Suntec Real Estate Investment Trust (Suntec REIT) has plans to acquire the entire Suntec International Convention & Exhibition Centre. However, this is unlikely to happen until the convention centre has been repositioned to produce a more stable income stream.
“Eventually, we hope for Suntec REIT to acquire the asset,” said John Lim, chief executive of ARA Asset Management, which has a unit that manages Suntec REIT.
But “we have to spend some time and money to reposition the convention centre, and that may take about two to three years,” he added.
ARA has not yet coordinated with the Urban Redevelopment Authority, although their plans are subject for approval. “We will have to work with the authorities closely on how to reposition the asset,” said Mr. Lim.
In 2009, ARA purchased Suntec convention centre for $235 million and placed it under the ARA Harmony Fund, a newly created private property fund. Suntec REIT has a 20 percent share in this fund.
Suntec REIT did not acquire the convention centre entirely as its earnings fluctuated, depending on the frequency and size of events held.
REITS prefer properties with stable income in order for them to make steady payouts to unit-holders.
Nicholas Mak, a property lecturer from Ngee Ann Polytechnic, said “putting up tenants that pay regular rents would be a way to instill more stability into the income of the convention centre." However, he said that the amount of space that could be converted to other uses could be limited.
The possibility of more food and beverage outlets at Suntec convention centre was also raised by Mr. Lim. “There are quite a number of activities you can look at,” he said.
In the meantime, Suntec REIT has been busy working to enhance some of its other assets. It said it would build a glass facade and covered walkway to connect Suntec City Mall to the forthcoming Promenade MRT station. It is also building new retail units.
Suntec REIT units earned one cent on Friday to close at $1.30.