CCT-CMT deal: Jury is out on whether sum of parts is better

THE chiefs of CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT) have called the proposed union a "merger of equals", touting benefits of the combined entity such as lower cost of capital, better portfolio resilience with asset class diversification, cost synergies, and better growth opportunities with a larger pool of assets in the acquisition pipeline.

But the scheme unveiled on Wednesday is probably more compelling for CMT, and likely for that reason, the deal terms also leaned in favour of its office counterpart CCT.

The scheme consideration of S$2.1238 for each CCT unit prices it at 1.1 times its book value and at a yield of 4.2 per cent which some analysts consider costlier than expected given that the office sector upcycle seems to be nearing its tail end. At 6.5 per cent accretion to distribution per unit (DPU), CCT also exceeds CMT's DPU accretion of 1.6 per cent.