Starhill Global REIT is set to acquire David Jones Building, a retail property located in central Perth, Australia for A$114.5 million ($148 million) from Centro, a real-estate company based in Australia, via a special purpose unit trust structure established in Australia.
In addition, Starhill Global REIT says it has entered into an agreement with the trustee of Starhill REIT of Malaysia to indirectly acquire Starhill REIT’s interests in Starhill Gallery and Lot 10 Shopping Centre on Bukit Bintang, Kuala Lumpur’s main shopping street, through an asset-backed securitisation structure, for a total consideration of RM1,030 million ($423.3 million).
David Jones Building is located in the epicentre of the Perth CBD and enjoys dual frontage to Hay Street and Murray Street, the only two retail pedestrian malls in the city. The building is also linked seamlessly to another major department store via a covered walkway on the first floor. The four-level property, which includes a heritage-listed building constructed circa 1910 that was formerly the Savoy Hotel, is anchored by the popular David Jones department store and six other speciality tenancies. David Jones, which has a lease in the building until October 2032, occupies approximately 22,903 sq m or 95% of the total gross lettable area (GLA) and accounts for 75% of the annual gross rental.
Starhill Gallery and Lot 10 are prime retail properties strategically located in the heart of Kuala Lumpur’s “Golden Triangle”. The two properties, comprising total net lettable area of 554,165 sq ft, will be acquired via an ABS structure. A bankruptcy-remote special purpose vehicle incorporated in Malaysia (ABS SPV), will issue Senior Medium Term Notes (MTNs), Junior MTNs and non-redeemable preference shares (NRPS).
Starhill Global REIT says it will subscribe to all of the Junior MTNs and NRPS via its wholly-owned subsidiary, SG REIT (M) Pte Ltd.
Under the heads of agreement, Katagreen Development Sdn Bhd, an indirect wholly-owned subsidiary of YTL Corporation Berhad, will be the master lessee in both properties with a tenure of 3+3+3 years.
The lease would be automatically renewed for the second term and both the ABS SPV and Katagreen Development Sdn Bhd will have a put and call option respectively to extend the lease upon expiry of the second term.
Starhill Global REIT says the master lease will incorporate a step-up rental feature every three years.
Source : The Edge – 18 Nov 2009