JTC to sell $1.7b of properties

Volatile capital markets cited as main reason

JTC Corp has scrapped plans to divest a large chunk of its industrial property portfolio through a listed real estate investment trust (Reit).

Instead, it will sell the 62 properties for $1.71 billion to Temasek-linked Mapletree Investments, which it had earlier appointed to manage the planned trust. This is because of recent weak stock market conditions.

“Since the appointment of Mapletree as the Reitmanager in February, the global and local capital markets have continued to remain volatile,” explained Ms Ow Foong Pheng, JTC’s chief executive.

Mapletree may still proceed with listing the properties as a REIT at a later date.

Singapore’s 20 existing listed Reits have fallen on average by 11 per cent this year amid concerns that the credit crisis in the United States might spread and hurt their ability to finance shortterm debt.

JTC’s decision to divest followed Mr Raymond Lim’s “Yellow Pages rule” in 2005, while championing entrepreneurship under the Ministry of Trade and Industry.

Besides cutting red tape, Mr Lim then said government agencies should not be in any business where the private sector is already performing and can be found in the Yellow Pages.

This was to help provide space for private businesses to bloom.

JTC heavily dominates Singapore’s industrial property landscape.

Mapletree may be independently managed but it still has government links as it is part of the Temasek family.

Mr Hiew Yoon Khong, Mapletree’s chief executive, said: “Mapletree will explore the possibility of listing the portfolio as a Reit, possibly in combination with other Mapletree industrial assets in due course.

“Meanwhile, our immediate focus will be to ensure a smooth transition for tenants and we look forward to working closely with them in the near future.”

Mapletree has an asset base of around $4.4 billion, comprising office, logistics, industrial, retail and lifestyle properties. It also manages another $3 billion worth of properties across Asia.

In this sale, Mapletree will get 39 blocks of flatted factories, 12 amenity centres, six stack-up buildings, one rampup building, one warehouse, and three multi-tenanted business parks. They are the Synergy and Strategy at the International Business Park and Signature at the Changi Business Park.

JTC said it may still divest other industrial properties through trade sales.

Source: Today – 23 Apr 2008