Singapore property investment firm CapitaLand plans to merge its commercial and retail real estate investment trusts (REITs) into Asia Pacific’s third largest property trust by valuation in order to put them on a “more sustainable growth trajectory”.
The CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT) will be combined into a single entity called CapitaLand Integrated Commercial Trust, which will have a market capitalisation of S$16.8 billion (US$12.4 billion), CapitaLand says in a statement on January 22.
It says the merged trust will have a portfolio of 24 properties valued at S$22.9 billion, the largest in Singapore and third largest in Asia Pacific.
According to Teo Swee Lian, chairman of CapitaLand Commercial Trust Management, the merger is “a game-changer that will propel both CMT and CCT towards a higher and more sustainable growth trajectory beyond what is achievable with each REIT’s current focus on a single asset class”.
“CMT and CCT are heading to the proposed merger from a position of strength,” she says in the statement.
Under the proposed deal, CMT will acquire all the units CCT in exchange for 88% of new units in the former and 12% in cash.
The deal is subject to approval from unitholders of the two REITs. CapitaLand expects the merger to be completed by the end of the second quarter.
The company’s plan underscores continued efforts by the REIT sector to create larger property trusts, according to Victor Yeung, managing partner of Hong Kong-based real estate manager Admiral Investment.
“Some people may question why [CapitaLand] is putting office and retail together, but the unique situation in Asia is that many top assets are mixed use assets,” Mr. Yeung tells Asia Asset Management.
There are many of these assets in CCT’s and CMT’s portfolios, so the merger will help unify the ownership, he says.
According to figures from Singapore Exchange, there are 37 REITs with a combined value of around S$134 billion in the city state.
CapitaLand had S$92.9 billion of total assets as of September 2019.
