Brokers' take
CapitaLand Mall Trust (CMT) | Hold (maintained) Fair value: S$2.10 Oct 1 close: S$2.20 OCBC Investment Research, Oct 1
CMT held the topping out ceremony of Funan last Friday and the mall is expected to open in Q2 2019, earlier than the target of Q3 2019. Funan is also aiming to be Singapore's first online-and-offline shopping mall.
According to CMT, including leases signed and in advanced negotiations, the take-up rates for Funan's retail and office components have hit 70 per cent and 60 per cent, respectively. Meanwhile, serviced residence component lyf Funan Singapore is expected to open in Q4 2019 instead of 2020.
Another recent significant event for CMT was its proposed acquisition of the remaining 70 per cent of the units in Infinity Mall Trust which holds Westgate. Westgate acquisition's NPI yield of 4.3 per cent (based on FY2017 figure) appears tight, in our view. The total acquisition cost is around S$805.5 million, of which S$405.6 million is in cash.
We expect this to be funded by both debt and equity. Hence the overhang over a likely equity fund raising exercise may subsequently neutralise the initial positive buzz created by Funan.
Mapletree Reits | Buy (maintained) DBS Equity Research, Oct 1
The Mapletree Group of Reits has been one of the more active S-Reits over the past 12 months, acquiring close to S$3.1 billion in assets in Singapore, Hong Kong, China, Japan and the US.
Trading at attractive cost of capital, the Reits also raise close to S$1.7 billion in new equity with strong investors' support.
We believe that the Reits are positioned in the more resilient commercial and industrial sectors, which in our view, are safer havens given the ongoing macro uncertainties.
In fact, the managers are seeing a steady improvement in operating outlook for most sectors (mainly the industrial and retail) going into 2019. We believe that both Mapletree Logistics Trust and Mapletree Industrial Trust will benefit from abating supply risk in its Singapore operations, boosted by contributions from recently completed acquisitions.
Mapletree North Asia Commercial Trust and Mapletree Commercial Trust have dominant properties in Hong Kong and Singapore, respectively, which we believe could withstand supply challenges and will continue to churn out positive rental upside in the coming quarters.
The Reits continue to attract a strong following in our recent corporate access event in Bangkok. Investor interest still revolves around the group's ability to grow revenues and keep balance sheet metrics strong.
While interest rates are rising, compressing credit spreads and a wider range of debt funding options imply that any upward pressure on interest rates is likely to be marginal.
Compiled by Navin Sregantan
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