CapitaLand Commercial Trust to buy 94.9% interest in German freehold office for $387.1m

MAC is a multi-tenanted office with a total net lettable area (NLA) of approximately 60,200 sqm.

CapitaLand Commercial Trust (CCT) has entered into an agreement to acquire an effective 94.9% interest in the holding companies of German freehold office property Main Airport Center (MAC) from CapitaLand and Lum Chang Holdings, an announcement revealed.

The proposed transaction is based on an agreed property value of approximately $407.8m (EUR265m) for MAC on a 100% basis, which translates to about $387.1m (EUR251.5m) for the 94.9% interest. Including acquisition-related expenses, CCT’s total acquisition outlay is estimated at $390m (EUR253.4m).

MAC is a multi-tenanted office building in Frankfurt with a total net lettable area (NLA) of approximately 60,200 sqm. Of this, approximately 53,900 sqm is high-specification office space and the remaining 6,300 sqm is ancillary space housing a conference hall, meeting rooms and 1,510 car park lots. The committed occupancy of the property was approximately 90% as at 30 June.

CapitaLand will continue to hold a 5.1% interest in the holding companies post-transaction. This accretive acquisition will mark CCT’s second asset acquisition in Frankfurt and increase CCT’s overseas exposure from 5% to 8% of its portfolio property value, the firm said. Apart from MAC, CapitaLand owns a 5.1% stake in Gallileo, a Grade A freehold commercial property in Frankfurt’s banking district, of which CCT owns the other 94.9%.

The transaction is expected to be distribution per unit (DPU) accretive in the range of 1-2.5% based on pro forma H1 2019 DPU. The resultant pro forma aggregate leverage for CCT would be 35% to 37% as at 30 June. The acquisition of MAC is also expected to deliver a net property income (NPI) yield of 4%.

According to Soo Kok Leng, chairman of CapitaLand Commercial Trust Management (CCTML), post-acquisition, the proportion of Singapore assets in CCT’s portfolio will stand at 92%, whilst overseas exposure will rise to 8% from 5% previously.

“This is aligned with our guidance of having up to 20% of CCT’s portfolio property value overseas in our pursuit for sustained growth. CCT remains predominantly Singapore-focused. Following the completion of CapitaLand’s merger with Ascendas-Singbridge, in addition to CapitaSpring, CCT can look forward to a larger pipeline of projects in Singapore from its sponsor,” he said.

Post-acquisition, CCT’s portfolio property value will increase from $10.7b to $11.1b. The acquisition is conditional upon CCT’s unitholders’ approval, which is expected to be obtained in September 2019. The transaction is expected to be completed in Q3 2019.