CCT

CCT: the Business Times reported that CCT may be in talks to acquire Twenty Anson, a prime office asset in the fringe CBD area, for $430m. This translate to $2,120 psf, inline with current mkt prices. The asset was completed in late 2009 with renewals expected in 2013/14. Current passing rent was reported to be $6.50 psfpm, which would provide NPI yield of 2.8%. Stanchart notes this would not be accretive to CCT’s 2012 DPU, therefore potentially, income support could be included to boost the near term yield until reversions bring rental income to the current market level of $8 psfpm.
The house notes, even at $8 psfpm rent (providing 3.4% NPI yield), it estimates the acquisition to be only 1.07% accretive to 2012 DPU. Says, gearing would likely rise from current 30% to 35%. StanChart believes the market would not like CCT to make any acquisition at this point in the cycle, especially when most market watchers expect office capital values to fall 25-30% in the coming 12 months.
The house has an Outperform rating with TP $1.30.