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• Yield-accretive acquisition of IMM Building
(IMM)
The yield-accretive acquisition of IMM in 2003
was central to CMT’s growth. The building was acquired at
an attractive price of S$264.5 million from International
Merchandise Mart Ltd, representing a 5.5 percent discount
to its appraised value of S$280.0 million*. With an attractive
property yield of 8.0 percent, the Manager sees potential
in asset enhancements at the mall to generate an even higher
yield.
With its strategic location near the Jurong East
Mass Rapid Transit (MRT) station in the western part of Singapore
as well as its large and diverse quality tenant base, IMM
provides a valuable diversification to CMT’s initial portfolio
which are located in the central, northern and eastern parts
of Singapore. With the addition of IMM, CMT also enjoys greater
income diversification as no more than 37 percent of the total
net property income will be derived from any one property.
(Before the acquisition of IMM, Tampines Mall accounted for
49 percent of the portfolio’s net property income.)
With this acquisition, CMT’s 2003 DPU forecast
was raised from 6.96 cents to an annualised 8.04 cents. In
fact, the actual DPU for the period 26 June to 31 December
2003 was 4.41 cents (annualised : 8.53 cents.)
* The valuation was carried out in February
2003 by Knight Frank Pte Ltd, which had utilised the Investment
Method and the Discounted Cash Flow Method as the primary approaches
to valuation and as a check, also relied on the Comparable Sales
Method.
IMM Building -
A yield-accretive acquisition
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Bukit Panjang Plaza -
Owned by CRS
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Rivervale Mall -
Owned by CRS
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Lot One Shoppers' Mall -
Owned by CRS |
• Investment in CapitaRetail Singapore Limited
(CRS)
CMT’s S$58 million (27 percent) stake in the Class
E Bonds issued by CRS, a private fund sponsored by CapitaLand
Commercial Limited (CCL), is expected to generate a minimum
coupon rate of 8.2 percent per annum. This is immediately
yield-accretive to CMT’s unitholders. This, together with
the upfront land premium payment for IMM, contributes to the
increase in forecast DPU for the year 2004 from the previous
forecast of 8.14 cents to 8.59 cents, an increase of 5.5 percent.
The three malls in CRS (Lot One Shoppers’ Mall,
Bukit Panjang Plaza and Rivervale Mall) were at the point
of CRS’s inception, producing property yields of between 6.0
to 6.4 percent. If they had been acquired directly by CMT
at that stage, would not have been immediately yield-accretive
to CMT’s forecast DPU. However, the characteristics of these
three malls fit within CMT’s investment strategy and asset
portfolio profile. At the same time, they have strong potential
for growth through asset enhancement initiatives.
With the investment in CRS, CMT has been granted
a right of first refusal to purchase these malls either individually
or collectively. This presents CMT with an opportunity to
establish a larger presence in the suburban retail property
market in Singapore.
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