Published March 27, 2009

CMT's rights issue over-subscribed

By UMA SHANKARI

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CAPITAMALL Trust (CMT), Singapore's largest real estate investment trust by market capitalisation, yesterday said that its $1.23 billion rights offer was over-subscribed based on initial tallies at the close of the rights offer on March 25.

'Acceptances and excess applications have been received for more than the total number of rights units offered pursuant to the rights issue,' CMT said in a filing to the Singapore Exchange.

The trust did not provide details of the amount of the oversubscription. Parent company CapitaLand similarly said on March 13 that its $1.84 billion rights issue had been over-subscribed.

CMT shares gained 16 cents, or 12.5 per cent, to close at $1.44 yesterday amid a broad gain in the market. The benchmark Straits Times Index closed 4 per cent up at a two-month high.

CMT on Feb 9 announced the $1.23 billion rights issue in a 9-for-10 rights offer. The trust, which is 29.7 per cent owned by CapitaLand, said that it will use most of the proceeds to pay off $956.2 million of debt due this year.

The balance will be used to pay for asset enhancement initiatives as well as for general corporate and working capital purposes. The rights issue will also reduce CMT's gearing from 43.2 per cent to 29.1 per cent.

In a report earlier this month, UBS Investment Research forecast an 8.3 per cent distribution per unit (DPU) yield for CMT this year - even on conservative assumptions, which included signing rents in suburban and central areas falling 8 per cent and 18 per cent respectively in 2009 as well as a 10 per cent rental rebate for central area malls.

'We maintain our 'buy' rating as CMT is relatively defensive with 50 per cent of its portfolio in suburban malls, and there is little doubt on its capital structure.'