Twenty Anson sold 19% over value amidst rising interest rates

It sold the 20-storey office building for $516m.

CapitaLand Commercial Trust (CCT) sold Twenty Anson, a 20-storey office building in Tanjong Pagar for $516m, 19.2% higher than its latest valuation of $433m and 20% higher than the original purchase price of $430m in 2012.

DBS Equity Research analyst Mervin Song noted that the selling price translates into an NPI yield of 2.7% based on the trailing 12-month income for the property. It came as a surprise for him, he said.

However, “there had been market speculation that CCT might dispose this property as it had been actively unlocking value and reconstituting its portfolio, focusing more on properties situated in prime locations and reducing its exposure to properties in fringe CBD locations,” Song said.

Over the last 12 months, CCT sold a 50% interest in One George Street and Wilkie Edge on exit NPI yields of 3.2% and 3.4%, which were 17% and 39% higher than their respective book values. Using these proceeds, CCT reinvested in Asia Square Tower 2 and Gallileo in Frankfurt at NPI yields of 3.6% and 4.1% respectively.

It also started to redevelop Golden Shoe Car Park into a 51-storey integrated development comprising Grade A offices, serviced residences, and retail space.

“Going forward, we expect CCT to eventually use the proceeds from the disposal of Twenty Anson to continue to reposition its portfolio and deepen its presence in Europe following its maiden acquisition there via its recent Gallileo acquisition,” he said.

Song noted that the deal shows that investor concerns over the potential expansion in office cap rates in Singapore due to rising interest rates are misplaced.