CapitaLand Integrated Commercial Trust (CICT)

[CY09]

Dont think whichever company that takes over wework Singapore subsidary will maintain the 14 locations. I have been to wework/spaces/justco and what I can say is that the takeup area for their avaliable spaces has worsened since the days of 2022 when i went to meet a vendor who uses hot desking space to meet the extra projects dished out to them.

With so much vacancies, I do not think business is profitable as well. Am expecting if Wework singapore survives, it will only continue leasing a much fewer number of locations.

[EnSabahNur]

An update to the Gallileo property in Frankfurt, where Commerzbank is giving up the lease, but the English Theatre Frankfurt's status was uncertain.

This looks like a happy ending for everyone.

Also unconfirmed, it sounds like the ECB may be taking up the lease that Commerzbank is giving up.

https://adragonhoard.blogspot.com/2024/0...perty.html

[weijian]

15years after it first opened, Ion Orchard is finally in the hands of a Capitaland REIT. Beyond the usual stuff (financial engineering, rights issue etc), 2 things that are slightly different stands out:

(1) CICT will acquire the 50% stake in the property manager, since the way the JV is structured and uses an internal property manager). IIRC, it is quite similar to NTUC property arm (Mercatus Co-operative)'s sale to Link REIT in 2023.

(2) Further upside from tax exemption has not been accounted for in the accretive earnings calculation.

PROPOSED ACQUISITION OF 50.0% INTEREST IN ION ORCHARD AND ION ORCHARD LINK

Through the Proposed Acquisition, CICT will indirectly hold 50.0% of OTH and IOL which amounts to a 50.0% stake in the Property and a 50.0% stake in OTD, the property management function of the Property.

The pro forma DPU accretion may potentially be higher due to the possibility of tax savings should there be a conversion of the Property holding entities to allow for tax transparency, along with the possibility of a total payout from the Property. The potential conversion of the Property holding entities for tax transparency purposes is subject to the JV Partner’s agreement, and the approval of the relevant authorities.

https://links.sgx.com/FileOpen/CICT_Acqu...eID=817751

[weijian]

CICT will be holding its EGM next week to approve the RPT of 50% of Ion Orchard from its Sponsor.

Question3 below is key as it basically indicates that with the acquisition as it is, DPU (enlarged basis) is -1.5%, a good indication of the weighted cost of capital in the current environment. Putting the tax benefit aside, the REIT manager has the discretion to adjust "mgt fees paid in units"% to get the desired DPU accretion.

Extraordinary General Meeting to be held on Tuesday, 29 October 2024 Responses to Substantial and Relevant Questions

From the table provided in the circular/slides, it appears that tax transparency would have a major impact on whether the deal is ultimately DPU accretive, or otherwise and the quantum of DPU accretion.

Can you advise and elaborate on the requisite steps and necessary conditions to secure tax transparency? How confident is CICT that it will be able to secure tax transparency? Please advise and elaborate.

Would you please also explain how the quantum of Enlarged CICT Management Fees in Units (MFU) will be determined? Would it be 50%, 52%, 60%, 70%? Please advise.

https://links.sgx.com/FileOpen/20241024_...eID=822840

[weijian]

From CICT's 9M24 update, its weighted cost of debt is ~3.6% (it was ~3.3% 1 year ago). Some of its MTN issued in the last 2 years were on the wrong side of 3.XX% and so there is a high chance weighted cost of debt has not peaked yet.

Current asset is been divested at BV and with all things been equal (regardless of frictional costs etc), the exit yield is below 3.5%. Therefore if the proceeds are used to pay down debt, that would be slightly accretive towards its "distributable income". Looks like a good move I suppose.

DIVESTMENT OF 21 COLLYER QUAY

After taking into account the Divestment related expenses (including the divestment fee of approximately S$3.4 million1 payable to the Manager) and certain completion adjustments, the net proceeds from the Divestment would be approximately S$681.7 million. This will provide CICT with greater financial flexibility to repay debt, to finance any capital expenditure, asset enhancement works and investments and/or to finance general corporate and working capital requirements. Based on the annualised net property income for the period ended 30 September 2024 and the Consideration, the exit yield is below 3.5%.

https://links.sgx.com/FileOpen/20241112_...eID=824808