Capitaland Commercial Trust is the biggest commercial office trust in Singapore. They already owned 40% of CapitaGreen, a building they sold to Capitaland to be redeveloped into an office building.
Last week, they proposed to purchase the other 60% of CapitaGreen they do not owned yet.
The first thing that hit me was that this purchase is not a tiny purchase. The 60% stake is valued at SG$960 mil. In contrast the valuation of Frasers Commercial REIT is SG$2 bil.
And this whole acquisition is funded by debt.
This will bring the gearing of CCT (Current Dividend Yield 5.9%) up from 30% to 37.7%.
The shareholders of CCT would have to thank the manager for their past conservative nature. Had they always been gearing up to purchase, this purchase would not have been possible.
