Mapletree Greater China Commercial Trust (MGCCT): Made its maiden acquisition for Sandhill Plaza for Rmb1.89b ($412.2m), a premium business park property located in Shanghai's Free Trade Zone.
The 83,801.5 sqm (0.9m sf) gfa property at Zhangjiang Hi-tech Park was completed in 2012 and has a lease term of 45 years up to 2060, and comes with a 96.2% occupancy rate.
Among Its 58 tenants include global companies such as ADI, Axalta, Borouge, Broadcom, Disney, Spreadtrum, Univar and Wincor Nixdorf.
Dubbed the “Silicon Valley” of Shanghai, the hi-tech park enjoys increasing demand from the growing high-tech and IT clusters, as well as companies in manufacturing, trading, R&D and regional headquarters seeking well-connected decentralised locations.
The purchase price of Rmb1.89b comprises Rmb1.84b for the property (3.2% below market value) and Rmb50m for working capital adjustments, and will be fully debt-funded through existing Rmb and HK$ debt facilities.
Post-acquisition, MGCCT's pro forma FYMar15 aggregate leverage is expected to increase from 36.2% to 40.6%, while DPU is expected to grow marginally by 0.1% to 6.55¢.
At $1.04, MGCCT is trading at a relatively attractive 0.87x P/B and 6.3% indicative yield, compared to SGX-listed retail reits average of 1.1x P/B and 5.6% yield.
Market Insight continues to like MGCCT for its exposure into the China market, underpinned by resilient leasing demand and the limited supply in the Hong Kong retail and Beijing office sectors.
However, we will keep our eyes peeled on its rising leverage ratio which may translate into rising interest costs.
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