Twenty Anson Was Sold on The Back of Higher Interest Rates
We recently revealed that the CapitaLand Commercial Trust (CCT) has sold the Twenty Anson office building. According to source, the grade A office building was sold because of the rise in the interest rates.
Twenty Anson is a 20-storey office building and it was sold for $516 million. CapitaLand Commercial Trust (CCT), belonging to CapitaLand, sold the building in the Tanjong Pagar region for 19.2% higher its price. It was valued at $433m but it was sold because of the rise in interest rates in the Singapore. The building was purchased for $430m back in 2012 and this only reveals that the company, CCT, made a good profit on its sale.
However, Mervin Song of DBS Equity Research is of the opinion that the selling price shows a NPI yield of 2.7% according to the 12-month income of the property. He felt this was more of a surprise.
Adding further, he said that there has been market speculation that the Commercial Trust division of CapitaLand, CCT, might end up disposing this property as it was looking for the unlocking value and then tried to reconstitute its portfolio as well. He said they were eyeing the locations in the prime areas of Singapore and they want to reduce their overall exposure to properties that were in the fringe CBD locations of the Singapore.
In the last 12 months, the company sold 50% interest in the One George Street and the Wilkie Edge, which had exit NPI yields of 3.2 and 3.4 percent respectively. These were already 17 and 39 percent higher than their book values. Once the company got the money from these, it then went to reinvest in the Galileo and Asia Square Tower 2 at NPI yields of 4.1% and 3.6% respectively.
It seems like CCT was on the move to make money from its sale to use that money to get something more viable and in more central and prime locations.
The company also began to redevelop the Golden Shoe Car Park in a massive 51-storey integrated development with retail space, Grade A offices and serviced apartments.
Mervin, while commenting further on the situation, also said that now, as we go forward, we are expecting the CCT to use the proceeds from its recent sale of Twenty Anson to reposition its portfolio and increase its presence in Europe. The Galileo acquisition shows that the company is interested in Europe and they feel it will continue to move in that direction.
As in the case of the last two properties that the company recently sold, there were additional funds that the company made with these sales and it is clear what it’s objective is: The company wants to use its profits to tap deeper into locations that are more strategic in order to make its portfolio stronger.
Good for CCT, which is making bold moves with the sale and purchase of its very valuable assets.