Mapletree Commercial Trust

Mapletree Commercial Trust: SCB maintains O/p with $1.30 TP. House note that in the 3Q12 results meetings, MCT management acknowledged that the recent share price performance had reduced the cost of equity significantly. As a result, the manager could consider both the acquisition of Mapletree Business City (MBC) as well as Mapletree Anson from the sponsor. House continue to believe the acquisition of MBC would be 6-12% accretive for MCT. However, based on current office capital values, expect the passing NPI yield for Mapletree Anson to be 3.0%. Income support may be needed for this to be yield-accretive for MCT. Add that if MCT acquires Mapletree Anson before MBC, investors could be disappointed in the short term given limited potential for earnings accretion. However, the two acquisitions would still be transformational for MCT – its portfolio could grow to $5b from $3bn currently, and its free float could increase 80% to $2.3bn. Organic rental income growth is still highly visible as new leases at Vivocity and PSA Building are signed at 37% and 46% above their expiring rents, respectively.