SINGAPORE: CapitaLand Commercial Trust (CCT), Singapore’s largest office real estate investment trust, is acquiring Asia Square Tower 2 building at Marina Bay for a property value of S$2.09 billion.
CCT made the announcement on Thursday (Sep 21) afternoon, following a trading halt of the REIT's counter on the Singapore Exchange.
The total acquisition cost from BlackRock Asia Property Fund III LP is S$2.15 billion, comprising of the agreed property value of S$2.09 billion, which was negotiated on a willing-buyer and willing-seller basis, estimated net cash, receivables and payables of S$21.7 million as well as acquisition fees and transaction costs of S$34.8 million.
The agreed property value is lower than an independent valuation of S$2.11 million conducted by estate agency Knight Frank.
The acquisition which costs S$2,689 per square foot, is expected to take place in November 2017 or a date to be agreed between the two parties, CCT said.
The deal for Asia Square Tower 2 comes a little more than a year after BlackRock sold the larger Tower 1 to the Qatar Investment Authority for S$3.28 billion in Singapore's largest office transaction.
Asia Square Tower 2 is a 46-storey integrated commercial development comprising of a premium quality Grade A office building and amenities including The Westin Singapore and a two-storey retail podium.
It is expected to yield a net property income of 3.6 per cent per annum, based on a committed occupancy rate of 88.7 per cent as on Jun 30.
CCT said it will fund this acquisition through a combination of a fully-underwritten and renounceable 166 for 1,000 rights issue to raise gross proceeds of approximately S$700 million, external bank borrowings of S$1.12 billion, and divestment proceeds of approximately S$340.1 million from previous property deals such as One George Street (50 per cent stake), Golden Shoe Car Park and Wilkie Edge.
Commenting on the acquisition, chairman of the trust's manager Soo Kok Leng said: "With this acquisition, CCT is now well anchored in all the key sub-markets in Singapore’s Central Business District: Marina Bay, Raffles Place, Tanjong Pagar and City Hall, cementing its position as the largest landlord of prime office assets in Singapore."
CEO of the trust's manager Lynette Leong added that the acquisition will "substantially enhance the quality, resilience and diversity of CCT’s portfolio".
"Together with the redevelopment of Golden Shoe Car Park which we recently announced, the acquisition of Asia Square Tower 2 will catalyse CCT as a landlord of choice office properties and enlarge its capacity for long-term value-creation," added Ms Leong.