Compiled by Lynette Khoo
CAPITALAND COMMERCIAL TRUST | HOLD
SEPT 22 CLOSE: $1.67
TARGET PRICE: $1.75
Deutsche Bank, Sept 22
Capitaland Commercial Trust announced that it has agreed to acquire Asia Square Tower 2, a Grade A commercial building in Marina Bay from BlackRock for S$2.12 billion.
The agreed property value of S$2.09 billion or S$2,689 per square foot, is slightly below its valuation of S$2.11 billion and is comparable to the S$2,650 psf paid by Qatar Investment Authority for Asia Square Tower 1 last June.
The 3.6 per cent initial yield on an 88.5 per cent occupied Grade A asset is a decent pricing for Asia Square Tower 2.
That said, with our less bullish view on the Singapore office sector, we estimate the potential ramp-up in occupancy could be largely offset by the negative rental reversion.
While we see CCT now being the best proxy for the office sector post transaction, the estimated moderate growth is not attractive enough in our view for a cyclical sector.
MAPLETREE LOGISTICS TRUST | BUY
SEPT 22 CLOSE: S$1.20
TARGET PRICE: S$1.35
OCBC Investment Research, Sept 22
Mapletree Logistics Trust (MLT) has concluded a private placement exercise, which was 3.3 times covered, at S$1.175.
Gross proceeds of S$353.5 million were raised. MLT has also launched a non-renounceable preferential offering on the basis of one new unit for every 10 existing units in MLT at S$1.145, raising further gross proceeds of S$286.5 million.
Collectively, this equity fund-raising exercise is expected to generate gross proceeds of S$640 million.
The main reason for this exercise was to raise funds for its proposed acquisition of Mapletree Logistics Hub Tsing Yi in Hong Kong from its sponsor Mapletree Investments Pte Ltd. Unitholders' approval has been obtained.
The purchase consideration of HK$4.8 billion (S$834.8 million) for Mapletree Logistics Hub Tsing Yi is expected to translate into an initial net property income yield of 5.7 per cent, which we deem attractive.
Our fiscal 2018 and 2019 forecasts on distribution per unit are adjusted marginally upwards by 0.3 per cent and 0.4 per cent, respectively.
We recommend unitholders to subscribe to their pro rata entitlement of the preferential offering.
Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.