CRCT / CMA

CRCT / CMA: CRCT has exercised its call option and signed an agreement with CMA to acquire Grand Canyon Mall in Beijing, strategically located along the South Third Ring West Road in Beijing’s up-and-coming south region. Open since Aug ’10, the mall enjoys an avg monthly footfall of >1m. within a 5km radius, the mall serves a catchment of >650k ppl. The current occupancy (as of Apr ’13) is 92.7% with an annualized net property income (NPI) yield of ~3.5% based on the divestment price. Including acquisition-related expenses, the total invmt cost of the mall is expected to be ~Rmb1.82b ($367.5m), or ~Rmb26,000 ($5249) psm based on total gfa, on par with the CBRE’s independent valuation of Rmb1.83b. The acquisition, expected to be completed by end this year, will be CRCT’s tenth mall in China and fifth in Beijing. Together with the asset enhancement at CapitaMall Minzhongleyuan to be completed in 2Q14, will provide a strong foundation for growth from next yr. To partly finance the deal, CRCT targets to raise gross proceeds of ~$59m through the issue of 45.4m new units at $1.30 each, through a non-renounceable preferential offering to existing unitholders. The corporate action commenced yday and will close next Wed, 13 Nov ’13. At the last close of $1.39, CRCT trades at 0.95x P/B, offers 6.6% yield. OCBC maintains its Buy ratings for both CMA and CRCT with TP $2.55 and $1.64, respectively.