Starhill REIT to buy The Residences

By Hamisah Hamid

STARHILL real estate investment trust (REIT) is buying service apartments known as The Residences at The Ritz-Carlton from YTL Land Sdn Bhd for RM125 million.

The deal, due for completion by the first quarter of 2007, is set to increase Starhill REIT's total asset value by 10 per cent to RM1.37 billion and reduce its gearing by 1.31 per cent to 13.09 per cent.

Tan Sri Francis Yeoh, the chief executive officer of Pintar Projek Sdn Bhd, the manager of Starhill REIT, described the acquisition as a yield-accretive acquisition that will further diversify and enhance Starhill REIT's asset base within the high-end luxury property segment.

The Residences - a 38-storey tower block adjacent to the Ritz-Carlton - comprises 60 serviced apartment units, four levels of commercial podium block and two levels of basement car parks. The value of the property as at September 25 was RM145 million.

Starhill REIT will issue 138.9 million new units of 90 sen per unit to YTL Land, a wholly-owned subsidiary of YTL Corp Bhd, to meet the RM125 million purchase price. Following the exercise, YTL Corp's stake in Starhill REIT will increase from 54.85 per cent to 60.17 per cent.