Singaporeās CapitaLand Commercial Trust made its first solo acquisition in Germany earlier this month buy concluding an agreement to buy the Galileo office building in Frankfurt. The 38-storey office tower is occupied by Commerzbank and offers 40,522 sqm of net lettable area. It’s being reported that the deal, concluded at a price of ā¬356m, will produce a net property income yield of 4 percent.
āExpanding overseas is a strategic move to deliver long-term sustainable distribution growth to our unitholders and inject diversity to the portfolio,ā commented Kevin Chee, chief executive of CCTās manager in a statement. He said that CCT will continue to focus on its home market of Singapore, but that up to 20 percent of its portfolio value could overseas.
The Motley Fool warns that 62 percent of the purchase price is being funded by debt, putting CCT near the regulatory limits of debt capacity. “Investors will have to note that after this acquisition, CCT is unlikely to be able increase its debt load much further and, hence, might not make another debt-driven acquisition for some time,” it writes.
Earlier in the year, CCT bought an office building near Frankfurt’s airport in a JV with the contractor Lum Chang for $293m.
