The portfolio’s value of office real estate trust (REIT) fall 10.15 percent made CapitaCommercial Trust (CCT) decided to raise $828.3 million due to an issue in rights, which will lessen the gearing. According to CCT, Singapore properties lost an estimated amount of $640,000 yesterday since December 2008. The poorer value of CCT’s portfolio could have resulted to REIT’s gearing to 38.3 percent from 43.1 percent. Although with the impending rights issue, it went down 30.7 percent. Singapore’s Monetary Authority has prepared 60 percent inception for REIT’s gearing.
Lynette Leong, chief executive of the REIT’s manager, said that the rights issue will lessen CCT’s gearing to the bottom of their aimed gearing range of 30 percent to 45 percent in the course of property market cycles. Earnings from the rights issue will help develop CCT’s fiscal flexibility by enhancing its credit profile and improving its balance sheet.
“It seems CapitaCommercial is building up capacity to refinance debt, and creating a buffer against potential asset writedowns,“ said David Lum, an analyst from Daiwa Institute of Research. However, CCT has said last April that they have no more refinancing to deal with for the rest of the year.
“We have achieved our refinancing objectives for 2009 by securing refinancing for borrowings in advance of debt maturity dates. The rights issue is being done from a position of strength,” Leong added. She also said that the profits will used to settle upcoming debt, in precedence on the debt due in 2010, which amounts to around $885 million.
In order to achieve the money, CCT will auction off its 1.4 billion shares for ¢59 each in a one-for-one rights offering. This price proposal embodies 44 percent mark down to the stock’s recent traded $1.06 amount. At the same time, the proposed price is a 61 percent discount to CCT’s net asset value, $1.52/unit. CapitaLand will receive its total claim of rights issue in an estimated sum of $260 million, considering the fact that they have 31.4 percent wager in CCT.
Several revelations were made yesterday. The property’s portfolio went down from December 2008 to May 2009 as the market rents experienced downfall. One George Street, Capital Tower and Six Battery Road, a few of the most important owned properties in CCT’s portfolio, also experienced a harsh fall with 11.9 percent, 9.4 percent and 13.8 percent, in that order.