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Friday, March 28, 2008

CapitaCommercial to pay S$1.2b for office block

SINGAPORE: CapitaCommercial Trust, one of Singapore's biggest office landlords, will buy a block in the city-state's central business district for S$1.165 billion (S$1 = RM2.32).

The trust will buy the 23-storey One George Street building from its biggest shareholder, Singapore's CapitaLand Ltd, said in a statement to the Singapore's stock exchange yesterday.

CapitaLand, Southeast Asia's largest developer, guaranteed a minimum annual net property income of S$49.5 million for five years after completion of the purchase, the trust said.

CapitaCommercial, is adding to its 2 million sq ft of office space in Singapore after rentals in the city rose to a record last year, driven by demand from financial institutions such as Standard Chartered Plc and UBS AG. The purchase will boost CapitaCommercial's rental income and increase assets that totaled S$5.3 billion as of December 31, it said.

"Rents are still on the uptrend, and will continue to be on the uptrend for the next 12 to 18 months, but not as rapidly as in 2007," said Donald Han, managing director of real estate firm Cushman & Wakefield in Singapore. "The rate of expansion by multinational companies, particularly financial institutions, has started to stabilise."

Han estimates One George Street's monthly rents at S$18 a sq ft, which would give CapitaCommercial a "pretty decent yield".

By Bloomberg

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