Corporate Capital Trust Inc(CCT)
CCT to sell Twenty Anson for S$516mn, 19% above last valuation as at 31 Dec 2017.
Favourable exit yield of 2.7%, vs 3.2%-3.4% for previous divestments in 2017.
Decent IRR of c.7% achieved over 6-year ownership period of Twenty Anson.
Expect loss of rental income to be topped up with divestment proceeds.
Maintain Accumulate with unchanged TP of S$1.88.
What is the news?
CapitaLand Commercial Trust (CCT) has agreed to sell Twenty Anson, a twenty-storey primeoffice building in Tanjong Pagar to an unrelated third party for S$516mn. The saleconsideration is 19% above the S$433mn valuation as at 31 December 2017. Twenty Ansonaccounted for about 5.5% of CCT’s FY17 net property income (NPI). Completion of sale isexpected in 3Q18.
The Positives
+ Favourable exit yield of 2.7%. This exit yield based on Twenty Anson’s NPI of S$13.8mnfor the 12 months preceding 31 March 2018, is even more attractive than the 3.4% and3.2% exit yields for Wilkie Edge (WE) and One George Street (OGS) sold by CCT last year.
+ Further showcasing ability to rejuvenate portfolio and effectively recycle capitalThrough the 3 local divestments (WE, OGS, TE) and 1 acquisition (Asia Square Tower 2AST2) since 2017, Management has repeatedly demonstrated the ability to effectivelyrecycle capital and rejuvenate the portfolio for enhanced returns. Using the latest locaacquisition as example, AST2 had a yield on cost of 3.6%, based on committed occupancyof 88.7%. The 3 divestments were at lower exit yields, despite having shorter (or similarland leases remaining. This effectively means capital has been effectively recycled into ahigher yielding asset, with comparable or better potential for growth in the vibrant MarinaBay district.
+ Decent IRR achieved over 6-year ownership period of Twenty Anson. Recall CCTpurchased Twenty Anson for S$430mn in 2012 with a yield on cost of c.4%. Throughout the6-year holding period, CCT would have achieved unle……[Phillip Securities (Hong Kong) Limited]
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