Morningstar | CMT Acquires 70% Stake in Westgate to Tap Long-Term Potential of Jurong East; FVE Remains at SGD 2.4. See Updated Analyst Note from 29 Aug 2018
CapitaLand Mall Trust, or CMT, has announced that it will acquire the remaining 70% stake that it does not own in Westgate, a retail mall at Jurong East, for SGD 789.6 million (or SGD 2,746 per square foot), from its parent company, CapitaLand Limited. This represents a 14% increase in valuation from the SGD 2,408 per square foot reported on June 30, owing to a lower capitalization rate of 4.3% (compared with 4.6%). CMT intends to fund this acquisition either through debt or a combination of debt and equity. Assuming the deal is 100% debt-funded, we estimate dividend per unit, or DPU, in 2019 could increase by around 1.2% to SGD 0.113. Our fair value estimate of SGD 2.40 is intact, along with our narrow moat and stable moat trend ratings.We view this transaction positively, as: (1) it allows CMT to recycle its capital following the sale of Sembawang Shopping Centre in June (at a lower capitalization rate of close to 3%) and the serviced-residence component of its Funan redevelopment in 2017; (2) it is DPU-accretive to unitholders; (3) it provides the trust with an opportunity to benefit from the potential rental improvement as CMT continues to adjust the tenant mix and carry out asset-enhancement initiatives on the property, including adding enclosures to selected alfresco food and beverage tenants and improving accessibility to the mall; (4) CMT will benefit from the long-term growth potential of the Jurong Lake District, which is Singapore’s planned second central business district and a transport interchange hub; and (5) this further reinforces its network effect moat source for the Jurong East catchment area, along with the two other malls that it already wholly owns, JCube and IMM (for further details, please refer to the moat section of our report). The occupancy rate for Westgate has also improved to 98% as of July 31 (from 95.3% as of June 30). This transaction is subject to unitholders' approval and is expected to be completed in fourth-quarter 2018.
CapitaLand Mall Trust is a real estate investment trust. Co. owns and invests in assets, which are used, or predominantly used, for retail purposes primarily in Singapore. Co.'s portfolio is comprised of 16 shopping centers, which include Tampines Mall, Junction 8, Funan DigitaLife Mall, IMM Building, Plaza Singapura, Bugis Junction, Sembawang Shopping Centre, JCube, Hougang Plaza, Lot One Shoppers' Mall, Bukit Panjang Plaza, Rivervale Mall, The Atrium@Orchard, Clarke Quay, Iluma, and Raffles City Singapore. All of Co.'s shopping centers are located in Singapore.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.