CCT – BT

Partners may loan up to $794m for Market Street Car Park project

They are CapitaLand, CapitaCommercial Trust and Mitsubishi Estate Asia

UP to $794 million of funding for the redevelopment of Market Street Car Park could be provided via a unitholder loan from its project partners CapitaLand, CapitaCommercial Trust (CCT) and Mitsubishi Estate Asia (MEA).

CapitaCommercial Trust Management said yesterday that the unitholder loan will be drawn down in multiple tranches over time, with interest pegged to market rates on the relevant dates of drawdown.

CapitaLand, CCT and MEA are redeveloping Market Street Car Park for some $1.4 billion. Their respective interests in the joint venture are 50 per cent, 40 per cent and 10 per cent.

Assuming that $794 million of unitholder loan is drawn down in one tranche, with a loan tenure of four years, the estimated total interest expense for the loan will be $100 million.

CCT’s proportionate share of the unitholder loan would be $317.6 million, and its share of the estimated interest expense payable would be $40 million.

Separately, CCT’s manager also said that CapitaLand has agreed to renew its lease at Capital Tower, a property in CCT’s portfolio. The current lease expires in July next year and the new one will run for three years from July 2012, with an option to renew for another three years on terms to be determined. The lease consideration is about $7.7 million.

Because CapitaLand has a deemed interest of 32 per cent in CCT and is a controlling unitholder, the lease deal is seen as an interested person transaction.

CCT’s manager believes that the lease consideration is fair and reasonable, saying that CapitaLand has been prompt in its rental payment and the lease will help generate a stable income flow.

Independent valuer CB Richard Ellis also found that the rental rate for the lease is ‘at market level’ and the other terms are consistent with normal commercial terms.

Meanwhile, CapitaLand announced that its joint venture with CapitaMalls Asia (CMA) and Singbridge Holdings has incorporated a 100 per cent-owned project company in China with a registered capital of $377 million. The partnership won a site in Chongqing for the development of a mixed use project.

In another development, CMA said that its wholly owned subsidiary Chengdu Huayun Jiangnan Real Estate Development, which holds CapitaMall Tianfu in Chengdu, has increased its registered capital by over $58 million to $170.54 million.