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2 CapitaLand trusts buy Raffles City on 4.9% 2006 yield

Published 21 March 2006

2 CapitaLand Ltd listed property trusts signed a conditional put-&-call option on Saturday to buy Raffles City in Singapore from Raffles City Pte Ltd (now known as Tincel Properties Pte Ltd) for $S2.085 billion.

CapitaCommercial Trust will take 60% and CapitaMall Trust 40%. If the mall trust’s unitholders don’t agree to the transaction, the commercial trust will buy the whole of Raffles City, which is 27 years through a 99-year lease which started in July 1979.

Including capex of $S41 million & other property-related costs of $S40 million, the whole deal is priced at $S2.166 billion, giving projected annualised yields of 4.9% for 2006 & 5.1% for 2007.

Tincel (originally Raffles City Pte Ltd) completed Raffles City in 1986 It sits on 30,630m² in Singapore’s business district and its total 391,000m2 contains:

The 1200-room 73-storey Swissotel The Stamford, South-east Asia’s tallest hotel
the 800-room 28-storey twin-tower Raffles The Plaza
the 55,125m2 42-storey Raffles City Tower office block
a 7-storey podium which houses the Raffles City Convention Centre, the 26,700m² Raffles City Shopping Centre & the Amrita Spa, and
44,300m2 of basement parking for 1200 cars.

The CapitaLand mall trust will increase its assets from $S3.4 billion to $S4.3 billion, strengthening its position as Singapore’s biggest reit by assets & market capitalisation. The commercial trust will grow from $S2.1 billion to $S3.5 billion.

If you want to comment on this story, write to the BD Central Discussion forum or send an email to [email protected].

Attribution: Joint announcement, Raffles City website, Singapore Stock Exchange website, story written by Bob Dey for this website.

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