CapitaLand Commercial Trust (CCT) is proposing to acquire the remaining 60 per cent in the office tower CapitaGreen that it does not already own for about $393 million.
The deal is expected to boost distribution per unit (DPU) and "augment portfolio quality for long-term growth", the trust manager CapitaLand Commercial Trust Management said yesterday.
It is buying a 50 per cent share from CapitaLand and a 10 per cent stake from Mitsubishi Estate Asia.
The $393 million outlay - which will be funded through borrowings from committed bank facilities - comprises a purchase consideration of $183.4 million, $198.5 million of existing unitholders' loans and accrued interest, and $11.1 million in related fees and expenses.
The trust manager's chief executive Lynette Leong told a briefing yesterday: "The positive attributes of the acquisition far outweigh the negative, which is why we decided that we should be acquiring it today, and we think that the DPU accretion is sustainable."
The trust said if it had completed the deal on Jan 1 and operated the property through to the end of March, the first-quarter DPU would have risen by 1.4 per cent to 2.22 cents.
CapitaGreen's contribution to the trust's portfolio net property income would also increase from 6 per cent as at March 31 to about 14 per cent.
CCT plans to exercise a call option - due to expire in December next year - to acquire the 60 per cent stake. The option is part of a joint venture agreement signed in 2011, and is conditional on the market valuation of CapitaGreen being equal to or above $1.59 billion
In a separate statement yesterday, CapitaLand said the proposed divestment is based on CapitaGreen's agreed market value of $1.6 billion ($2,276 psf), which is the average of two independent valuations.
The developer added that its 50 per cent stake in CapitaGreen will be divested for a total of $318.3 million. CapitaLand said it will realise a gain of about $196 million.
"The proposed divestment... is part of our robust capital recycling strategy, which enables us to realise development gains and enhance financial flexibility to redeploy capital to ventures that will generate returns for our shareholders," said CapitaLand president and group chief executive Lim Ming Yan.
The proposed deal will lift CCT's gearing from 30.1 per cent to 37.7 per cent, which Ms Leong said is still a "comfortable" level.
Following the acquisition, CCT's portfolio of investment properties will be valued at $8.4 billion, up from $7.5 billion as at Dec 31.
CapitaGreen is a 40-storey Grade A office building on the site of the former Market Street Car Park in the central business district.
The property, with a net lettable area of 703,122 sq ft, had a committed occupancy of 92.8 per cent as at March 31. The acquisition is expected to be completed by the end of the year.
Ms Leong, in a response to a question at the briefing on whether there are plans to divest two of CCT's other assets - Wilkie Edge and One George Street, said: "So far, there have been offers but the prices are not right... If the price is right, we will always be open to divesting.".
