CapitaMall closes fourth CMBS

Newest Singapore securitization continues love affair with Europe.

Capitamall Trust (CMT), Singapore's first listed real estate investment trust (REIT), closed its fourth commercial mortgage backed securitization (CMBS) on Friday (October 21) via sole lead manager HSBC. The S$433 million ($256 million) seven-year deal was marketed to investors at 24bp to 25bp over Libor. The offering priced at the tight end of guidance at 24bp over.

The notes, rated Aaa/AAA/AAA by Moody's, Fitch and Standard & Poor's respectively, have a scheduled maturity of seven-years, and a finally maturity date of April 30, 2014. As was the case with the previous CMT deals, the latest offering will be issued off the group's S$1 billion secured medium term note facility via special purpose vehicle Silver Maple Investment Corp.

The loans to HSBC Institutional Trust Services (Singapore) Ltd. as trustee of CapitaMall Trust are secured by first-registered mortgages over nine Singapore-based commercial retail malls. The Transaction is fully cross-collateralized.

The final book attracted 14 accounts totaling approximately S$1.1 billion in orders, an over subscription ratio of about 2.5 times. The deal was sold primarily to European fund managers, with some Singapore-based accounts picking up the remainder of the book.

The new deal shows how Singaporean paper continues to attract strong European interest. Singapore-based issuers offer strong credit stories with geographical diversity for European investors who do not have the same wide range of asset classes to invest in as their US counterparts. European investors are seeking diversification via jurisdiction rather than structure.

The deal marks the fifth international Reit securitization out of Singapore this year and is the third arranged by HSBC. Previously Suntec, Ascendas, Fortune and Prime had brought deals to international investors, with HSBC arranging deals for Fortune and Prime prior to this transaction. HSBC will also provide the cross-currency swap and interest rate swap.

The transaction will help CMT finance the acquisition of four commercial properties in Singapore: Parco Bugis Junction, Hougang Plaza Units, Jurong Entertainment Centre and Sembawang Shopping Center. Funds will also be used for capital expenditure and working capital requirements.

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