Monday, July 19, 2010

CapitaCommercial Trust

CapitaCommercial Trust (CCT) will sell Starhub Centre - located behind Centrepoint SC - for S$380m (S$1,140psf GFA) to Frasers Centrepoint. FC will redevelop the building into a high-end mixed residential & retail project. Sale price of S$380m is within market expectations and will net surplus of S$109m to CCT or implicitly S 3.9c/share. We view the sale positively as CCT will not dilute its focus in office sector by not participating in the redevelopment.

CCT will either use the net proceeds of cS$375m to repay debt (current gearing at 39%) or fund acquisitions. CCT implied FY10E DPU yield at Friday's closing price is 5.7%, which compares with KREIT's 5.9%.

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