UPDATE: CICT and CapitaLand Investment fund to acquire 79 Robinson Road for S$1.26B

CLI’s portfolio of assets include new economy assets in its core markets of Singapore, China and India, such as Grade A office developments Capital Tower and 79 Robinson Road (pictured). Credit: CapitaLandCLI’s portfolio of assets include new economy assets in its core markets of Singapore, China and India, such as Grade A office developments Capital Tower and 79 Robinson Road (pictured). Credit: CapitaLand

This item was originally published on Friday, 25 March 2022 at 18:48 SGT; it has since been updated with additional details.

CapitaLand Integrated Commercial Trust (CICT) and CapitaLand Open End Real Estate Fund (COREF), a newly established discretionary fund managed by CapitaLand Investment (CLI), have entered a deal to acquire the office property at 79 Robinson Road in Singapore for S$1.26 billion. 

CICT will hold 70 percent of the property holding company, Southernwood Property (SWP), while COREF will hold 30 percent, the two said in a filing to SGX Friday. 

Currently, SWP is 65 percent owned by CLI, while a joint venture between Mitsui & Co. and Tokyo Tatemono hold the remainder, the filing said. 

CICT’s funding

CICT said it will fund its share of the acquisition via a combination of the divestment proceeds from the sale of JCube and debt; CICT said its outlay for the acquisition will be around S$869.2 million. The deal is expected to post a distribution per unit (DPU) accretion of 2.9 percent on a pro forma basis, the filing said.

Tony Tan, CEO of CICT’s manager, said the investment reinforces the REIT’s Singapore focus. 

“Coupled with Capital Tower, another prime office property across the street from 79 Robinson Road, the acquisition will propel CICT to a dominant position in Singapore’s Tanjong Pagar office sub-market with more than 1 million square feet of net lettable area including ancillary retail space,” Tan said in the statement. 

“We are also pleased to partner with COREF in this transaction, which has enabled us to optimise our funding arrangements. The acquisition is well-timed in view of the upturn in Singapore’s prime office market and we are confident of further improving the building’s NPI [net property income] yield through proactive leasing of the remaining space.”

The property has a net property income yield of 4.0 percent, based on pro forma annualised January 2022 net property income, the filing said. 

COREF

For COREF, the deal is its first acquisition in Singapore, but its third overall after investing in two Japan assets, the filing said. COREF’s focus is on a long-term strategic exposure to institutional grade, income-producing assets in Asia’s developed markets, the filing said. The fund is targeting raising US$1 billion to US$1.5 billion after an initial three-year build-out period, the filing said, noting its on track for its first closing of S$500 million in commitments. 

CLI is committed to holding a 10 percent long-term stake in COREF, the filing said.

79 Robinson Road

The property at 79 Robinson Road was completed in 2020 and has 29 storeys. It has a committed occupancy of 92.9 percent as of end-December, with tenants including multinational companies from the banking, legal, financial services, aviation, IT and other sectors, the filing said.

The site, in Singapore’s central business district (CBD), is at the junction of Robinson Road and Maxwell Road, located near the Tanjong Pagar MRT station; a direct access link to the station via an underground pedestrian link is planned, the filing said.

The transaction is expected to be completed in the second quarter of this year, the filing said. 

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