CapitaLand Mall Trust - Maybank Kim Eng 2020-01-22: Buying Scale, Diversification

CAPITALAND MALL TRUST (SGX:C38U) | SGinvestors.io CAPITALAND MALL TRUST (SGX:C38U)

CapitaLand Mall Trust - Buying Scale, Diversification


Proposes merger with CapitaLand Commercial Trust, maintain HOLD



Focus is now on scale, limited deal visibility

  • The exercise will see CapitaLand Mall Trust acquiring all CapitaLand Commercial Trust units for SGD8.2b - 88% to be financed by units and 12% in cash at a 0.82 gross exchange ratio; its leverage is set to rise from 32.9% to 38.3% post-merger. Its sponsor CapitaLand (SGX:C31) will maintain its interest at 29.1% in the combined REIT which will own 15 downtown, suburban malls in Singapore and ten prime office assets (eight in Singapore, two in Frankfurt, Germany).
  • The deal expands CapitaLand Mall Trust’s AUM into a broader commercial (office) asset class, while lifting its pro-forma DPU and NAV by 1.6% and 1.5%. The process will complete in 1H20 after approval from unitholders.


Retail fundamentals weak

  • CapitaLand Mall Trust reported 4Q19 results which were in line with consensus, with DPU up 4.0% y-o-y, backed by higher contributions from Westgate and Funan (from Jun 2019). Portfolio occupancy improved from 98.9% to 99.3%, and improvement was broad-based. Rental reversion for FY19 was slower at +0.8%, versus 1.2% for 9M19. See Capitaland Mall Trust Announcements.
  • Its occupancy cost has improved y-o-y from 18.4% to 18.2% in FY19, but its rental growth outlook remains weak against slower tenants’ sales, which were down 1.4% y-o-y despite the 1.4% rise in shopper traffic.





Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-01-22
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.70 UP 2.600



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