CCT to pay $544m for major stake in Frankfurt property

CapitaLand Commercial Trust (CCT) is buying a majority stake in a prime Frankfurt property for €342.7 million (S$544 million).

CCT and CapitaLand will acquire the freehold commercial block known as Gallileo, which is in the central business district.

The trust will hold a 94.9 per cent stake, with CapitaLand holding the remaining 5.1 per cent.

The building's agreed value of €356 million is a 1.4 per cent discount to the open market estimate of €360.9 million as at March 31.

CCT will undertake a private placement of 130 million new units at between $1.631 and $1.676 each to partially fund the acquisition.

About $208.7 million, or 98.4 per cent, of the gross proceeds will partially fund CCT's stake in Gallileo. The rest will go to expenses and working capital.

The 38-storey Gallileo has a net lettable area of 436,175 sq ft. It has some retail outlets and a four-storey heritage building for office use.

The weighted average lease expiry is 10.6 years, while occupancy stands at 100 per cent, with Commerzbank anchoring about 98 per cent. Net property income yield is expected to be about 4 per cent.

CCT said it will continue to be predominantly Singapore-focused, but will allocate 10 to 20 per cent of its deposited property for overseas investments.

The acquisition will be CapitaLand's second in Germany in less than six months, following its purchase of the Main Airport Centre in Frankfurt last December.

A version of this article appeared in the print edition of The Straits Times on May 18, 2018, with the headline 'CCT to pay $544m for major stake in Frankfurt property'. Print Edition | Subscribe