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Moody's Rating For CapitaCommercial Trust

BackMar 04, 2009

CapitaCommercial Trust's Response:

CapitaCommercial Trust Management Limited, the Manager of CapitaCommercial Trust (CCT), has in place a proactive capital management strategy. In January 2009, the Manager announced that CCT has secured refinancing for its S$580 million commercial mortgage-backed securities (CMBS) due in March 2009. Four banks, namely, DBS Bank Ltd, Standard Chartered Bank, United Overseas Bank Limited and The Bank of Tokyo-Mitsubishi UFJ, Ltd, will provide a secured three-year term loan of up to S$580 million for CCT's refinancing.

The term loan will only be secured by a mortgage and other securities relating to Capital Tower. The Manager believes that the banks' willingness to lend to CCT with security over just one asset, Capital Tower, is an affirmation of their confidence in the quality and value of CCT's portfolio as well as its blue-chip tenant base. As a result, out of CCT's portfolio of eleven properties, eight properties with a total asset value of S$2.7 billion will be free of any encumbrance. This will provide the Manager with financial flexibility in managing CCT's capital and balance sheet.

There is evidence of strong organic growth within the CCT's portfolio. Current occupancy rate is about 97%. The average monthly passing rent of CCT's office properties is S$7.44 per square foot. This is significantly below market rentals which, according to industry statistics, were S$15.00 per square foot per month for Grade A office and S$12.90 per square foot per month for prime office in Singapore as at end-2008. The full effect of the rent reversions of leases committed in 2008 (when rentals were high), and full year income contributions from One George Street and Wilkie Edge (acquired in July and December 2008 respectively) will come through in 2009 and subsequent years. This will strengthen CCT's financial performance. The Manager has been actively engaging tenants for forward lease planning. As at 31 December 2008, 79% of the 2009 forecast gross rental income has been locked in with committed leases. This will ensure income stability for CCT's unitholders.

The Manager expects to be able to deliver CCT's forecast distribution per unit for 2009 of 12.34 cents, which is 12.2% higher than the DPU of 11.00 cents delivered in financial year 2008. This forecast was shown in the Unitholder's Circular dated 9 June 2008.

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