Corporate Events
CapitaCommercial Trust (CCT) has secured a three-year term loan of S$580m from DBS, Standard Chartered Bank, UOB and The Bank of Tokyo-Mitsubishi UFJ. The term loan will be drawn down to refinance S$580mcommercial mortgage-backed securities (CMBS) in Mar 09.
Stock Impact
This is the fourth refinancing package involving club deals in the local REITs market. Suntec REIT, Starhill Global REIT and Cambridge Industrial Trust have previously successfully refinanced via club deals.
The term loan was priced at an attractive credit spread of 150-200bp. The all-in interest cost for the facility is about 4%, lower than our assumption of 4.5%.
The CMBS was secured by CCT’s initial seven properties, namely Capital Tower, 6 Battery Road , Robinson Point , Starhub Centre, Bugis Village, Golden Shoe Car Park and Market Street Car Park. The new term loan will only be secured by Capital Tower . CCT will have a total of eight properties valued at S$2.8b, free of any encumbrance after this refinancing, which
provides greater financial flexibility.
The next major refinancing for CCT is S$650m two-year secured term loan due Jul 10.
Earnings Revision
We have fine-tuned our earnings model to reflect the impact of the latest refinancing.
Valuation/Recommendation
CCT focuses on Grade A office space and has a market share of 9% of the private office stock within Downtown Core. The stock provides an attractive 2009 distribution yield of 13.0% and trades at 68.2% discount to NAV/share of S$2.94. Maintain BUY with a target price of S$1.80.
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