Singapore's largest commercial REIT by market capitalisation, CapitaLand Commercial Trust (CCT or Trust), is expanding its footprint beyond Asia for the first time. With CapitaLand Limited, CCT is acquiring a freehold grade A commercial property, Gallileo, in the prime central business district of Frankfurt at an agreed property value of EUR356.0 million (approximately S$569.6 million) (100% basis). CCT will hold a 94.9% stake and CapitaLand will hold the remaining 5.1% stake in the Gallileo property through a special purpose vehicle. Completion is set for June 2018.

The agreed property value of Gallileo at EUR356.0 million, negotiated on a willing-buyer and willing-seller basis, represents a discount of 1.4% to the open market value of EUR360.9 million (S$577.4 million). The open market value as at 31 March 2018 was appraised bv Cushman & Wakefield LLP, an independent valuer.

Kevin Chee, chief executive officer of the manager of CCT, said: "CCT has grown to become the largest office landlord in Singapore's CBD by net lettable area. Expanding overseas is a strategic move to deliver long-term sustainable distribution growth to our unitholders and inject diversity to the portfolio. CCT will remain Singapore focused and will look to allocate between 10% to 20% of its deposited property overseas. We have been exploring opportunities to acquire core assets in key gateway cities in developed markets. Germany is a key focus for CCT given the depth of good quality investment grade commercial assets. Frankfurt's office market is particularly attractive in view of the strong momentum in office demand and resilient rents."

Mr Chee added: "The Gallileo property is a freehold Grade A asset which offers a strategic fit with CCT's existing portfolio of assets. Providing income stability with an established anchor tenant on a long-term lease, the acquisition offers an attractive net property income yield of 4.0%. This accretive acquisition is expected to increase CCT's 1Q 2018 DPU by 1.4%, to 2.15 cents from 2.12 cents on a pro forma basis. Post-acquisition, CCT's portfolio value will increase from S$10.4 billion to S$10.9 billion with 5% exposure to Germany. This joint venture with CapitaLand also allows CCT to leverage our sponsor's operational expertise and network platform to deepen our presence in Germany."

Mr Gerald Yong, Deputy Chief Investment Officer of CapitaLand Limited and Head of CapitaLand International, said: "This is CapitaLand's second office acquisition in Germany in less than six months following our acquisition of the Main Airport Center in Frankfurt last December. Leveraging the Group's 15 years of experience in Germany, the acquisition of Gallileo is in line with CapitaLand's strategy of growing its platforms and increasing its holdings of well-located assets in developed markets outside of Asia. In deepening our presence in one of the world's largest and most stable economies, we will continue to deploy capital to achieve higher risk adjusted returns. When the acquisition is completed, CapitaLand's network in Europe will comprise 46 serviced residences and hotels, as well as two commercial properties with over 1 million square feet of net lettable area."