CapitaLand Commercial Trust's CapitaGreen. (Photo: REITsWeek)CapitaLand Commercial Trust's CapitaGreen. (Photo: REITsWeek)

Singapore-listed office REIT, CapitaLand Commercial Trust, announced on 23 May that it will be acquiring the remaining stake in a 40-storey Grade A office tower located in Singapore’s central business district for SGD393 million.

The property, CapitaGreen, is currently 40% owned by the REIT through a special purpose vehicle jointly owned with CapitaLand Group and Mitsubishi Estate Asia Pte Ltd. The acquisition of the remaining stake will place the property fully under the control of CapitaLand Commercial Trust.

CapitaGreen features a net lettable area (NLA) of approximately 703,000 square feet and currently has a committed occupancy of 92.8%. The property has no leases expiring prior to 2018.

“We expect the proposed acquisition to be accretive to the trust’s distribution per unit”, said Lynette Leong, CEO of the REIT’s manager. “On a pro forma basis, CapitaLand Commercial Trust’s 1Q 2016 distribution per unit would have risen by 1.4% to 2.22 cents from the reported 2.19 cents with the proposed acquisition”, she added.

The value of CapitaLand Commercial Trust’s investment properties is expected to increase from SGD7.5 billion as at 31 December 2015 to about SGD8.4 billion post acquisition.

The acquisition will be funded funded through borrowings from committed bank facilities and is expected to raise CapitaLand Commercial Trust’s aggregate leverage from 30.1% as at 31 March 2016 to 37.7%.

The acquisition is expected to be completed in 4Q 2016, subject to unitholders’ approval. An extraordinary general meeting to approve the acquisition is expected to be convened in 3Q 2016.

Units of CapitaLand Commercial Trust are currently trading on the Singapore Exchange at SGD1.38.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.