Wisma Technip sale. CCT intends to sell Wisma Technip to Quill Capita Trust (“QCT”) for RM125m (S$56.1m) through asset securitisation vehicle Aragorn in which CCT owns 100% of the junior bonds. CCT would gain about S$2m from transaction, expected to complete by 4Q07, pending a funding raising exercise by QCT for the acquisition.

QCT as main channel of growth in Malaysia. While it’s the first asset sale by an S-REIT since its inception, it’s CCT’s strategy to focus on growth in the Malaysian office market through its 30% strategic stake in listed investment vehicle QCT. We believe this is a positive for QCT (Buy, TP RM2.37) which would benefit from growth through acquisitions as Capitaland’s main platform for opportunities in Malaysia and Capitaland’s 28%-owned incubator, Malaysia Commercial Development Fund (MCDF).

Minimal impact, TP S$2.97 unchanged. We like CCT’s platform of growth in Malaysia through QCT, but see a small, albeit positive impact on CCT in the near term. While CCT would primarily remain Singaporecentric, we continue to see organic growth through strong positive rental reversions for CCT’s portfolio. On the acquisitions front, 3rd party acquisitions continue to elude CCT at this point since the HSBC acquisition in 2005, apart from the injection of 60% stake in Raffles City from developer sponsor Capitaland in 2006. With the sale of Wisma Technip, this would reduce distribution income estimates in FY08 by 0.8% with DCF based target price of S$2.97 unchanged. Maintain Hold.