Tuesday, July 16, 2013

CapitaMalls Asia : Sister act (DBSV)

CapitaMalls Asia Limited
Sister act

•CMA to acquire Grand Canyon Mall in Beijing, offers property to CRCT via ROFR
•CRCT will buy the asset via a combination of cash, debt and equity funding
•Maintain BUY of CMA and HOLD on CRCT
Family affair. CMA announced it has won a public tender to acquire the Grand Canyon Mall in Beijing, China, from Capital Airport Real Estate Group Co. Ltd, for Rmb1.82b (cS$373m). The 3-year old mall has a GFA of c70,000sm, which translates to Rmb26,000 psm. The acquisition is subject to Chinese government approval, and is expected to be completed in 2Q14. Upon completion, this will be CMA’s 10th shopping mall in Beijing. At the same time, CMA has offered CRCT to buy this property via a ROFR.

Passing the baton. CRCT simultaneously announced that it is exercising its ROFR and has entered into a conditional call option to acquire the mall from CMA at acquisition price plus acquisition fee. The purchase will largely be funded by debt and existing cash from placement proceeds raised last year (cS$287-328m) as well as new equity (c22% of purchase price).

Deal likely to be yield accretive for CRCT in the medium term, boost fee income for CMA. This transaction shows the group’s ability to leverage on its network and platforms to secure good operational assets in addition to its traditional developer/REIT model, thus enabling the group to grow its AUM more rapidly. Operationally, the mall is currently under-rented. Based on a present occupancy of 92.7%, the mall is trading at an NPI yield of 3.5% and is expected to reach 5% by 2014 and expand further to a target yield of 7-8% by 2016-17 after positive rental reversions. This should boost CRCT’s DPU in the medium term. From CMA’s perspective, it will generate higher fee income from managing a larger AUM for CRCT. We are maintaining our BUY call on CMA with a TP of S$2.38. We are currently reviewing our HOLD call and TP of S$1.78 for CRCT, pending results announcement tomorrow.

Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 16/07/13

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