CapitaLand Mall Trust

CapitaLand Mall Trust (CMT): CMT announced the acquisition of Bedok Mall from sponsor CapitaLand, valuing asset at $780m. This translates to an entry NPI yield of 5.1%. Opened in Dec 2013, the mall has 201 leases and is 99.3% occupied, with average monthly shopper traffic of 1.4m (+22% YoY) in 1Q15.

The new purchase will expand CMT’s AUM by 8% to $11b and boost the trust’s exposure to the necessity spending segment to 76.2% of portfolio (from 74.5%).

CMT will use 80:20 debt and equity mix to fund the acquisition where CMT will issue 72m new units to CapitaLand as part of purchase consideration on top of the $7.8m acquisition fee to be paid in units; the rest will be funded by debt. CMT’s leverage will increase from 33.8% to 37%. Sponsor CapitaLand’s stake in CMT will increase from 27.7% to 29.3% following the scheduled completion of the deal in 4Q15.

CMT currently trades at FY15F yield of 5.1%.

Latest broker views:
Nomura expects Bedok Mall to add 1.7% to CMT’s DPU. The house maintains its NEUTRAL rating with TP: $2.22.
CIMB maintains its HOLD rating with TP raised slightly to $2.25.
OCBC maintains its HOLD rating with TP: $2.21.
MayBank KE maintains its SELL rating with TP: $1.96 (prev: $1.87), as it is DPU accretive next year, not FY15.