CapitaLand Limited: Acquires retail mall in Japan
- Acquires retail mall in Chiba, Japan
- Completed 650m CB issue
- Balance sheet remains robust
Acquires Vivit Minami Funabashi shopping mall in Japan
- CapitaLand (CAPL) recently announced that it has agreed to wholly acquire, through the CMA Japan Trust, the entire interest of a shopping mall in Japan for JPY3.05b (S$33.2m) in cash.
- The mall, Vivit Minami Funabashi (Vivit), is located in Funabashi city in the Chiba Prefecture, Greater Tokyo, Japan.
- Vivit is currently part of a portfolio of assets held by CapitaMalls Japan Fund Pte Ltd, which is managed by a subsidiary of the group and in which CAPL has an interest of 26.29%.
- We understand the mall was independently valued at JPY10.5b (S$114.2m) by Cushman & Wakefield as at end FY14, and the purchase consideration was derived after accounting for the liabilities of the holding entities.
- The price reflects fair value, in our opinion, and we assign no accretion to the group’s RNAV on this acquisition.
- While China and Singapore remain core markets for the group’s retail mall business, we believe the addition of this asset, which the group is already familiar with, is a low-risk proposition that will complement the retail portfolio and provide an incremental source of stable income.
- The acquisition is expected to be completed on 30 June 2015.
Successfully issued S$650m in convertible bonds due 2025
- In addition, the group also successfully completed the issue of S$650m in convertible bonds earlier this month.
- The newly issued CB has a coupon of 2.8% and is due in 2025, and the group intends to use the proceeds to refinance the repurchases of the outstanding S$1.2b 2.875% CB due 2016 and S$1.3b 3.125% CB due 2018.
- We like that management is actively refinancing its shorter duration debt in the window before a likely Fed rate hike in 2H15, while the group’s net gearing and interest coverage ratio remains at a prudent 57% and 7.2x, respectively.
- Maintain BUY with an unchanged fair value estimate of S$4.07 (25% discount to RNAV).
(Eli Lee)
Source: http://www.ocbcresearch.com
