The manager of CapitaLand Integrated Commercial Trust (CICT) is acquiring from an unrelated third-party a 50.0% interest in 101 – 103 Miller Street and Greenwood Plaza, an iconic integrated development in North Sydney Central Business District (CBD), Australia, for a purchase price of A$422.0 million ($409.3 million).
The property has a yield of 4.9%, based on its annualised 1H2021 net property income (NPI) and a passing NPI yield of 5.6% . CICT’s total acquisition outlay of A$454.4 million for this acquisition comprises the purchase price of A$422.0 million, other expenses of A$28.2 million and acquisition fees of A$4.2 million. It will be funded by a combination of debt, divestment proceeds and remaining proceeds of about $95.9 million from the private placement closed on Dec 8.
On a pro forma annualised 1H2021 distribution per unit (DPU) basis, assuming that this acquisition was completed on Jan 1, 2021, the property was held and operated till June 30, 2021 and the funding mix is as detailed above, the DPU accretion is expected to be 1.0%. The transaction is expected to be completed in 1Q2022.
101 Miller Street and Greenwood Plaza have a committed occupancy of 94.9% as at Oct 20. Building occupants include high quality tenants from the government, financial services and insurance sectors. The property is strategically located in the heart of the CBD, which is set to benefit from the urban renewal plans to rejuvenate North Sydney. It boasts excellent connectivity, with a seamless link to the North Sydney train station via Greenwood Plaza.
This acquisition, coupled with the proposed acquisition of 66 Goulburn Street in Sydney CBD and 100 Arthur Street in North Sydney CBD announced by CICT on Dec 3, have a total property value of approximately A$1.1 billion. This accounts for approximately 5% of CICT’s pro forma portfolio property value. The three Sydney assets are expected to provide a pro forma annualised combined 1H2021 DPU accretion of 2.8%.
Tony Tan, CEO of the manager says, “The proposed acquisition marks another step forward in CICT’s portfolio reconstitution journey to drive sustainable growth and diversify income sources through accretive acquisitions and recycling capital to higher yielding assets.”
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“The total investment of approximately A$1.1 billion in the three Sydney properties will provide CICT with a new engine of growth in a developed market with strong fundamentals, and the potential to ride on the city’s gradual recovery and rejuvenation in the mid to long term,” he adds.
CICT’s Singapore assets account for approximately 91% of its total portfolio property value. Given CICT’s predominant focus on Singapore, Tan emphasises that the REIT will continue to seek growth opportunities within this home market. Post-Proposed Acquisition, and after the purchase of 66 Goulburn Street and 100 Arthur Street in Sydney, CICT’s aggregate overseas portfolio exposure in Sydney, Australia and Frankfurt, Germany will stand at approximately 9%, well within the REIT’s guidance of an overseas exposure to be no more than 20%.
Units in CICT closed at $1.98 on Dec 23.
