CapitaLand Integrated Commercial Trust raising S$600 million in private placement
The units are priced at S$2.11 apiece
[SINGAPORE] CapitaLand Integrated Commercial Trust (CICT) on Wednesday (Aug 6) announced the launch of nearly 284.4 million new units to raise gross proceeds of around S$600 million, priced at S$2.11 apiece.
The issue price represents a discount of around 2.5 per cent to the adjusted volume-weighted average price (VWAP) of S$2.1637 per unit for trades done on Monday.
It also represents an approximate 5.5 per cent discount to the VWAP of S$2.2334 per unit, said the manager.
The private placement was about 4.9 times covered, when including the upsize option, and around 5.9 times covered, upon excluding the upsize option.
The joint bookrunners and underwriters agreed to raise additional gross proceeds of around S$100 million for the issue, such that the aggregate gross proceeds raised is about S$600 million as part of the upsize option.
Around S$125.9 million or 21 per cent of the amount will be used to repay and refinance debt and/or capital expenditure and asset enhancement initiatives. This is up from the S$26.3 million CICT announced on Tuesday.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Some S$7.6 million of the sum will also be allocated for the payment of transaction-related expenses, including professional fees and expenses related to the private placement. This is an increase from the S$7.2 million stated previously.
The S$466.5 million designated on Tuesday to finance the remaining 55 per cent interest in the office and retail component of CapitaSpring, located at 86 and 88 Market Street, remains the same.
Earlier on Tuesday, CICT’s manager provided a range of the issue price to be between S$2.105 and S$2.142 per new unit, and estimated gross proceeds of S$500 million to be raised.
DBS has been allocated 3.3 million new units under the private placement, and is a joint bookrunner and underwriter, along with Citigroup Global Markers Singapore and JPMorgan Securities Asia. According to the Singapore Exchange, no objections arise as long as the amount placed to DBS is no more than 25 per cent of the total new units under the private placement, and DBS does not own an interest of 5 per cent or more in CICT.
The trading of the new units is expected to commence at 9 am on Aug 14.
Analysts generally positive on CICT post-H1 results; limited upside prevails
JPMorgan analysts Mervin Song and Terence Khi are “overweight” on the counter following robust first-half FY2025 results.
CICT’s distribution per unit (DPU) had increased by 3.5 per cent to a new high of S$0.0562 supported by its distributable income up 12.4 per cent year on year to S$411.9 million, from S$366.5 million, on the back of income contribution from Ion Orchard acquired in October 2024, improved performance from existing properties and lower interest expenses.
“This was underpinned by H1 retail rental reversions increasing by 7.7 per cent with the office portfolio seeing a 4.8 per cent uplift. Cost of debt quarter on quarter was also stable at 3.4 per cent,” they wrote on Tuesday.
They noted that CICT’s tenant sales in H1 remained resilient with downtown malls excluding Orchard up 0.3 per cent (or 40 per cent if Ion Orchard was included), while that of suburban malls slipped 0.4 per cent year on year mainly due to asset enhancement initiatives at IMM. Overall portfolio occupancy dipped slightly to 96.3 per cent from 96.4 per cent in Q1.
With regards to the Reit’s private placement, the JPMorgan analysts’ evaluation based on Tuesday’s range of S$2.105 to 2.142 per unit translated to an FY2025 DPU of S$0.1114 to S$0.1156, with the mid-point of S$0.1135 in-line with their FY2025 DPU expectations, but 3 per cent above consensus.
The current upsized option of S$600 million in gross proceeds also sees the Reit’s DPU accretion of 0.9 per cent instead of 1.1 per cent, with gearing lowered to 37.9 per cent from 38.3 per cent.
Equity research analysts Hesper He and Xuan Tan from Goldman Sachs had earlier noted in their Tuesday report CICT’s “broadly unchanged” gearing and previous DPU accretion level, following the announcement of CICT acquiring the remaining 55 per cent stake in CapitaSpring for S$1 billion.
Still, CapitaSpring – a Grade A office tower located in Raffles Place – is a “high-quality asset” to the analysts, as it increases CICT’s Singapore exposure to 95 per cent from 94 per cent.
They added that upside could be relatively more limited however given its high occupancy of 99.9 per cent and expiring rents at S$12.99 per square foot (psf) a month for 2026 and 12.47 psf a month for 2027. The analysts have kept their “neutral” call on CICT, with no change to its target price of S$2.18.
Units in CICT last traded at S$2.24. The manager announced on Wednesday morning that it will be lifting the trading halt it had put in place on Tuesday morning.
Copyright SPH Media. All rights reserved.
