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SPT to be renamed CapitaMall Trust : sources

CapitaLand said to be scouring for cornerstone investors, underwriters for relaunch of trust

Posted on 31-May-2002
By: Kalpana Rashiwala

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SPT to be renamed CapitaMall Trust : sources

CAPITALAND has started oiling its machinery for a relaunch of the SingMall Property Trust, which it will rename CapitaMall Trust, sources told BT.

Sources say it is looking for more cornerstone investors and possibly an underwriter before it relaunches the trust. The timing will depend on market conditions.

The trust will offer higher dividend yields than the 5.75 per cent and 6.05 per cent (for the first two years) offered when the trust was launched last November.

That flotation, which was not underwritten, was called off due to under-subscription.

A CapitaLand spokesman, contacted by BT yesterday, could not comment on the name change for the trust but reiterated: 'In the event that CapitaLand relaunches the trust, the instrument will likely be offered at a higher yield than the original offering.'

'Goldman Sachs continues to be our financial adviser,' he added.

CapitaMall Trust owns three malls - Junction 8 in Bishan, Tampines Mall, and Funan The IT Mall.

SPT's failed initial public offering last year was blamed by analysts largely on its dividend yields being insufficient for investors.

Besides this, analysts say that another reason CapitaLand will have to ensure its yields are much higher when it relaunches its shopping centre trust is a recent benchmark set by the successful asset securitisation of Wisma Atria.

The strata offices and shops in the prime Orchard Road property covered under the securitisation exercise excluded the anchor space at Wisma owned by Isetan, and generated net rental income after property tax and service charge of about $36 million last year, according to bond investor sources.

This works out to a net rental yield of 8 per cent on the $451 million worth of bonds raised for the securitisation and a higher 8.7 per cent based on the actual sale price of $415 million.

The difference of $36 million ($451 million less $415 million) comprises reserves set aside for future renovation of the Wisma property, stamp duty, GST, and legal costs, the sources added. Bond investors - there are three tranches - will receive coupons ranging from 4.94 to 8.85 per cent, depending on the tranche of the bonds.

Taking into account the shorter remaining lease - 61 years - on the Wisma site, but offseting that by the property's better location than CapitaLand's three malls, market watchers have suggested that CapitaLand may need to offer dividend yields of 7 to 8 per cent to entice investors to its trust.

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