SPH plans listing of a retail REIT

SPH plans listing of a retail REIT

SINGAPORE - Singapore Press Holdings Limited ('SPH' or the 'Company') has received an eligibility-to-list ('ETL') letter from Singapore Exchange Securities Trading Limited (the 'SGX-ST') in connection with the proposed initial public offering and listing of SPH REIT on the Main Board of the SGX-ST (the 'Offering').

In a press release, SPH stated that an Extraordinary General Meeting has been scheduled for Tuesday, June 18, 2013, to seek shareholders' approval for:

(i) the establishment of SPH REIT,

(ii) the proposed injection of Paragon and The Clementi Mall into SPH REIT, and

(iii) the payment of a Special Dividend upon completion of the Offering

SPH REIT will be established to principally invest, directly and indirectly, in a portfolio of income-producing real estate used primarily for retail purposes in Asia-Pacific as well as real estate-related assets.

The initial portfolio of properties of SPH REIT is expected to comprise a 99-year leasehold interest in Paragon commencing on the date of listing of SPH REIT on the Main Board of the SGX-ST ('Paragon') and a 99-year leasehold interest in The Clementi Mall commencing from 31 August 2010 and expiring on 30 August 2109 (collectively, the 'Properties'), which are valued at S$3.07 billion in aggregate.

SPH plans to sell Paragon to the REIT Trustee, DBS Trustee Limited, for a fixed consideration of S$2.5 billion, and The Clementi Mall to the REIT Trustee for a fixed consideration of S$570.5 million.

Rationale and benefits of the proposed listing of SPH REIT

The injection of the Properties into SPH REIT and the listing of SPH REIT on the SGXST are expected to offer several benefits to the shareholders of SPH:

1. Unlock value in the Properties: Capital in the Properties would be released back to SPH and its subsidiaries ('the Group'), which will allow SPH to pursue its growth strategies across its property, media and other businesses, and enable the Group to pay a Special Dividend to its shareholders as a reward for their investment in SPH;

2. Strengthen the Group's balance sheet: Assuming the REIT IPO had been completed on 31 August 2012, the Group's net gearing is estimated to decrease from 40.6 per cent to 9.3 per cent before payment of the Special Dividend and net asset value will increase by more than 63 per cent from S$1.39 to S$2.27 per share;

3. Create an efficient platform for the holding of investment properties: SPH REIT would serve as an efficient platform for holding future investment properties and as a separate listed entity, SPH REIT would also be able to finance itself independently;

4. Continued majority ownership of the Properties: The Group is expected to hold approximately 70 per cent of SPH REIT units upon listing, providing SPH shareholders with continued majority ownership of the Properties. The Group also expects to be closely involved in SPH REIT through its ownership of the REIT Manager and the property manager; and

5. Fee income: The REIT Manager will earn a recurrent management fee, adding a valuable fee-based management business to the Group's portfolio.

Mr Alan Chan, Chief Executive Officer of SPH said: "We believe that the establishment of SPH REIT will be a positive event for SPH shareholders. It allows SPH to crystallise the value created in Paragon and The Clementi Mall, and release capital to fund the Group's growth and the Special Dividend.

"SPH has always endeavoured to explore new avenues for growth to maximise shareholder value. Through this transaction, SPH shareholders will be able to enjoy the best of both worlds - a Special Dividend and the opportunity to continue to enjoy the benefits from the establishment of SPH REIT in which the Group will continue to be closely involved."

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