CMA

CMA: Co announced that it has entered into a 50-50 jv agreement with Msia Sime Darby Property for the construction of a RM500m development in Msia Klang Valley. The 242k sqft land plot will yield a net 635k sqft of space they will be able to let out and is expected to be completed by 2016. CMA added that the proposed investment in the development will be funded by equity and debt Deutsche note that the development is strategically located in the mature residential precinct of Taman Melawati and is expected to serve a total catchment of 800,000 people. The mall is targeted to be completed in 2016. Assuming average rents of between MYR7-9psf, house estimate a stabilized NPI yield of 8%. Based on an exit cap rate of 6.5% (in line with CMMT's current 6.5-6.9% NPI yields); estimate a marginal NAV accretion of $0.4c. While the accretion is minor, JV may result in further opportunities to work with Malaysia's largest developer by land bank. With this acquisition, CMA strengthens its foothold in Msia, house believe mgt can leverage its strong leasing platform expertise to develop the asset quickly. After completing 33% of its China NAV last year, CMA 's completed malls now account for 73% of total NAV. At the same time, co continues to acquire assets which will provide a visible development pipeline through 2014. Valuations remain attractive at a 0.9x P/B and 30% discount to NAV of $2.04. Deutsche has $1.84 TP.