CapitaMalls Asia's latest spending spree revealed

CMA will be investing a total of S$217.4m for its latest acquisitions.

According to CIMB, the acquisition will be debt funded.

Here’s more from CIMB:

We lift our FY12-14 core EPS by 2-4% to factor in higher rental income from the Japan portfolio. RNAV and target price (still on 25% disc to RNAV) are raised marginally. CMA trades at just 10% discount to our RNAV. Maintain Underperform.

What Happened
CMA announced it will acquire the remaining 73.7% stakes it does not already own in three Japan retail malls, namely CapitaRetail LPM in the Mizue suburb, CapitaRetail IH in Osaka and CapitaRetail CK in Nishinomiya. The total investment cost for the acquisitions, based on a 100% basis, is c. S$217.4m, which represents a 16.9% discount to the assets’ latest assessed book values. The acquisitions will be funded by debt.

What We Think
We like the acquisition, mainly on a price perspective. CMA estimates the combined net property yield of the assets to be around 7.6%, which is a decent spread over the current 10-year bond yield (1%). We expect the acquisition to be substantially accretive over funding costs as well.

CMA also expects an additional recurring PATMI of over S$8m a year, which will be complement a maturing portfolio in China. Debt levels will rise from this purchase, though we are less concerned in this instance given that the assets are already income producing. We estimate a muted RNAV impact, to the tune of 1ct uplift. Its Japan portfolio forms 2.7% of its GAV.  

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Tags: CapitaMalls Asia's latest acquisitions, CapitaRetail LPM in the Mizue suburb, CapitaRetail IH in Osaka and CapitaRetail CK