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CapitaLand Launches S$580 Million Rated CMBS For CapitaCommercial Trust (CCT)

BackMar 02, 2004

Follows CapitaRetail Singapore's recent S$506 million CMBS issue for retail properties

CCT CMBS is largest issue rated by 3 agencies in Asia ex. Japan

 


CapitaLand Limited ("CapitaLand") has today launched a US$343 million (S$580 million equivalent) rated Commercial Mortgage Backed Securities ("CMBS") issue backed by the initial portfolio of seven properties under CapitaCommercial Trust ("CCT"). The CMBS will be issued by Silver Loft Investment Corporation Limited ("Silver Loft") as US dollar denominated Notes which are backed by the cashflow and assets from CCT's initial seven properties, namely Capital Tower, 6 Battery Road, Starhub Centre, Robinson Point, Bugis Village, Golden Shoe Car Park, and Market Street Car Park.
This CMBS transaction represents CCT's maiden fundraising. Silver Loft will swap the proceeds into Singapore dollars and lend the proceeds to CCT. CCT will thus enjoy optimal long term Singapore dollar funding as well as a prudent interest rate structure which will provide 100% fixed rate interest hedging during the first two years, and an average of 63.8% interest rate hedging over the life of the transaction. Upon successful close of this transaction, CCT's debt to deposited property will be approximately 28.1%.

Said Mr Liew Mun Leong, President and CEO of CapitaLand, "This CMBS is another significant milestone in the development of Singapore's real estate capital market. Like the creation of CapitaMall Trust in 2002 and the recently proposed CCT, CapitaLand continues to increase the depth and breadth of its access to the global capital markets through the use of various financial instruments. The CMBS issue is noteworthy as it is the largest rated CMBS issue out of Singapore todate. It is also Singapore's first rated commercial office CMBS. The launch of this CMBS is timely given the tremendously successful close of CapitaRetail Singapore's S$506 million CMBS issue just a few days ago. This CMBS transaction continues to build CapitaLand Financial Limited's successful track record as advisor to numerous debt capital market issues for the wider CapitaLand group."

Details on the CMBS
The Notes will be issued via special purpose company Silver Loft Investment Corporation Limited in four classes, all of which will be rated by the three international rating agencies, namely Fitch, Moody's and Standard & Poor's. The ratings are as follows :

Class: A1 Indicative Size: US$ 90 million Rating: AAA/Aaa/AAA

Class: A2 Indicative Size: US$ 147 million Rating: AAA/Aaa/AAA

Class: A3 Indicative Size: US$ 47 million Rating: AA/Aa2/AA

Class: A4 Indicative Size: US$ 59 million Rating: A/A2/A


Total US$343 million or S$580 million equivalent All the Notes carry quarterly coupon payments and have an expected maturity in March 2009. The Class A2 Notes carry an early redemption feature for a period commencing at the end of year 2 until the expected maturity in March 2009. Applications have been made to list the notes on the Singapore Exchange Securities Trading Limited ("SGX-ST") and the Luxembourg Stock Exchange.

HVB Group is the Lead Manager, Global Coordinator and Joint Bookrunner for the CMBS issue, while DBS Bank and JPMorgan are the Co-Managers and Joint Bookrunners. The issue is scheduled to close in mid-March 2004.

Background to CCT
On 6 February 2004, CapitaLand had announced the proposed creation of CCT and the proposed distribution of approximately 60% of CCT units to CapitaLand's shareholders via a capital reduction exercise and a pro-rated distribution in specie. In conjunction with this proposal, CapitaLand intends to list the CCT units on the SGX-ST by way of introduction. The creation of CCT, Singapore's first commercial real estate investment trust (or REIT), is subject to approvals from CapitaLand's shareholders, the SGX-ST and other regulatory authorities. CapitaLand Financial Limited, the real estate financial services arm of CapitaLand, together with DBS Bank and JPMorgan, are the advisors for the CCT transaction.

CapitaLand Financial Limited's Track Record
CapitaLand Financial Limited ("CFL"), the real estate financial services arm of CapitaLand, is a leading provider of real estate financial services which includes structured financing, real estate fund management and advisory services. Some previous transactions include:

- February 2004 - CapitaRetail Singapore Ltd:
Issue of an aggregate of S$506 million equivalent of CMBS notes (Class A, B, C, D and E) against mortgages of the Singapore retail properties: Lot One Shoppers" Mall, Bukit Panjang Plaza, and Rivervale Mall. Class A, B, and C notes were rated by Fitch, Moody's and Standard & Poor's (AAA/Aaa/AAA, AA/Aa2/AA and A/A2/A respectively). At the time of launch last month, this was the only CMBS with Euro-denominated tranches to have been launched out of Singapore.

- June 2003 - Silver Maple Investment Corp. Ltd:
Launch of a new S$1 billion rated secured Medium Term Note ("MTN") Programme with an initial issue of an aggregate of US$72.1 million rated CMBS notes. In conjunction with the launch of this MTN Programme, outstanding notes under the then existing S$200 million MTN Programme were brought under the new programme. Notes under the new programme are secured against the mortgages of four retail properties in CapitaMall Trust, namely, Funan The IT Mall, IMM Building, Junction 8 and Tampines Mall. The notes were rated by Fitch, Moody's and Standard & Poor's. (All the notes were rated AAA/Aaa/AAA).

- January 2003 - Aragorn Investment Corporation Ltd:
Issue of an aggregate of S$198 million equivalent rated notes (Class A1, A2, B and C) against the receivables from the sale of units in The Waterina. This is a 398-unit residential development located along Guillemard Road near the central business district in Singapore. The notes were rated by Fitch, Moody's, and Standard & Poor's. (AAA/Aaa/AAA, AAA/Aaa/AAA, AA/Aa2/AA and A/A2/A respectively.)

- February 2002 - Silver Maple Investment Corp. Ltd:
Issue of an aggregate of S$200 million rated CMBS notes (in two series) under a S$222 million rated secured Medium Term Note ("MTN") Programme. The notes were secured against the mortgages of three retail properties in CapitaMall Trust, namely, Funan The IT Mall, Junction 8 and Tampines Mall. The notes were rated by Fitch, Moody's and Standard & Poor's. (The notes were both rated AAA/Aaa/AAA.) This was Singapore's first rated CMBS transaction, and the first rated MTN programme by a real estate group in Singapore.

- June 2001 - Peridot Investments Ltd:
Issue of an aggregate of S$200 million rated Residential Mortgage Backed Securities ("RMBS") notes (Class A, B, C, and D) against the mortgage loans and receivables of three residential development projects, namely, Sunhaven, The Loft and Palm Grove. The notes were rated by Fitch (AAA, AA, A and BBB respectively). This was Singapore's first rated real estate backed note issue, and Singapore's first rated RMBS issue.