 billion.

What is clear is that despite owning just 27.23% of Ngee Ann City and 74.23% of Wisma Atria, which contains a mix of retail and office space, the bulk of the REIT’s revenue and net property income is still generated by the retail portion of these two Singapore assets.

MP REIT’s gearing ratio is 28.9%. About 89.4% of its total debt of S$662 million is fixed rate and there is no significant financing due until then.