REIT - CGS-CIMB Research 2020-01-22: Big Getting Bigger

CAPITALAND MALL TRUST (SGX:C38U) | SGinvestors.io CAPITALAND MALL TRUST (SGX:C38U) CAPITALAND COMMERCIAL TRUST (SGX:C61U)

REIT - Big Getting Bigger




Creating largest proxy to Singapore commercial real estate



Benefits of the merger

  • The enlarged entity is likely to be better positioned to explore growth opportunities with a broader investment focus, including retail, office and integrated projects as well as overseas acquisitions. Properties acquired under the combined entity will be subject to CapitaLand Mall Trust’s fee structure.
  • In addition, with enlarged assets under management (AUM) of S$24bn, the merged entity could undertake additional developments of up to S$6bn and increase its debt headroom to c.S$2.9bn. We think this will enhance the REIT’s ability and flexibility to undertake larger redevelopments.
  • Aside from the improved growth outlook, we believe the larger entity would be more resilient with a more diversified portfolio to hedge against market cycles and reduced asset concentration risk.


Pro-forma financial impact

  • Based on its announcement, CapitaLand Mall Trust is expected to issue a total of 2,829.7m new units (including acquisition fees in units) and take on S$1,021.1m of new debt to fund the transaction.
  • Based on pro-forma numbers, the deal could result in a 1.6% and 1.5% increase in FY19 pro-forma DPU and NAV, respectively. It expects post-merger gearing of the combined entity to move higher towards the 38% mark.
  • For CapitaLand Commercial Trust, management guided that the deal is expected to result in a pro-forma 6.5% accretion to FY19 DPU.


Ratings for CapitaLand Mall Trust and CapitaLand Commercial Trust unchanged






LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2020-01-22
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.640 SAME 2.640
ADD MAINTAIN ADD 2.250 SAME 2.250



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