CCT – Nomura

Option to buy One George St

First look
CapitaCommercial Trust has obtained an option to acquire One George Street for S$1.165bn, equivalent to S$2,600/sf. The deal is underscored by the vendor’s income guarantee of S$49.5mn pa, ensuring that the deal will deliver a yield of 4.25%. We view the acquisition price as fair given recent comparables. We expect the 100% debt financed deal to be yield accretive by about 1.2-2.9% for FY09F, though the level of accretion is sensitive to funding costs.