CapitaLand Mall Trust: CLSA opines that it has striked a good deal in divesting its Rivervale Mall, for $190.5m to PE fund manager, AEW Asia, realising a net gain of $72m.
The three-storey mall with a net lettable area of 81,159sqf is located at Sengkang New Town, and has a 100% committed occupancy as of Sep '15, comprising anchor tenants such as NTUC, McDonalds and UOB.
According to an independent valuation as at Jun '15, the property is valued at $116m. Thereby, the$190.5m price tag presents a $72m gain to CMT, after netting off divestment related expenses.
The REIT is estimated to realise an exit yield of about 3.4% as compared to Rivervale mall's Jun'15 annualised cap rates of 5.6%.
The deal is seen to be positive for CMT because the 3.4% yield is notably lower than exit yield of recent mall transactions, which ranged between 4.6-5.6%.
Looking ahead, the broker is touting that Funan Mall could be the REIT's next divestment, given the IT-centric mall is seen to be facing stiff competition from online e-commerce business.
In addition, CLSA also noted that CMT is still facing a challenging operating environment amid a labour squeeze within the retail sector.
As such, the house maintains an Underperform rating, but raises its TP marginally to $2.05 (Prior: $2.00) on the REIT.
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