SINGAPORE (May 2): The trustee manager of CapitaLand Commercial Trust (CCT) has entered into an agreement to divest One George Street into a concurrently-formed limited liability partnership – One George Street LLP (OGS LLP), which CCT has established with joint venture partner OGS (II), a special purpose vehicle owned by insurer FWD Group.

The agreed value of the property is at $1.183.2 million or $2,650 psf, 16.7% above the property’s Dec 31 valuation of $1.014 million or $2,271 psf, translating to a net property yield of 3.2% per annum.

CCT will hold 50% of OGS LLP and is expected to recognised a gain of about $84.6 million upon divestment of the property on a 50% basis, with an approximate net gain of $79.7 million after the estimated transaction and related costs of $4.9 million.

OGS (II) will hold the remaining 50% in OGS LLP, which is tax transparent for Singapore income tax purposes.

In a Tuesday announcement, CCT’s trustee manager says the divestment is in line with the trust’s portfolio reconstitution strategy to proactively enhance value and increase financial flexibility.

“By maintaining a 50% ownership of OGS LLP, CCT will continue to receive tax transparent income contribution from One George Street, a good quality Grade A office building with a solid tenant profile,” says Lynette Leong, CEO of the manager.

Units of CCT closed 1 cent lower at $1.62 on Friday.