New owner for two local malls?

Source : Today - 29 Oct 2008

YTL CORP, Malaysia’s biggest builder, will spend $285 million for control of Macquarie Prime Real Estate Investment Trust (Reit), owner of stakes in two Singapore malls - Wisma Atria and Ngee Ann City.

YTL, which is based in Kuala Lumpur, will buy 26 per cent of Macquarie Prime at 82 cents each from Macquarie Bank, it said yesterday in a statement.

The company will also acquire 50 per cent of Prime Reit Management Holdings, the holding company for the manager of Macquarie Prime, allowing YTL to control the Reit, it added.

Singapore’s economy entered a technical recession in the last quarter as the global financial crisis curbed demand for its exports, tourist arrivals fell and real estate prices declined.

“Challenging equity and debt conditions on account of the sub-prime crisis and tightening credit market conditions have led to attractive valuations,” said Mr Keith Magnus, head of investment banking for Singapore and Malaysia at Merrill Lynch, YTL’s adviser for the transaction.

Trading in Macquarie Prime was halted yesterday. On Friday, the stock climbed 1.9 per cent to 54 cents, the first gain in eight days. YTL said it bought the units at a 49-per-cent discount to their net asset value.

The Singapore-based Reit, which will be renamed Starhill Global Reit, owns $2.2 billion worth of retail and office properties in Singapore, Japan and China, according to YTL’s statement.

The Malaysian company owns the luxury Starhill mall in Kuala Lumpur and has said it wants to bring the brand to projects in Singapore and London.

Macquarie Prime controls Wisma Atria and has stakes in Ngee Ann City, which together offer the longest stretch of street-level frontage along the Orchard Road shopping belt, YTL said.

Macquarie Prime said in February it was conducting a review that may lead to the sale of the trust after Macquarie Real Estate, its biggest shareholder, received “unsolicited offers” for the 26-per-cent stake.

Macquarie Real Estate is a unit of Macquarie Group, Australia’s biggest securities firm.