Category: CCT
CMT / CCT – BT
CapitaMall Trust and CCT issue US$645m secured notes
CapitaRetail China Trust raises gross proceeds of $70m from placement
CAPITACOMMERCIAL Trust (CCT) and CapitaMall Trust (CMT) yesterday announced the issue, through Silver Oak, of US$645 million five-year secured floating rate notes (FRNs).
Separately, CapitaRetail China Trust (CRCT) – another trust in the CapitaLand stable – announced a successful private placement.
The FRNs issued by Silver Oak are secured by Raffles City Singapore, a mixed-use property jointly owned by CCT (60 per cent) and CMT (40 per cent), through special-purpose trust vehicle RCS Trust.
Silver Oak is a special-purpose company incorporated to provide credit facilities to RCS Trust.
Half of the notes have been placed with Asian institutional investors and the other half with European investors. The issue was 1.7 times subscribed.
Proceeds from the notes – which have been assigned an AAAsf rating by Fitch Inc and a Moody’s Investors Service rating of Aaa(sf) – have been swapped into S$800 million.
In addition, Silver Oak has drawn down S$164 million from a S$200 million five-year term-loan facility granted by DBS Bank, HSBC and Standard Chartered Bank.
‘The S$800 million proceeds from the FRN, together with the amount of S$164 million term loan, are on-lent to RCS Trust to refinance RCS Trust’s existing aggregate debt of S$964 million, ahead of the latter’s expected maturity date on 13 September 2011,’ said the managers of CCT and CMT.
‘The balance S$36.0 million of the term loan is expected to be fully drawn down in September 2011 to finance purposes such as asset enhancement initiatives and working capital.’
The interest rates payable by RCS Trust for the S$800 million proceeds and the S$200 million term loan will be fixed at 3.09 per cent per annum and 3.025 per cent per annum respectively, from Sept 13.
CapitaCommercial Trust Management Limited chief executive officer Lynette Leong noted that this ‘marks the completion of the early refinancing of CCT’s only outstanding debt for 2011 and extension of its portfolio debt maturity’.
The three banks have further granted a five-year committed revolving credit facility of S$300 million, available to finance future capital expenditure, asset enhancement initiatives, and general corporate and working capital purposes.
Meanwhile, CRCT announced yesterday that its initial private placement size of S$55 million was 2.5 times subscribed. As a result, the full upsize option was exercised, raising gross proceeds of about S$70 million through the placement of 59.8 million new units.
Said Victor Liew, chairman of CapitaRetail China Trust Management Limited (CRCTML): ‘The strong demand by investors for the private placement is testament to the attractiveness of CRCT as an investment for unitholders to tap into China’s consumption growth.’
Each new unit was issued at $1.17, representing a discount of approximately 3.2 per cent to CRCT’s adjusted volume weighted average price.
The total demand book comprised over 40 existing and new investors from Asia, the United States and Europe.
CapitaMalls Asia’s (CMA’s) subsidiaries subscribed for about 12.9 million new units.
Gross proceeds from the private placement will be used to finance the acquisition of New Minzhong Leyuan Mall, with the remaining balance funded by a drawdown from CRCT’s existing debt facilities.
CRCTML also intends to declare an advance distribution for existing unitholders, for the period from Jan 1 to June 29, at an estimate of between 4.26 cents and 4.30 cents per unit.
The books’ closure date for the advance distribution is June 29 at 5pm. The advance distribution will be paid around Sept 23 this year.
In the stock market yesterday, CCT shares closed two cents lower at $1.43, CMT shares closed one cent lower at $1.90, and CRCT shares closed three cents lower at $1.22.
CCT – OCBC
Permission granted to demolish Market Street Car Park
Approval granted for MSCP demolition. CapitaCommercial Trust (CCT) has announced on 16 Jun that it has been granted permission to demolish Market Street Car Park (MSCP) to make way for its new ultra-modern Grade A office tower. The carpark, including its food court and all its shops, will be closed on June 30 and eventually torn down. The new tower is expected to be completed before end 2014.
MSCP redevelopment. Recall that CCT was granted the Outline Planning Permission (OOP) by URA for the redevelopment of MSCP in Jan 2008. However, the project was aborted in Jan 2009 amid the Financial Crisis due to uncertain outlook, tight credit conditions and high development cost and significant size of the undertaking. The OOP was thus allowed to lapse. Subsequently, CCT rekindled redevelopment plans for MSCP and obtained provisional permission in Nov 2010. It will be jointly developing MSCP with its sponsor CapitaLand, with a 40% stake in the JV and capital commitment of S$560m. This constitutes 9.3% of its total assets as of 31 Mar, which is below the stipulated development limit of 10%. CCT will commit S$335m in 2011, and the rest via internal cash resources and debt, keeping pro forma gearing below 31%. The new office tower has a GFA of 887,000 sqft and height of 245m. It will have a towering presence around the area and is likely to be the fifth tallest building in Singapore after OUB Centre (280m), Republic Plaza (280m), UOB Plaza One (280m) and Capital Tower (254m). We have factored in contributions from MSCP starting Dec 2014, with a stabilised NPI yield-on-cost of 6.9% and a modest starting rent of S$14 psf/month. This compares favourably with CCT existing NPI yield in FY10, which is 5.46% according to our estimates.
Reiterate BUY. We are overall positive on the MSCP redevelopment but remain wary that its land lease is only 59 years following the 2014 completion. There is potentially an additional supply of about 1m sqft of commercial space on the reserved list at Marina View (near Asia Square Tower 1 & 2), which was recently announced in the 2H11 GLS programme, with its estimated launched date1 in Oct 2011. We forecast for CCT to continue to experience negative rent reversions in 2011, but this should change in 2012. With its near 100% occupancy and active leasing strategy, CCT stands in a good stead to reap the office rental uptrend for its existing properties, at least in the short to medium term. Reiterate BUY with an unchanged RNAV-derived fair value of S$1.63.
CCT – BT
End of the road for Market Street Car Park
MARKET Street Car Park will be closed for good at the end of this month for demolition and an ultra-modern Grade A office tower will spring up in its place before the end of 2014.
CapitaCommercial Trust (CCT), which has been granted permission to demolish the car park amid concerns of a resultant shortage of car park space in the area, said the 245-metre tall tower to be developed will be an exciting addition to the skyline of Singapore’s Central Business District (CBD). It is expected to have a gross floor area of 887,000 square feet.
Announcing the redevelopment yesterday, CCT said: ‘As a result, Market Street Car Park, including the food court and all the shops, will be closed permanently from 2359 hours on Thursday, 30 June 2011 for demolition.’
The car park, which was built in 1964 and has 704 lots, is one of the major sources of parking space in the Central Business District today.
CCT said that existing season car park holders have already been told since April to start sourcing for alternative car parking and have been provided with a list of alternative car parking facilities in the surrounding commercial buildings.
There has since been ‘a steep decline’ in the number of season car parkers at the car park, said CCT.
BT had earlier reported that owners of some developments near the property had jointly written to the Urban Redevelopment Authority (URA) for a dialogue to address concerns over the supply of parking lots in the area when Market Street Car Park is being redeveloped.
Several buildings in the vicinity have either few or no parking lots, which means that many of their tenants or visitors have hitherto been relying on Market Street Car Park for their parking needs.
Plans for the redevelopment of the car park emerged more than 15 years ago but firmed up only recently. CCT said in April that it will work with CapitaLand to re-build the car park into a Grade A office tower for around $1.4 billion. This includes a differential premium for the change of land use.
CMT, CCT – BT
CapitaCommercial, CMT plan issue of floating rate notes
CAPITACOMMERCIAL Trust (CCT) and CapitaMall Trust (CMT) intend to launch a ‘benchmark-size’ offering of US dollar secured floating rate notes this month, the trusts said yesterday.
The notes, which will be due in 2018, are part of the $10 billion multi-currency secured medium term note programme set up in September 2006.
CCT and CMT – which are both units of Singapore’s largest listed property group CapitaLand – did not provide the total value of the notes that will be issued in this tranche. But benchmark-size offerings are usually in excess of US$500 million.
Some $866 million worth of notes have been issued to-date under the programme, a spokesman said. He added that a further announcement will be made when the notes are launched, which is expected to be within this month. The notes, which will be secured by Raffles City Singapore, will be issued through special purpose vehicle Silver Oak.
CCT and CMT also said that in conjunction with the notes issue, DBS Bank, The Hongkong and Shanghai Banking Corporation (HSBC) and Standard Chartered Bank will grant a $200 million term loan facility and a $300 million revolving credit facility to the issuer. It is intended that the facilities will mature on the same date as the notes and will also be secured by Raffles City Singapore – but will be subordinated to the notes.
DBS, HSBC and Stanchart has also been appointed as the joint lead managers of the notes issue. The proceeds from the notes and facilities will be used to refinance existing borrowings, finance future capital expenditure and asset enhancement initiatives, and for general corporate and working capital purposes.
The notes are expected to be assigned an ‘AAA’ rating by Fitch and an ‘Aaa’ rating by Moody’s Investors Service, CCT and CMT said.
CCT shares gained one cent to close at $1.46 yesterday, while CMT closed unchanged at $1.95.
CMT, CCT – DBSV
CMT and CCT jointly extend early tender offer to buy back CMBS for Raffles City
CMT and CCT have jointly extended an early tender offer to the CMBS holders of Silver Oak SPV. The group had earlier partially funded the purchase of the Raffles City property through a revolving credit facility of S$164m and an issue of S$866m CMBS, through the Silver Oak SPV. CCT’s 60% share of the CMBS amounts to cS$520m and CMT’s 40% share is S$346m.
The notes are due to mature on 13 Sep 2011 and both CMT and CCT have extended an early offer to buyback the notes by 2 June 2011 at a purchase price of 100.25 percent of the principal amount together with accrued and unpaid interest. Notes tendered after the Early Offer Deadline but before the Expiration Deadline will be purchased at 99% of their principal amount together with any accrued and unpaid interest thereon. The tender offer will expire on 8 June 2011.
We believe refinancing this tranche of debt under the current low interest rate environment would be earnings accretive to both reits as the existing average debt cost is relatively high at 4.1-4.2%. Also, these loans are backed by an asset with strong operating performance, which saw NPI yield rising from 3.69% in 2006 to 5.46% in 2010, and low existing loan to value ratios.
Maintain BUY with TP S$2.06 for Capitamall Trust and S$1.59 for Capitacommercial Trust.