Developments on the office space front shows that office rentals will hover at an average monthly rental of s$8.50-9psf for the next few years. This is due to the fact that office rentals for new premises are going at 7.50 to 10+ psf from the above blog post. And there are more supply coming and new developments are not fully pre-committed yet.
From CCT slides, current average rental for grade A is s$9.50psf, while CCT's average rental is about s$$8.90. This means we can estimate rentals to fall about $1 psf in time to come. That is about a 12% decrease. Assuming the full effect trickles down to dividends, this meas at current price of $1.615, the forward yield (in this tough environment) is about 4.7%.
Is that a fair valuation? To me, I don't think so and I will prefer a yield of about 5%.
I am pretty uncomfortable with the ever declining capitalization and discount rates employed by CCT and its valuers. from the table attached, one can see the CAP rate and discount rate used at present is lower than that of 2014. Assuming if rental remains constant, it means property values will just be boosted up.
No doubt Wilkie Edge was sold at such a high valuation to Lian Beng, but it is becoming a game where there must be "a greater fool" in the market to buy.
<Not very excited at how CCT and valuers are shifting its valuation parameters over the years to achieve a high asset base>
21-09-2017, 06:37 PM (This post was last modified: 21-09-2017, 06:43 PM by CY09.)
CCT is acquiring Asia Tower 2.
The acquisition will be funded by rights issue, its cash reserves and more bank borrowings.
The property is sold to CCT at a net property yield at about 3.6%. Post rights, CCT will be more leveraged and will have a lower yield (DPU) post rights.
I don't find this acquisition accretive to shareholders of CCT.
The Malls are still as full as ever for most of CMT malls. And they are maintaining stable DPU even without funan. Sometimes writer has to be on the ground to see it for themselves.
Agree. The writer makes some assumption without further elaborating or the corresponding figures to back it up. eg. he says that 'the share of food and beverage in CapitaLand's rental income from Singapore malls has risen to 31% from 27% three years ago'. So why is that a bad thing? Do F&B outlets pay lower rental or % of sales?
CapitaSpring secures J.P. Morgan as anchor office tenant
Joint venture partners CapitaLand Limited (CapitaLand), CapitaLand Commercial Trust (CCT) and Mitsubishi Estate Co., Ltd (MEC) unveiled today the name of their upcoming 51-storey skyscraper at 88 Market Street – CapitaSpring.
CapitaLand Commercial Trust owns 45.0% of CapitaSpring, the other joint venture partners are CapitaLand Limited (45.0%) and Mitsubishi Estate Co., Ltd (10.0%).
CapitaSpring which broke ground for construction in February 2018, will be one of the tallest and greenest buildings in Raffles Place, with integrated commercial and community spaces and a City Room at the ground floor. Community events such as fitness sessions and lunchtime performances can be held at the City Room, which will blend into a 12,500-sq-ft public park. Occupants can also look forward to a café, treetop cocoons, sky hammocks, meeting and activity spaces connected by a spiral stairway at the Green Oasis. CapitaSpring will also be home to Singapore’s highest urban farm and a fine-dining restaurant on the rooftop at around 280-metres-high.
J.P. Morgan, the global banking and financial services provider, will take up close to a quarter of the 635,000 square feet (sq ft) of the net lettable area at CapitaSpring. This translates to approximately 155,000 sq ft of premium office space from levels 24 to 30.
Private Placement of 130 Million New Units in Capitaland Commercial Trust & Proposed Acquisition of 94.9% interest in Gallileo property in Germany
CapitaLand Commercial Trust Management Limited, in its capacity as manager of CapitaLand Commercial Trust ("CCT") announced the proposed private placement of 130,000,000 new units in CCT to eligible institutional, accredited and other investors at an issue price of between S$1.631 and S$1.676 per New Unit (both figures inclusive) to raise gross proceeds of no less than S$212.0 million.
Subject to relevant laws and regulations, the Manager intends to use the gross proceeds of approximately S$212.0 million (assuming the issue price is based on the minimum of the Issue Price Range of S$1.631 per New Unit) from the Private Placement in the following manner:
(i) approximately S$208.7 million (which is equivalent to approximately 98.4% of the gross proceeds of the Private Placement) to partially finance the acquisition of 94.9% interest in Gallileo Property S.a.r.l which holds a 100% interest in the property known as Gallileo, which is located at Gallusanlage 7 / Neckarstrasse 5, 60329 Frankfurt Am Main Germany; and
(ii) approximately S$3.3 million (which is equivalent to approximately 1.6% of the gross proceeds of the Private Placement) to pay the estimated transaction-related expenses, including professional fees and expenses, incurred or to be incurred by CCT in connection with the Private Placement, with the balance of the gross proceeds of the Private Placement, if any, to be used for general corporate and/or working capital purposes.
CapitaLand Commercial Trust Divests Twenty Anson for S$516.0 million
CapitaLand Commercial Trust announced today that its trustee, HSBC Institutional Trust Services (Singapore) Limited has today entered into an agreement for the sale of Twenty Anson, a 20-storey office building in Tanjong Pagar, a sub-market of Singapore’s Central Business District (CBD), to an unrelated third party for a sale consideration of S$516.0 million or S$2,503 per square foot based on the building’s net lettable area. The transaction is expected to be completed in 3Q 2018.
The sale consideration was arrived at through a bidding process conducted by an appointed property consultant, and is 19.2% above the 31 December 2017 valuation of S$433.0 million and 20.0% higher than CCT’s purchase price of S$430.0 million in 2012. The sale consideration translates to a net property yield of 2.7% based on Twenty Anson’s net property income of S$13.8 million for the 12 months preceding 31 March 2018.
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