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  • CICT made its first transaction post the CCT-CMT merger with the divestment of its remaining 50% stake in One George Street to SG OGS Pte Ltd for S$640.7m (total value of the building is S$1,281.5m)
  • Transaction price is 8% higher than previous transaction when the former CCT divested 50% stake however, yield of 3.17% is similar and close to recent transactions.
  • We view this as a positive move to optimise CICT’s portfolio. Could this be a start of further repositioning of its assets to gain more headroom for future pipeline acquisitions?
  • Maintain BUY; TP of S$2.50
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CICT made its first transaction post the CCT-CMT merger with the divestment of its remaining 50% stake in One George Street to SG OGS Pte Ltd for S$640.7m, which values the building at S$1,281.5m or S$2,875psf. Estimated exit yield is c.3.17%. Total net proceeds (post divestment fee) is c.S$344.8m.

The price is 8% higher than the price when formerly CCT (now CICT) previously sold its 50% stake to FWD Group in 2017 for S$1,183.2m or S$2,650psf. However, yield were similar at c.3.2% then. 

Based on previous media reports, JP Morgan was said to have teamed up with another party, believed to Nuveen Real Estate to do an exclusive due diligence on the asset. 

One George Street is a 23-storey Grade A office building located near Raffles Place with a total NLA of 445k sqft. Committed occupancy as at 30 Sep 2021 was 96.9%, similar to the occupancy in 2017 at 96.5%. One George Street has a remaining lease of c.81 years, with landlease expiring in Jan 2102.

The transaction is estimated to complete by year-end.

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Our Views
We view the divestment as a positive move to optimise CICT’s portfolio post the merger of CCT-CMT. At an exit yield of 3.17%, we believe CICT has taken the opportunity to crystalise the value of its assets and likely with an eye for future redeployment into higher yielding assets. The exit yield of 3.17% is close to the lower end of the recent transacted range and is comparable to recent transactions such as the divestments of 9 Penang Road at 3.3% and lower than the divestment of 50% stake in OUE Bayfront at 3.6%. 

With Tony making his first divestment within a year of the merger, could this imply that CICT is embarking on further repositioning of its portfolio and gain more headroom for future acquisitions (possible pipeline from Sponsor)? Potential pipeline from sponsor includes 55% stake in CapitaSpring, 79 Robinson Road and ION.