Mapletree Greater China Commercial Trust (MGCCT) announced that it has entered into a conditional sale and purchase agreement with an unrelated third party vendor to acquire a 100% interest in Sandhill Plaza. Sandhill Plaza is a premium quality business park located in Zhangjiang Hi-Tech Park in Shanghai, with total GFA of 83,801.48 sqm.
The purchase consideration works out to CNY1,888.1m (~S$412.2m), and translates into an initial NPI yield of 3.85%. Management intends to fund this acquisition with existing banking facilities, upon which its gearing ratio will increase from 36.2% to 40.6%. On a pro forma basis, DPU would remain relatively flat (from 6.543 S cents to 6.55 S cents). However, we believe there is room for growth ahead, as the current rental rates at Sandhill Plaza is below the average rental of its Comparable Basket.
We will provide more details after the analyst conference call. Our last rating on MGCCT was a HOLD, with a fair value estimate of S$1.07.
Source : OCBC Investment Research