CapitaLand Mall Trust to strengthen its leadership position as Singapore’s largest REIT with proposed acquisition of Bedok Mall
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Singapore, 14 July 2015 – CapitaLand Mall Trust Management Limited (CMTML), the manager of CapitaLand Mall Trust (CMT), is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited, the trustee of CMT, has entered into a sale and purchase agreement with Brilliance Residential Pte. Ltd. and CMA Singapore Investments (3) Pte. Ltd., wholly-owned subsidiaries of CapitaLand Limited, to acquire the entire unitholding interest of Brilliance Mall Trust, which owns Bedok Mall. This acquisition is based on an agreed value of Bedok Mall of S$780.0 million and other net assets of Brilliance Mall Trust of about S$3.1 million.
Opened in December 2013, Bedok Mall is the first major mall in the heart of Bedok Town Centre, serving Singapore’s largest estate of about 300,000 residents as well as other residents in the east of Singapore. It is part of an integrated retail-residential-transport development, which also includes the 583-unit condominium Bedok Residences developed by CapitaLand that received its Temporary Occupancy Permit in May 2015. The mall’s Basement 2 is directly linked to the Bedok MRT station while the new air-conditioned Bedok bus interchange, which began operations in January, is integrated with the mall on Level 2.
With a net lettable area of approximately 222,500 square feet (sq ft), Bedok Mall is about the size of Junction 8, with over 200 shops spread across four floors from Basement 2 to Level 2. Its key tenants include Fairprice Finest, UNIQLO, Best Denki, Canton Paradise, Popular, McDonald’s and Din Tai Fung. As at 31 December 2014, Bedok Mall has a committed occupancy of 99.3%.
Bedok Mall’s property yield of approximately 5.1%1 is in line with CMT’s distribution yield. The proposed acquisition will grow the income of the CMT portfolio and increase its revenue diversification.
Including acquisition-related expenses, CMT’s total acquisition outlay is expected to come up to about S$795.0 million. CMT intends to leverage on its strong balance sheet to fund this acquisition. On top of issuing 72 million new units2 as partial consideration to CapitaLand, it plans to finance the transaction by using a mixture of new debt and/or equity fund raising, the combination of which will be determined at a later date. The transaction is expected to be completed by the fourth quarter of 2015.
Mr Danny Teoh, Chairman of CMTML, said: “Bedok Mall is a strategic component of Bedok Town Centre’s integrated retail-residential-transport development, which is leading the revitalisation of Bedok into an exciting hub in the East Coast under the Government’s Remaking Our Heartland programme. The mall currently receives an average of 1.4 million shoppers every month. This number is expected to grow as Bedok Town Centre undergoes further rejuvenation with the recent opening of the new Bedok interchange food centre with adjoining multi-storey car park. There will also be upcoming amenities such as a town plaza for community events with a heritage corner within, and an integrated community and sports complex. The proposed acquisition of Bedok Mall will enable CMT to extend its presence in the eastern part of Singapore beyond Tampines Mall, and allow CMT to further capitalise on the remaking of the East Coast area.”
Mr Wilson Tan, CEO of CMTML, said: “The proposed acquisition of Bedok Mall complements CMT’s current portfolio of mainly suburban malls catering to the necessity shopping segment, which has proven to be resilient through different economic cycles. It will increase CMT’s asset size from S$10.2 billion (as at 31 March 2015)3 to about S$11.0 billion. The proposed acquisition is also part of our strategy to reconstitute and optimise CMT’s portfolio. With our proven track record in proactive mall and asset management, we are confident that the addition of Bedok Mall will further enhance value for our unitholders and reinforce our leadership position as Singapore’s largest real estate investment trust (REIT).”
Valuation and conditions for the acquisition
As CapitaLand is a controlling unitholder of CMT, the acquisition is considered to be an interested person/party transaction (IPT) under the Listing Manual of Singapore Exchange Securities Trading Limited (SGX) and the Property Funds Appendix of the Code of Collective Investment Schemes. As the value of the acquisition exceeds 5% of CMT Group’s latest audited net tangible assets, the acquisition is subject to the approval of CMT’s unitholders at an extraordinary general meeting which will be held at an appropriate time.
According to the Property Funds Appendix, in the case of an IPT, two independent valuations of the property must be obtained, with one of the valuers commissioned independently by the trustee. As at 30 June 2015, Knight Frank Pte Ltd – an independent property valuer appointed by CMTML – has valued Bedok Mall at S$779.0 million, while DTZ Debenham Tie Leung (SEA) Pte Ltd – an independent property valuer appointed by the trustee – has valued Bedok Mall at S$781.0 million.
Summary of Bedok Mall
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1Computed by dividing Bedok Mall’s FY2014 net property income (NPI), adjusted for certain amortised expenses, by the agreed value of Bedok Mall of S$780.0 million. 2Units will be priced at the 10-day Volume Weighted Average Price immediately preceding the date of completion of the transaction. 3Adjusted for cash utilised to repay US$500.0 million Euro-Medium Term Notes (EMTN) issued by CMT MTN Pte. Ltd. under its US$3.0 billion EMTN Programme on 8 April 2015, as announced.