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Both Keppel REIT and Suntec REIT had pre-emptive right to purchase the assets from HKL before it was injected into HKL's own managed fund. Keppel REIT took action and Suntec REIT did not. OPMIs from Suntec REIT have asked why Suntec REIT didn't take action (while OPMIs from Keppel REIT asked why more action wasn't taken).
The first availability of a "call option" (in Buffett's description) is whether you have a low enough gearing to get a bridging loan to buy the asset when it becomes available. When the opportunity surfaced in the 4th quarter of 2025, both Keppel REIT and Suntec REIT have similar gearing at ~41-42%, and so they had the same opportunity set in terms of debt. But eventually Keppel REIT managed to buy something because it was trading at ~15% discount to NAV, while Suntec REIT manager has stated that their 30% discount to NAV was the main roadblock for them to not having bought anything.
So the observation that in the absence of a general crisis, a "lower discount (or slight premium) to NAV" is a good predictor of future TSR does seem to hold more and more true.
ANNUAL GENERAL MEETING ON 16 APRIL 2026 RESPONSES TO THE SUBSTANTIAL AND RELEVANT QUESTIONS
Why did the REIT choose not to acquire One Raffles Quay (“ORQ”) and Marina Bay Financial Towers 1 and 2 (“MBFC”) from HongKong Land? Please share the thinking and consideration in giving up the opportunity to acquire these two properties?
Answer: ORQ and MBFC are very good quality assets in core CBD location. As such, it is also 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% for a one-sixth stake in ORQ or MBFC.
At the point of evaluating the offer, Suntec REIT was trading at about 30% below Net Asset Value (“NAV”), issuing equity will be dilutive to NAV and Distribution Per Unit (“DPU”) for unitholders. Hence, the Manager is of the view that it was not in the unitholders’ interest to accept the offer.
Suntec REIT AGM Q&A: https://links.sgx.com/FileOpen/Suntec%20...eID=883079
Keppel REIT AGM Q&A (question 1 asked about Keppel REIT's purchase from HKL): https://links.sgx.com/FileOpen/KREIT%20R...eID=883072
The first availability of a "call option" (in Buffett's description) is whether you have a low enough gearing to get a bridging loan to buy the asset when it becomes available. When the opportunity surfaced in the 4th quarter of 2025, both Keppel REIT and Suntec REIT have similar gearing at ~41-42%, and so they had the same opportunity set in terms of debt. But eventually Keppel REIT managed to buy something because it was trading at ~15% discount to NAV, while Suntec REIT manager has stated that their 30% discount to NAV was the main roadblock for them to not having bought anything.
So the observation that in the absence of a general crisis, a "lower discount (or slight premium) to NAV" is a good predictor of future TSR does seem to hold more and more true.
ANNUAL GENERAL MEETING ON 16 APRIL 2026 RESPONSES TO THE SUBSTANTIAL AND RELEVANT QUESTIONS
Why did the REIT choose not to acquire One Raffles Quay (“ORQ”) and Marina Bay Financial Towers 1 and 2 (“MBFC”) from HongKong Land? Please share the thinking and consideration in giving up the opportunity to acquire these two properties?
Answer: ORQ and MBFC are very good quality assets in core CBD location. As such, it is also 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% for a one-sixth stake in ORQ or MBFC.
At the point of evaluating the offer, Suntec REIT was trading at about 30% below Net Asset Value (“NAV”), issuing equity will be dilutive to NAV and Distribution Per Unit (“DPU”) for unitholders. Hence, the Manager is of the view that it was not in the unitholders’ interest to accept the offer.
Suntec REIT AGM Q&A: https://links.sgx.com/FileOpen/Suntec%20...eID=883079
Keppel REIT AGM Q&A (question 1 asked about Keppel REIT's purchase from HKL): https://links.sgx.com/FileOpen/KREIT%20R...eID=883072
I am not a certified financial advisor and so nothing of what I say should be construed as financial advice. Please consult a certified financial advisor for advice instead.
