CapitaCommercial Trust to raise $828m

THE commercial real estate investment trust CapitaCommercial Trust (CCT) announced a cash call yesterday to raise about $828.3 million.

CCT unit holders can subscribe for one new unit in CCT for every existing unit held, at a price of 59 cents a piece. This is a 44.3 per cent discount to Thursday’s closing price of $1.06.

Ms Lynette Leong, chief executive of the trust’s manager CCT Management, said the rights issue will ‘reduce CCT’s gearing to the low end of our target gearing range of 30 per cent to 45 per cent through property market cycles’.

The net proceeds of the rights issue will be used mainly to reduce borrowings with the rest going to capital expenditure, asset enhancements and working capital.

Developer CapitaLand, which owns 31.4 per cent of CCT, will subscribe to its full entitlement for $260.4 million.

CapitaLand chief financial officer Olivier Lim said that when CCT approached CapitaLand for support, ‘we agreed wholeheartedly’.

‘I think the management has displayed a tremendous ability to refinance existing debts.’

In a separate announcement to the Singapore Exchange yesterday, CCT’s manager said it had obtained new independent valuations for properties owned by CCT here, including Capital Tower, Robinson Point and HSBC Building. The valuer is Jones Lang LaSalle Property Consultants.

The value of CCT’s Singapore properties, including its 60 per cent interest in Raffles City through RCS Trust, is $6 billion, as at yesterday.

This represents a downward revaluation of $681 million, or 10.15 per cent, from $6.7 billion as of Dec 1 last year.

Ms Leong said: ‘The key reason for the decline is due to a significant rental decline that the valuers had assumed. From December last year to June this year, they have factored the declines that are in line with the market.’

Earlier this year, CapitaLand and its listed retail trust CapitaMall Trust (CMT) announced rights issues.

CapitaLand had said that it will raise $1.84 billion in a one-for-two rights issue to build up its war chest to $6 billion. The issue was over-subscribed when the rights offer closed on March 12.

CMT said it would raise $1.23 billion in a nine-for-10 rights offer. Its offer was also over-subscribed, based on initial tallies on March 25.

CCT recently posted a 26.6 per cent rise in distributable income of $45.4 million for the three months ended March 31. Its distribution per unit was 3.24 cents, up from 2.59 cents in the same period last year.

DBS Bank, Cazenove & Co (Singapore) and United Overseas Bank have been appointed as joint lead managers and underwriters for the CCT cash call.

Trading in CCT’s shares was suspended yesterday.

Source : Straits Times – 23 May 2009