KUALA LUMPUR: AmResearch has reaffirmed its Hold on Capitamalls Malaysia Trust (CMMT) with an unchanged fair value of RM1.50/share based on a DCF valuation.
In a note on Tuesday, the research house said CMMT has entered into a conditional sale and purchase agreement with Tropicana City Sdn Bhd to acquire the following properties in Petaling Jaya at a purchase consideration of RM540mil.
At the purchase price of RM540mil, these properties have an estimated property yield of 4.6%.
This is lower than CMMT’s overall portfolio yield of 6.5%. Whilst this planned acquisition would provide geographical diversification for its portfolio, it may not be yield accretive immediately, particularly in the first two years following the acquisition.
"Although there could be some DPU dilution, we believe that management would undertake various asset enhancement initiatives to add value to the mall. Nevertheless, 30% and 16% of leases are due for renewals in 2015 and 2016, respectively, for the two properties.
"Funding structure for the acquisition are yet to be determined by CMMT. Based on a 100% debt funding, gearing is expected to increase to 39.5% from FY14’s 28%," it said.
It added that the acquisition is expected to complete by 3QFY15.
CMMT’s last acquisition took place in 2011 for the East Coast Mall. This acquisition is in line with its portfolio which focuses on day-to-day necessity malls.
Following the acquisition, CMMT would then have a total of five shopping malls and one office.
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