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CapitaLand Commercial Trust (CCT) has made its maiden foray into Europe, with the acquisition of a 94.9 percent stake in a Grade A commercial property in Frankfurt, Germany.
CCT and CapitaLand, which will hold the remaining 5.1 percent stake, will acquire the freehold property dubbed Gallileo for €356 million (about S$569.6 million).
Gallileo’s agreed property value represents a 1.4 percent discount to the open market value of €360.9 million (about S$577.4 million) as at 31 March.
CCT intends to fund its share of the acquisition cost via “a fully-underwritten private placement of net proceeds and bank borrowings”.
Located in Frankfurt’s prime central business district, Gallileo “offers a strategic fit with CCT’s existing portfolio. Providing income stability with an established anchor tenant on a long-term lease, the acquisition offers an attractive net property income yield of 4.0 percent,” said CCT CEO and manager Kevin Chee.
“This accretive acquisition is expected to increase CCT’s Q1 2018 DPU by 1.4 percent to 2.15 cents, from 2.12 cents on a pro-forma basis. Post-acquisition, CCT’s portfolio value will increase from S$10.4 billion to S$10.9 billion with a fiver percent exposure to Germany.”
However, Chee noted that CCT will remain “predominantly Singapore focused and will look to allocate between 10 percent to 20 percent of its deposited property overseas”.
Meanwhile, Gerald Yong, CapitaLand deputy chief investment officer and head of CapitaLand International, revealed that Gallileo is CapitaLand’s second office acquisition in Germany in less than six months, following its purchase of the Main Airport Center in Frankfurt last December.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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