News
CapitaCommercial Trust (CCT) Proposes to Start Trading In May 2004 Subject To Relevant Approvals
Forecast* for annualised distribution per CCT unit raised by 6.6%
Singapore, 16 March 2004 - CapitaLand Limited (CapitaLand) has despatched the Introductory Document relating to the listing of CCT on the Main Board of Singapore Exchange Securities Trading Limited (SGX-ST) and a shareholders' circular to CapitaLand shareholders. The aim of the circular is to seek approval from CapitaLand shareholders for the proposed distribution in specie of approximately 60% of the issued CCT units to CapitaLand's shareholders via a capital reduction at an Extraordinary General Meeting (EGM) to be held on 12 April 2004. Thereafter, approval from the High Court for the capital reduction will be sought.
Upon receiving the approvals, CapitaLand shareholders will receive CCT units in proportion to their shareholdings in CapitaLand. For every 1,000 CapitaLand shares held as at a books closure date to be announced, CapitaLand shareholders will get 200 CCT units (i.e. one CCT unit for every five shares held).
Shareholders will then hold two listed investments, namely CapitaLand shares and CCT units, traded separately on the SGX-ST. Trading of CCT units is expected to commence on or around 19 May 2004. The CCT units will be traded in board lots of 1,000 units. However, a temporary odd-lot counter will be set up for two calendar months from the date of commencement of trading to allow trading in board lots of 100 units.
CCT is Singapore's first commercial real estate investment trust with a portfolio of seven commercial properties variously located in their respective prime micromarkets in Singapore's Central Business District. All seven buildings are located adjacent or close to MRT stations. As at 31 December 2003, CCT's portfolio has a total value of about S$2.018 billion, a combined net lettable area of about 1.8 million square feet (169,080 square metres) and, in respect of the two car park properties, 1,867 car park lots. The seven properties are
Capital Tower
6 Battery Road
Starhub Centre
Robinson Point
Bugis Village
Golden Shoe Car Park
Market Street Car Park
68% of the total portfolio net lettable area are Grade A office buildings with about 40% (by appraised value) of the portfolio being freehold or 999-year leasehold. The remaining are primarily held on 99-year tenure leases. Quality tenants include Government of Singapore Investment Corporation Pte Ltd, Cisco Systems (USA) Pte Ltd, JPMorgan Chase Bank, Nomura Singapore Limited, Standard Chartered Bank and Starhub Pte Ltd, some of whom occupy their premises on long-term leases. The portfolio's committed occupancy rate was 94.9% as at 31 December 2003, which was substantially higher than the market average of 82.1%.
Qualifying unitholders stand to benefit from tax transparency as they receive distributions on a gross basis and pay tax subsequently at their own applicable income tax rate. In addition, following the 2004 Budget announcement on 27 February 2004, individuals who hold CCT units as investment assets will enjoy not only tax transparency, but also tax exemption on the distribution received from CCT.
However, this tax transparency and tax exemption does not extend to individuals who hold the CCT units through a partnership.
Forecast distribution per unit raised from 5.33 cents to 5.68 cents*
CCT has forecast a higher annualised distribution per unit of 5.68 cents per unit, for the period from 1 May to 31 December 2004 and the full year of 2005. This is 6.6% higher than the initial forecast distribution of 5.33 cents per unit that had been announced earlier on 6 February 2004.
The higher distribution is due to the favourable borrowing cost that has been locked in with the recent close of the US$340.6 million (S$580 million equivalent) rated Commercial Mortgage-Backed Securities (CMBS) issue backed by the seven commercial properties in CCT's portfolio.
CCT will thus enjoy optimal long-term Singapore dollar funding as well as a prudent interest rate structure which will provide 100% fixed rate hedging during the first two years, and an average of 63% hedging over five years. The strong investor demand for the CMBS is attributed to, inter alia, the high ratings from credit rating agencies and the diversified nature of the assets backing the notes. In addition, the manager of CCT, CapitaCommercial Trust Management Limited (CCTML), is committed to support, to the extent possible, stable cash distribution of 5.68 cents per unit to unitholders until December 2008 by receiving part or all of its management fee in units rather than cash.
Directors and Key Executive Officers of CCTML
The Board of Directors of CCTML consists of Mr Sum Soon Lim (Chairman), Mr Liew Mun Leong (Deputy Chairman), three other representatives of CapitaLand, namely, Mr Kee Teck Koon, Mr Lui Chong Chee and Mr Soong Hee Sang, as well as three independent directors, namely, Mr Stewart Fraser Ewen, Mr Fong Kwok Jen and Mr Ho Swee Huat.
Mr Sum Soon Lim is currently a Non-Executive Director of CapitaLand Limited and Corporate Advisor to Singapore Technologies Pte Ltd and Temasek Holdings (Private) Limited. Mr Sum is also a director of Chartered Semiconductor Manufacturing Ltd, Singapore Technologies Telemedia Pte Ltd, Singapore Health Services Pte Ltd and Singapore Press Holdings Ltd among others, and a Member of the Securities Industry Council.
Mr Soong Hee Sang has been appointed the Chief Executive Officer of CCTML. At CapitaLand Commercial Limited, Mr Soong managed the office and industrial property portfolios. CCTML's Finance Manager is Ms Ang Siew Yan, who has been transferred from CapitaMall Trust Management Ltd (the manager of CapitaMall Trust) to CCTML with effect from 16 March 2004.
CCT Growth Strategy
Said Mr Soong Hee Sang, CEO of CCTML, "Leveraging on CapitaLand's integrated property delivery platform, growth for CCT will be achieved through pro-active asset management and acquisition of yield-accretive properties. CCT will benefit from its relationship with CapitaLand by drawing upon CapitaLand's expertise and best practices in managing commercial properties, as well as significant knowledge and experience in commercial properties and property markets and extensive industry network in potential acquisitions. Of the 46 million square feet of office space in the Central Business District, the CCT portfolio accounts for only about 4%. There is therefore scope for CCT to grow via acquisitions."
Indicative Timetable
| Date & time of EGM | 12 April 2004 at 10.30 a.m.+ |
| Expected date for High Court approval of the capital reduction | 4 May 2004 |
| Expected books closure date for the distribution in specie | 14 May 2004 at 5.00 p.m. |
| Expected date for crediting CCT units into the securities accounts of shareholders | 18 May 2004 |
| Expected date for commencement of trading of CCT units on the SGX-ST | 19 May 2004 |
The timetable above is only indicative and the actual dates of the above events in italics will be announced in due course.
Analyst Contact
Harold Woo
Equity Markets
Telephone: 68233 210
Media Contact
Julie Ong
Corporate Communications
Telephone: 68233 541
Shareholder Helpline : 6536 1188
* The forecast and projected distribution per CCT unit is based on the assumptions set out in the section "Profit Forecast and Profit Projection" of the Introductory Document.
+ or as soon thereafter following the conclusion or adjournment of the Annual General Meeting of CapitaLand to be held at 10.00 a.m. on the same day and at the same place
--------------------------------------------------------------------------------
IMPORTANT NOTICE
Holders of units in CCT have no right to request CapitaCommercial Trust Management Limited (as manager of CCT) (the "Manager") to redeem or purchase their units for so long as the units are listed on the SGX-ST. It is intended that unitholders may only deal in their units through trading on the SGX-ST. The listing of the units on the SGX-ST does not guarantee a liquid market for the units.
You should read the introductory document dated 16 March 2004 issued in connection with the listing of CCT on the SGX-ST ("Introductory Document") carefully before taking any action in respect of the units in CCT or deciding whether to purchase units in CCT in the secondary market.
This press release is not an offer of securities for sale in the United States. Securities may not be sold in the United States unless they are registered or are exempt from registration. Neither CapitaLand Limited nor the Manager intends to register the introduction of the units in the United States or to conduct a public offering in the United States. Any public offering of securities to be made in the United States will be made by means of a prospectus that will contain detailed information about CapitaLand Limited, the Manager, CCT and/or their respective management, as well as financial statements. Copies of this press release are not being, and should not be, distributed in or sent into the Un
