CapitaLand Mall Trust: (S$1.86) Unlocking space in Funan DigitaLife Mall
CapitaLand Mall Trust (CMT) will redevelop Funan DigitaLife Mall into an experiential creative hub for an undisclosed sum.
The mall located in North Bridge Road in the downtown core is expected to be shut down in 3Q16 for three years for the integrated development.
The project is expected to unlock GFA of 388,000 sf based on the site's gross plot ratio of 7.0, boosting the total gfa for the redeveloped asset to a significant 862,000.
Maybank-KE estimates that the space would be used mainly for office (75%), with the remaining for retail.
By 2019 when construction is completed, the house believes the impending oversupply of office would have passed and Singapore may be hit by a supply crunch situation given the lack of office land sales now.
Maybank-KE believes that CMT may potential recognise a fair value gain of ~$600m ($0.17/unit), and an estimated DPU uplift of 0.8¢, bringing FY19-20 DPU to ~12.8¢.
While CMT has the balance sheet capacity of $1.3b cash for the entire redevelopment by itself, it has not confirmed that.
On the back of falling prime rental rates at Orchard Road, CMT is likely to face some challenges to its malls in Downtown Core Raffles City, Jurong, and Bukit Panjang next year.
Maybank-KE still maintains its Sell rating on CMT with TP of $1.96. House cites that the present fwd yields of 5.1-5.4% are also not compelling.
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