CapitaLand’s commercial REIT is selling a mixed-use development in central Singapore for S$280 million ($202.7 million), in a signal that the city-state’s sluggish commercial property market may be picking up.
CapitaLand Commercial Trust (CCT), a real estate investment trust managed by a unit of property giant CapitaLand, will sell Wilkie Edge, a 12-storey integrated complex combining office and retail units with serviced apartments to homegrown construction group Lian Beng, the trust’s manager announced this week. The transaction is being handled by HSBC Institutional Trust Services and is expected to be completed in September.
CCT Offloads a Fully-Leased Project for a 53.3% Markup
Wilkie Edge is located near the Little India district at the intersection of Wilkie Road and Selegie Road, a short walk away from the Dhoby Ghaut and Little India MRT interchanges. Completed in 2008, the project has a net lettable area of 154,528 square feet and was fully occupied as of the end of March, with major tenants including Kaplan Learning Institute and Tower Research Capital, a financial services firm. The property also includes the 154-unit Citadines Mount Sophia serviced residence, which under the terms of the deal will be managed under CapitaLand’s Ascott division until 2105, when the property’s leasehold term expires.
“The sale of Wilkie Edge is in line with the Trust’s portfolio reconstitution strategy to rejuvenate its portfolio and recycle capital to give us the financial flexibility to invest in more attractive growth opportunities,” said Lynette Leong, CEO of CapitaLand Commercial Trust Management Limited, the trust’s manager in a statement.
The sale will bring CCT a 53.3 percent markup over the S$182.7 million price the trust paid for the commercial asset in 2008, with Wilkie Edge achieving a net property yield of 3.39 percent in the 12 months ending March 31st, according to CCT’s statement. The transaction price also represents a 39.3 percent premium over a S$201 million December 2016 valuation of the property.
Singaporean Trust Fine Tunes Its Portfolio
As the commercial trust affiliate of the largest developer in southeast Asia, CCT specializes in landmark office buildings and mixed-use developments in Singapore. The Wilkie Edge divestment leaves the trust with a portfolio of nine commercial properties with a total value north of S$8 billion ($11.1 billion), all in Singapore.
Among its trophy assets is Raffles City Singapore, a $4.4 billion mixed-use development in the heart of the city that includes a 73-storey hotel tower, which CCT jointly owns with CapitaLand Mall Trust. Nearby in the downtown core, the trust also owns CapitaGreen, a high-tech premium office tower valued at $2.2 billion.
This past May, CCT divested One George Street, a prime downtown office building, into a limited liability partnership for S$1.18 billion, retaining a 50 percent stake in the property.
CCT’s partner in the Wilkie Edge deal, Lian Beng, is among a number of Singaporean developers with an appetite for investment properties that offer recurring income. Among other recent deals, the listed construction and development firm purchased four large-format, fully leased retail properties for S$151 million last July.