1. Mapletree Logistics Trust
After a recent equity fundraising exercise, Mapletree Logistics Trust held, OCBC Research expects gross proceeds of about $640 million.
On top of that, it rolled out a 3.65% distribution rate fixed rate perpetual securities, priced at $180 million. With a robust subscription rate of 6.7x, it’s looking good for Mapletree Logistics Trust.
So, it raises the question: Why raise so much money? It turns out Mapletree Logistics Trust proposed to acquire Mapletree Logistics Hub Tsing Yi in Hong Kong, which received support from unitholders.
The acquisition will set Mapletree Logistics Trust back by about $834.8 million while translating to an attractive initial net property income (NPI) yield of about 5.7%.
OCBC Research recommends unitholders to subscribe to their pro rata entitlement of the preferential offering and maintain a BUY call on Mapletree Logistics Trust (SGX: M44U) with a target price of $1.35.
2. CapitaLand Commercial Trust
If CapitaLand Commercial Trust’s proposal of acquiring Asia Square Tower 2 (AST2) less the hotel component goes through, it will cost the REIT $2.094 billion.
OCBC Research expects a $2,689 per square foot (on net lettable area) and an initial NPI yield of about 3.6%, which is higher than the exit NPI yield of One George Street (3.2%) and Wilkie Edge (3.4%).
CapitaLand Commercial Trust intends to pay for the acquisition with its $340.1 million divestment proceeds, $1.12 billion in bank borrowings and a rights issue to raise the remaining $690.4 million.
Although the AST2 acquisition is great, the rights issue would dilute CapitaLand Commercial Trust’s dividend payouts, at least in the initial stages.
Nevertheless, OCBC Research believes CapitaLand Commercial Trust will be back on track once AST2’s occupancy rate rises later.
OCBC Research gave CapitaLand Commercial Trust (SGX: C61U) a HOLD call with a target price of $1.69.
3. Keppel Corporation
Keppel Land (property arm of Keppel Group) zooms in on Indonesia as its wholly-owned subsidiary acquires a prime site in Jakarta’s central business district for about $60 million.
It will cost an additional $170 million to build a premium high-rise tower with a gross floor area of 390 square feet and housing 400 luxury apartments.
Located adjacent to Keppel Land’s International Financial Centre Jakarta, OCBC Research expects the tower to house the growing foreign and local business community with premium tastes.
As such, OCBC Research maintains a BUY call for Keppel Corporation (SGX: BN4) with a target price of $7.36, considering there are even more upcoming developments to anticipate.