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SINGAPORE: CapitaCommercial Trust (CCT) has been given a call option to buy the One George Street Building for nearly S$1.2 billion.
The purchase price works out to S$2,600 per square foot of net lettable area.
CCT said the acquisition will benefit its unit holders.
Prominently located in the core central business district, the One George Street building is just walking distance from the Raffles Place and Clarke Quay MRT stations.
And CCT said the property will add value to its portfolio.
As part of the deal, CapitaLand will provide a yield protection to CCT by ensuring a minimum net property income of some S$50 million annually over five years.
Lynette Leong, CEO of CapitaCommercial Trust Management Limited, said: "It will be yield accretive and offers good potential for rental upside. In addition, the yield protection that is granted by CapitaLand of 4.25 per cent per annum over 5 years, will help us to eliminate all downside risks. It provides a floor as well as give CCT all the upside.
“Given that One George Street is a Grade A office building, it will further enhance CCT's portfolio as well as increase the income contribution from Grade A office assets from 43 per cent to 55 per cent.”
CCT will have the right to buy the three-year-old building, subject to due diligence and approval from unit-holders.
The trust plans to fund the purchase through debt and it will not place out new units or do a rights issue.
However, it was unable to release further details on funding.
CCT said the property will increase its income contribution from Grade A office assets to 55 per cent.
And it will also help enhance its tenant mix.
It is currently 100 per cent occupied by tenants that include The Royal Bank of Scotland, law firm WongPartnership and insurer Lloyd's of London.
Ms Leong continued: "We will be able to diversify the income stream from various sources and also with the increase in asset size of CCT, we will be able to generate economies of scale and get better pricing when we deal with contractors and suppliers."
One George Street has a net lettable area of 44, 7999 square feet.
It is one of the newest premier commercial properties in Singapore catering to the financial services industry and multinational companies. - CNA/vm
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