Mapletree Commercial Trust - Maybank Kim Eng 2019-09-30: Large Deal, Largely Priced In

MAPLETREE COMMERCIAL TRUST (SGX:N2IU) | SGinvestors.io MAPLETREE COMMERCIAL TRUST (SGX:N2IU)

Mapletree Commercial Trust - Large Deal, Largely Priced In


MBC II acquisition ups DPUs by 4-6%; Prefer FCT




Strong asset, positive growth fundamentals

  • The asset, a 1.2m sf NLA development valued at SGD1.55b comprising a business park (1.17m sf) and common property (eg carpark), is adjacent to its MBC I and boasts similar Grade A office specs. It is backed by 99.4% committed occupancy with ~97% of leases embedded by +2.3% pa rental step-ups on average, and 2.9-year WALE (by gross rental income).
  • Mapleetree Commercial Trust’s three best-in-class assets (VivoCity, MBC I & II) now contribute ~81% of its NPI (from ~77%) but tenant concentration risks have also risen; Google occupies 680k sf or 13.5% of its enlarged NLA as its single largest tenant.


DPUs get a boost, but valuations have run harder

  • We are positive on Singapore’s business park growth fundamentals given the government’s decentralisation efforts – 53% of business park tenants at MBC II had relocated from the CBD while 29% were led by upgrades to higher quality space. Rental growth outlook is supported by:
    1. high pre-commitment on new supply and demand especially for assets at the city-fringe; and
    2. a widening rental gap between Grade A office and business parks. Its capital value at SGD1,308 psf, is higher than for MBC I (at SGD1,285 psf), with the additional 8% in ancillary income.


A likely 45-55 debt-equity funding, higher accretion

  • The purchase will be funded by debt up to SGD800.0m at 2.9% interest cost pa and an equity fund raising of up to 500.0m new units.
  • Management sees 4% DPU accretion (pro-forma) based on the proposed funding structure. We believe the strong unit price appreciation suggests more.





Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2019-09-30
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.100 SAME 2.100



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......