Capitamall Trust

Capitamall Trust: Maybank-KE downgrade to Hold and reduce TP to $2.10 from $2.15 on valuation grounds and lackluster DPU growth prospects, citing that most of the group’s eligible portfolio malls have already undergone asset enhancements. The house opines that near term acquisitions would be unlikely, despite a comfortable gearing ratio of 34.8% and management being open to acquisitions. This is because CMA’s most stabilized asset, ION Orchard, remains a major contributor to recurrent income while the other properties (The Star Vista, Bedok Mall and 50% stake in Westgate) are either not stabilized or still under construction. Going forward, do not expect significant contributions from the AEI of Bugis Junction and Tampines Mall, with a projected increment in capital value (net of capex) of $22.1m and $16.4m respectively, adding ~3¢ to the group’s RNAV. Meanwhile, expect attention to focus on the active leasing of Westgate and Westgate Tower, with 320k sf NLA in the tower now available for lease by end 2014. Catuion however that Westgate will face competition in its next rent review cycle in 2016-2017 when Sim Lian’s nearby mixed development project in Venture Avenue comes onboard. At the current price, Capitamall Trust trades at 1.2x P/B with a forward yield of 5.2%.