CapitaMall Trust (CMT), the first listed real estate investment trust (REIT) in Singapore, closed its second commercial mortgage backed securitization yesterday (Thursday) via HypoVereinsbank.
The S$349 million ($199.5 million) deal comprises $72 million of US dollar denominated notes, a S$172 million bond issue and a S$52 million revolving credit facility.
The transaction will help CMT finance its acquisition of the IMM Building from International Merchandise Mart. The building, which features a mix of retail, office and warehouse space, was recently valued at S$280 million. Earlier this month CMT raised S$128.2 million from a new share issue to help towards the acquisition.
As was the case with the company's first CMBS deal in February 2002, CMT's latest offering was issued out of the S$1 billion Silver Maple Investment Corp medium-term note programme.
The US dollar bonds, rated triple-A by Fitch, Moody's and S&P, have an expected maturity of 7 years and priced at 62bp over Libor. The Sing dollar notes, which also rated at the triple-A level and have expected average lives of 3.8 years, offer a fixed rate coupon of 3.86%.
According to a source familiar with the deal, the bonds placed with four European investors, including one buyer in London and three in Continental Europe.
Although at first glance it might seem surprising that an Asian securitization deal placed exclusively into offshore accounts, European investors have been major participants in previous property backed deals from Singapore (see related articles). Bankers involved on those deals attributed the interest to the fact that foreign investors are attracted by both the quality of the assets and the high relative yield pick-up for triple-A CMBS deals compared to what is available on similar transactions from the US, Europe and Australia.
CMT's first securitization helped the company raise S$200 million to refinance its debts on three shopping centres: Tampines Mall, Funan IT Mall and Junction 8. The acquisition of the IMM Building increases the total value of CMT's property portfolio to S$1.215 million. The portfolio has an average loan to value of 37.65% and 2.12 X debt service coverage ratio.
