MCT

MCT: announced its maiden acquisition since IPO, with the proposed purchase of Mapletree Anson, a 19 storey Grade A office asset located in the Tanjong Pagar section of the CBD, from its sponsor for $680m (1% discount to the avg of two independent valuations). This works out to $2,049 psf for the leasehold asset, which was completed in Jul ’09. Occupancy at end Sep was 95.6% but has since improved to 99.4%. Passing rent as at end Sep was $7.30 psf pm, though none of the tenants has undergone the first rental renewal cycle. 7.6% of income is due for expiry by end FY12/13, with mkt rent closer to $8 now. Credit Suisse est that the acq price implies a cap rate of btwn 3-4%. This compares with CCT’s Feb ’12 purchase of Twenty Anson office nearby at a stabilized NPI yield of 4% (with income support). Mgt guides for the acq to be both DPU and NAV accretive, and looks to finance it via a combination of debt and equity, while maintaining an optimum level of gearing of <45%. This is the first acq of an office asset in Spore undertaken by a Reit without an income support or yield stabilization structure. Citi likes the acq for its “clean” structure that reflects the core operating cash flow of the asset while minimizing any forward uncertainty upon the expirty of any income support. Maintains Buy with TP $1.35. Credit Suisse keeps at Outperform with TP $1.38.