Capitaland Integrated Commercial Trust Sells 21 Collyer Quay for £420 Million
Capitaland Integrated Commercial Trust (CICT) has offloaded 21 Collyer Quay, an office building situated in Raffles Place, for £420 million (S$688 million).
The sale price aligns with the property's independent valuation, announced the trust's manager on Tuesday. Savills, the independent property valuer for the deal, assessed the asset at £420 million as of 31 October.
Excluding divestment-related expenses, the net proceeds from the sale are expected to reach approximately £416 million (S$681.7 million). These funds will be used to repay debt, finance capital expenditure, asset upgrading works, and investments. They will also cover general corporate and working capital requirements.
Based on CICT's annualised net property income for the period ending 30 September and the purchase price, the exit yield for the property is below 3.5%.
Assuming the divestment is finalised and net proceeds are used to repay existing debt on 30 June 2024, the trust's pro forma aggregate leverage is projected to decline from 39.9% to around 38.3%.
The transaction is not anticipated to have any significant impact on CICT's distribution per unit or net asset value per unit for the financial year ending 31 December.
The 21-storey building, boasting a net lettable area of 213,000 square feet, is fully occupied by co-working operator WeWork. The co-working operator took over the lease of the former HSBC building in 2021 after the bank relocated to Marina Bay Financial Centre Tower 2. WeWork holds a seven-year lease for the lettable area until 2028.
CICT's manager referred to the buyer of 21 Collyer Quay as an "unrelated third party."
Previously, *The Business Times
reported that in late 2023, CICT received interest in the office building, which possesses a 999-year leasehold tenure. Potential buying interest fell within the range of £2,200 to £2,250 per square foot (psf) on the property's net lettable area.
However, CICT reportedly sought a higher price of £2,400 to £2,450 psf, translating to between £760 million and £780 million (S$830 million and S$852 million).
Rather than bearing risk and uncertainty, CICT may have opted to divest 21 Collyer Quay at a premium to valuation, reported *BT
in February. As of 31 December 2022, the building was valued at £387 million (S$634 million), based on a 3.45% cap rate.
Analysts from various brokerages previously indicated that CICT's divestment of its Singaporean assets could bolster its balance sheet and position it to acquire higher-quality assets from its sponsor.
One of these analysts highlighted 21 Collyer Quay as a potential candidate for divestment.
This latest divestment arrives a few months after CICT announced its intention to purchase a 50% stake in Ion Orchard and its connecting underpass, Ion Orchard Link, for £1.13 billion (S$1.85 billion).
Tony Tan, chief executive of CICT's manager, described the Ion deal as a "transformational move" towards a diverse trade mix that allows the trust to capture Singapore's luxury retail market, leverage domestic and international spending power, while benefiting from resilient demand for essentials across economic cycles.
The trust's manager also noted that acquiring Ion Orchard would consolidate CICT's retail presence in a "tightly held" downtown precinct.
Units of CICT were trading up 0.5% or S$0.01 at S$1.98 as of 10.43 am on Tuesday, following the news.
