CapitaLand is in the market with its second Silver Oak CMBS, ahead of the completion tomorrow of its tender offer for the outstanding notes of its first transaction. The deal is secured by Raffles City, a prime integrated property development in Singapore, which is owned by CapitaLand subsidiary RCS Trust.
The Reg S US dollar-denominated class A notes, due in 2018, have provisional Moody's/Fitch ratings of Aaa/AAA and are expected to total the equivalent of approximately S$800m. At closing, the proceeds will be lent to HSBC Institutional Trust Services, the trustee-manager of RCS Trust. RCS Trust will then use the loan proceeds to refinance its existing borrowings.
Raffles City comprises three parts: office (the Raffles City Tower); retail (the Raffles City Shopping Centre); and hotels/convention centre (Swissotel The Stamford, Fairmont Singapore and Raffles City Convention Centre). Office, retail, hotels/convention centre contributed 18.1%, 44.5% and 37.4% respectively to the trust's total gross rental income, as of December 2010.
Among the transaction's key strengths, Moody's notes that the underlying is a quality property in a good location. Raffles City is a landmark integrated development and conveniently located at the fringe downtown district, with direct access to one of the largest MRT interchanges in Singapore.
The rating agency also took into consideration the property management expertise of RCS Trust's owners, CapitaCommercial Trust and CapitaMall Trust, and the liquidity facility provided by DBS Bank, HSBC and Standard Chartered Bank. The facility covers 10 months of scheduled fees, expenses and swap payments.
In addition, Moody's believes that the major concerns of the transaction would be sufficiently addressed by the overall LTV, the stressed DSCR, the security package for the benefits of the noteholders and other structural features.
CapitaLand is tendering US$427m class A1, €30m class A2 and US$86.5m class B notes from its 2006 Silver Oak transaction in advance of the scheduled maturity date of 13 September 2011. Under the tender offer, notes validly tendered before 2 June will be purchased at 100.25% of their principal amount, together with any accrued and unpaid interest. Notes validly tendered after this but before the expiration deadline of 8 June will be purchased at 99%.
This article was published in a special ‘Global ABS 2011 conference’ issue by Structured Credit Investor on 7 June 2011.