CapitaLand Commercial Trust (CCT) has divested One George Street for $1.18 billion into a limited liability partnership but retains a 50 per cent interest in the prime office building in the Central Business District.
Its joint venture partner, OGS (II) - a special purpose vehicle owned by insurer FWD Group - will hold the other half stake in the limited liability partnership, One George Street LLP (OGS LLP).
CCT is expected to recognise an estimated gain of $84.6 million on the divestment of the property on a 50 per cent basis. After estimated transaction and related costs of $4.9 million, approximate net gain is $79.7 million, said CapitaLand Commercial Trust Management, asset manager for CCT. The transactions involved are expected to be completed by end-June this year.
One George Street's sale price of $1.18 billion works out to $2,650 per sq ft based on the building's net lettable area.
The price is 16.7 per cent above the property's valuation of $1.01 billion, or $2,271 per sq ft, as at Dec 31.
Based on One George Street's net property income of $38 million for the 12 months preceding end- March 2017 and the agreed value, the net property yield translates to 3.2 per cent per annum.
CapitaLand Commercial Trust Management and CapitaLand Commercial Management will continue to be the asset manager and property manager respectively.
"The divestment of One George Street to OGS LLP is in line with the trust's portfolio reconstitution strategy to proactively enhance the value of CCT's portfolio and increase our financial flexibility to invest in other compelling and sustainable growth opportunities so as to improve returns to unitholders," said Ms Lynette Leong, chief executive of the trust manager.
"By maintaining a 50 per cent ownership of OGS LLP, CCT will continue to receive tax transparent income contribution from One George Street, a good quality Grade A office building with a solid tenant profile," she added.
One George Street is a 23-storey Grade A office building located near Raffles Place, Clarke Quay and Chinatown MRT stations.
The top three tenants are Borouge, Diageo Singapore and Her Majesty The Queen in Right of Canada, as represented by the Minister of Foreign Affairs.
As at end-March, it had a committed occupancy rate of 96.5 per cent and contributed 11 per cent to CCT's first quarter net property income.