CapitaLand Commercial Trust is divesting One George Street to One George Street LLP, a limited liability partnership. CCT will hold 50% of OGS LLP, with joint-venture (JV) partner OGS (II), a special purpose vehicle owned by insurer FWD Group, holding the remaining 50%.

The agreed value of OGS is $1.18 billion, or $2,650 psf, which is 16.7% above OGS’s latest valuation of $1 billion ($2,271 psf) as at Dec 31, 2016. Based on the net income of $38 million for the 12 months preceding March 31 this year, this translates into an exit net property income yield of 3.2%.

Under the agreement, if the JV does not achieve an agreed after-tax return on equity, CCT will direct OGS LLP to pay FWD Group a portion of income from OGS LLP to which CCT is entitled. After the disposal, OGS will continue to be managed by CapitaLand Commercial Trust Management for an initial term of five years, which may be renewed at the option of CCTML for successive periods of three years each.

CCT expects to recognise an estimated net gain of $79.7 million from the sale of an effective 50% interest in OGS. CCT’s net asset value per unit is expected to increase 2.3% y-o-y to $1.77 from $1.73, with pro-forma distribution per unit falling 4.4% to 8.68 cents from 9.08 cents.