CapitaLand Mall Trust - OCBC Investment 2020-09-30: When Two Becomes One

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

CapitaLand Mall Trust - When Two Becomes One



Proposed merger to go ahead after approval obtained from unitholders



Look forward to strategic benefits of an enlarged entity

  • We are positive on this development given the importance of scale in the REITs industry. Upon completion of the merger, the enlarged entity, which will be renamed CapitaLand Integrated Commercial Trust (CICT), is expected to be one of the largest REITs in Asia-Pacific in terms of market capitalisation. CICT is also expected to own 24 properties with a portfolio value of ~S$22.4b. 96% of this will be contributed by Singapore, with the remaining 4% from Germany.
  • We see scope for CICT to increase its overseas exposure in the future as a means of diversification.
  • In terms of asset class, 38% of the enlarged property value would be derived from Office, 33% from Retail and 29% from Integrated developments (Raffles City Singapore, Plaza Singapura, The Atrium@Orchard, Funan and CapitaSpring).
  • As a recap, on a pro forma basis, DPU accretion for CapitaLand Mall Trust and CapitaLand Commercial Trust is estimated to be +4.1% and +7.6% for the last 12 months ended 30 Jun 2020, respectively. However, pro forma aggregate leverage of CapitaLand Mall Trust is expected to increase from 34.4% (as at 30 Jun 2020) to 39.7%. The strategic benefits from an enlarged REIT include better economies of scale, reduced concentration risks in a particular asset class, a potentially lower cost of capital and increased debt and development headroom which would allow the REIT to compete more effectively on portfolio acquisitions.

Overhang lifted






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2020-09-30
SGX Stock Analyst Report BUY MAINTAIN BUY 2.39 UP 2.290



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