CapitaLand, CCT, and MEA sign joint-venture agreement to redevelop Market Street Car Park into Grade A office tower

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1 NEWS RELEASE For Immediate Release 14 July 2011 CapitaLand, CCT, and MEA sign joint-venture agreement to redevelop Market Street Car Park into Grade A office tower Singapore, 14 July 2011 CapitaLand Commercial Limited, the commercial strategic business unit of CapitaLand Limited (collectively CapitaLand ), CapitaCommercial Trust ( CCT or Trust ) and Mitsubishi Estate Asia ( MEA ) signed a joint venture agreement ( JVA ) on 13 July 2011 to redevelop Market Street Car Park ( MSCP ) into a Grade A office tower. Under the agreement, CapitaLand, CCT and MEA owns 50%, 40% and 10% interest respectively in MSO Trust, an unlisted special purpose sub-trust set up to undertake the development. The total project development cost is estimated to be S$1.4 billion and will be funded by the three parties in proportion to their respective joint venture interest. Under the MAS property funds guidelines for Singapore REITs, CCT may only develop projects the total cost of which must not exceed 10% of its total asset size. As the estimated total project cost will exceed such limit, the Manager of CCT required joint venture partners for the redevelopment of the property by way of a special purpose vehicle in which CCT will own a 40% interest and the joint venture partners, the balance. MSO Trust will acquire MSCP, currently owned by CCT, at a price of S$56.0 million. This price is 15.2% above MSCP s valuation as a car park facility as at end-december In May 2011, the Manager of CCT had appointed Jones Lang LaSalle Property Consultants Pte Ltd while the trustee of CCT had appointed CB Richard Ellis (Pte) Ltd to conduct independent valuations of MSCP. The average value of the two independent valuations was S$53.3 million. Both valuations were done based on the residual value of MSCP to be redeveloped into an office building, taking into account that a differential premium equal to 100% of the enhancement in land value resulting from the change of use 1

2 of MSCP from transport facilities to commercial shall be payable to the government. This differential premium and other land related costs payable to the government will constitute 48% of the total project development cost of S$1.4 billion. The payment of the differential premium is one of the conditions imposed by the government for its granting the change of use. The differential premium is unlike a development charge where the latter is based on 70% of the enhancement in land value. A call option is granted to CCT to acquire CapitaLand s and MEA s interest in the MSO Trust or the completed development. CCT may exercise the call option any time over a period of three years after temporary occupation permit ( TOP ) of the new office tower is obtained, subject to terms and conditions. Mr Chong Lit Cheong, Chief Executive Officer of CapitaLand Commercial Limited, said, Investing in the Market Street office development is aligned with our strategy to strengthen our pipeline of commercial properties in Singapore and to lend support to our sponsored commercial REIT, CCT. Moreover, CapitaLand s full suite of commercial real estate expertise from design and development, project management, marketing and leasing to property management services can be fully leveraged in this project. To add to our strength, we are pleased to have Mitsubishi Estate Asia (MEA), a whollyowned subsidiary of Mitsubishi Estate Co., Ltd, on board with us, to jointly redevelop Market Street Car Park. Mitsubishi Estate Co., Ltd is a leading international property development and investment company listed in Japan, and owns a portfolio of prime properties with total net area of 17 million square feet in Tokyo s Marunouchi area. MEA is a strategic joint venture partner with CapitaLand in Japan, Singapore and Vietnam. With MEA and its parent s exemplary track record in developing ultramodern commercial projects internationally, we believe that our combined forces will create a premier Grade A office tower that will be outstanding amid the skyline of Singapore s Central Business District (CBD). Ms Lynette Leong, Chief Executive Officer of CapitaCommercial Trust Management Limited, added, Our initiative and drive to redevelop Market Street Car Park to a Grade A office tower for many years has finally come to fruition. The redevelopment will result in higher value for the Trust which is in line with our portfolio reconstitution strategy. It is expected to generate a yield-on-cost of more than 6% per annum on a stabilised basis. This is CCT s first development project and also first collaboration with CapitaLand, our sponsor, and MEA, a strategic partner of CapitaLand, both of which have extensive experience and strong track records in real estate development and project management. Ultimately, we intend to acquire the other 60% interest from our partners at the appropriate time under the call 2

3 option. We target to complete the development before end-2014 when no major Grade A office supply is scheduled for completion in the CBD. This will give us the competitive advantage to capture the year s office demand amidst expected rising rentals. Mr Takashi Utagawa, Managing Director of Mitsubishi Estate Asia Pte. Ltd., said: We are deeply grateful to CapitaLand and CCT for giving us a rare opportunity to participate in this office redevelopment project in the heart of Singapore s Central Business District. It is our pleasure to partner CapitaLand Group, a renowned leading developer in Asia, and we would like to further deepen our long-term relationship with CapitaLand Group through this project. Market Street Car Park has been closed permanently from 30 June Assistance has been rendered to the retail tenants and season car parkers since 19 April 2011 to facilitate the property s closure. Help included the offering of alternative retail space at other properties owned by CCT, such as the neighboring Golden Shoe Car Park. For season car parkers, a list of alternative season parking within Market Street s vicinity was provided. END About Market Street Car Park redevelopment The planning of the Market Street Car Park redevelopment to an office building has been ongoing for more than 15 years but it was only in early 2008 that outline planning permission was granted by the authorities. However, the Manager of CCT deferred the proposed redevelopment in 2009 due to the global financial crisis. On 19 April 2011, CCT announced the redevelopment of Market Street Car Park into a Grade A office tower at an estimated cost of S$1.4 billion with CapitaLand as a potential joint venture partner. The redevelopment is in line with the Manager s portfolio reconstitution strategy and is expected to generate a yield of more than 6% per annum on stabilised basis. The estimated total project development cost of S$1,900 per square foot (on net lettable area basis) was considerably lower than then-transacted prices of Grade A office buildings. The design of the new office tower is led by the internationally-acclaimed, award-winning Japanese architect, Mr Toyo Ito. The project is estimated to provide a gross floor area (GFA) of 887,000 square feet (including bonus GFA) with floor plates of 20,000 to 25,000 square feet. Scheduled for completion before the end of 2014, the completed Grade A office tower will soar to a height of 245 metres, well 3

4 above the height of the surrounding buildings, and be an exciting addition to the skyline of Singapore s CBD. About CapitaLand Group ( CapitaLand is one of Asia s largest real estate companies. Headquartered and listed in Singapore, the multi-local company's core businesses in real estate, hospitality and real estate financial services are focused in growth cities in Asia Pacific and Europe. The company's real estate and hospitality portfolio, which includes homes, offices, shopping malls, serviced residences and mixed developments,spans more than 110 cities in over 20 countries. CapitaLand also leverages on its significant asset base, real estate domain knowledge, financial skills and extensive market network to develop real estate financial products and services in Singapore and the region. The listed entities of the CapitaLand Group include Australand, CapitaMalls Asia, CapitaMall Trust, CapitaCommercial Trust, Ascott Residence Trust, CapitaRetail China Trust, CapitaMalls Malaysia Trust and Quill Capita Trust. About CapitaCommercial Trust ( CapitaCommercial Trust is Singapore s first listed commercial REIT with a market capitalisation of S$4.1 billion based on the last traded price of S$1.46 per unit on 13 July CCT aims to own and invest in real estate and real estate-related assets which are income producing and used, or predominantly used, for commercial purposes. The total asset size of CCT is S$6.2 billion as at 30 June 2011, comprising a portfolio of nine prime properties in Singapore, as well as investments in Malaysia. The properties in Singapore are Capital Tower, Six Battery Road, One George Street, HSBC Building, Raffles City (60% interest through RCS Trust), Bugis Village, Wilkie Edge, Golden Shoe Car Park and Market Street Car Park (to be redeveloped into an office tower). In addition, CCT is a substantial unitholder of Quill Capita Trust with 30% unitholdings and has taken a 7.4% stake in the Malaysia Commercial Development Fund Pte. Ltd. (MCDF). Quill Capita Trust is a commercial REIT listed on Bursa Malaysia Securities Berhad, with a portfolio of ten commercial properties in Kuala Lumpur, Cyberjaya and Penang. MCDF is CapitaLand s first and largest Malaysia private real estate fund with a focus on real estate development properties primarily in Kuala Lumpur and the Klang Valley, Malaysia. 4

5 Effective from 18 September 2009, CCT is a constituent of FTSE4Good Index Series (FTSE4Good), a series of benchmark and tradable indices derived from the globally recognised FTSE Global Equity Index Series. FTSE4Good is designed to track the performance of companies meeting international corporate responsibility standards and forms the basis for over 70 different funds and investment products. CCT is managed by an external manager, CapitaCommercial Trust Management Limited, which is an indirect wholly-owned subsidiary of CapitaLand Limited, one of the largest real estate companies in Southeast Asia by market capitalisation. About Mitsubishi Estate Co., Ltd. ( Mitsubishi Estate Co., Ltd. (MEC), listed on Tokyo Stock Exchange, is a leading international property development and investment company with a substantial commercial and residential portfolio in Japan, which includes over 30 major buildings in Marunouchi area, Tokyo s premium central business district. MEC operates in Singapore through Mitsubishi Estate Asia Pte. Ltd. (MEA), its wholly owned subsidiary, to seek opportunities in Asia. MEA and other MEC bases in London and New York cover MEC s global operations as one team. Jointly issued by CapitaLand Limited (Company registration no.: N), CapitaCommercial Trust Management Limited (Company registration no.: W) and Mitsubishi Estate Asia Pte. Ltd (Company registration no.: R) CapitaLand Limited Analyst Contact Singapore Harold Woo Investor Relations DID: (65) harold.woo@capitaland.com Media Contact Singapore Sharon Sim Corporate Communications Mobile: (65) sharon.sim@capitaland.com CapitaCommercial Trust Contact Ho Mei Peng Head, Investor Relations & Communications DID: (65) , Mobile: (65) ho.meipeng@capitaland.com Mitsubishi Estate Asia Pte. Ltd. Contact Soichiro Kanada DID: (65) Mobile: (65) s-kanada@mea.sg 5